Compensation costs increase with establishment size

November 04, 1998

Employer costs for employee compensation are generally higher in large establishments than in small. In March 1997, compensation costs for establishments with 500 or more employees were 46 percent higher than for establishments with 100-499 employees, and 61 percent higher than for establishments with less than 100 employees.

Employer costs for employee compensation by establishment size, March 1997
[Table data—TXT]

The proportion of total compensation made up of benefit costs was greater in large establishments. Benefit costs accounted for 30.8 percent of total compensation costs for workers in establishments with 500 or more employees, compared with 24.9 percent of compensation in establishments with less than 100 workers.

In addition to employment size, a variety of factors—including differences in the mix of industries, occupations, union coverage, and location—influence compensation cost levels. Compared with small establishments, large establishments tend to be located in metropolitan areas and are more likely to be covered by union contracts, two factors often associated with higher compensation costs.

Note that establishment size may differ from firm size. The Bureau of Labor Statistics defines an establishment as a single physical location where business is conducted. Establishments can be parts of a larger company. About three-quarters of the employees in small establishments work in small, independent private businesses; the remainder are in establishments that are part of larger firms.

These data are a product of the BLS Employment Cost Trends program (specifically the Employer Costs for Employee Compensation series). Additional information is reported in the bulletin, Employer Costs for Employee Compensation, 1986-97, Bulletin 2505, August 1998. A summary of compensation costs trends from 1981 to 1997 based on Employment Cost Indexes is available from "Total compensation costs double from 1981 to 1997," The Editor's Desk.


Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, Compensation costs increase with establishment size on the Internet at (visited September 28, 2016).


Recent editions of Spotlight on Statistics

  • A look at healthcare spending, employment, pay, benefits, and prices
    As one of the largest U.S. industries, healthcare is steadily growing to meet the needs of an increasing population with an increasing life expectancy. This Spotlight looks at how much people spend on healthcare, current and projected employment in the industry, employer-provided healthcare benefits, healthcare prices, and pay for workers in healthcare occupations.

  • Employment and Wages in Healthcare Occupations
    Healthcare occupations are a significant percentage of U.S. employment. Some of the largest and highest paying occupations are in healthcare. This Spotlight examines employment and wages for healthcare occupations.

  • Fifty years of looking at changes in peoples lives
    Longitudinal surveys help us understand long-term changes, such as how events that happened when a person was in high school affect labor market success as an adult.