Government Workers Enjoy Better Benefits...
Employees of state and local government receive 29.9 percent of total compensation in the form of employee benefits, compared to 27.9 percent of compensation paid to private sector workers, according to a recent U.S. Department of Labor report. The enhanced level of benefits for government employees is particularly noticeable in the area of employer paid health benefits. Government employers contribute 9.2 percent of employee compensation towards health benefits while private sector employers provide only 6.4 percent.
Likewise, in the area of retirement and savings plans, government employers contribute 5.6 percent of compensation costs for retirement related benefits while private employers contribute only 3 percent of compensation costs for this category of benefits.
Private sector employers, however, provide a greater proportion of compensation to employees in the form of wages and salaries. Private sector employers contribute 72.1 percent of total compensation in the form of wages and salaries while state and local government provides 70.1 percent of employment costs into the employee's weekly paycheck.
These findings are detailed in a U.S. Department of Labor, Bureau of Labor Statistics (BLS) report entitled Employer Costs for Employee Compensation, June, 2003. The BLS is the federal government agency that tracks and reports on various labor and employment data such as employment, unemployment, wage and benefit practices in the public and private sectors.
Overall, employer costs for civilian workers in both public and private sectors averaged $24.19 per hour worked, including costs paid by the employer for direct salaries, benefits, retirement plans and legally required benefits. The legally required benefits include costs incurred by the employer for the employer's contribution to social security, workers compensation, and unemployment insurance.
The overall average paid for wages and salaries was $17.35 per hour. This number represents an overall average of direct pay rate for all workers in all categories of jobs.
The report also noted the current trend of rising insurance costs incurred by employers. The BLS reported that average costs of health insurance rose from $1.52 per hour a year ago to $1.69 in 2003.
This data is significant because it demonstrates the benefits costs incurred by employers over and above the direct salary which the employee sees in his or her pay check at the end of the week.
Human resources specialists recommend that employers make an effort to carefully define and communicate pay information to employees. Supervisors should be trained to effectively discuss pay and performance with employees. Compensation studies can be used to insure that pay and benefits levels are competitive. Employee benefits statements can be use to communicate the value of benefits information to employees. During this current economic period of low inflation, low pay raises, and large increases to insurance costs, employers are encouraged to find creative ways to communicate pay information to employees.
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William S. Hubbartt is president of Hubbartt & Associates, a St. Charles, IL consulting firm specializing in employee compensation, employee handbooks, personnel policies and supervisory training. (www.Hubbartt.com) Mr. Hubbartt is author of The Medical Privacy Rule - A Guide for Employers and Health Care Providers.
