Employer Costs for Employee Compensation for the Regions

Internet: www.bls.gov/ro5/		FOR RELEASE: Tuesday, March 18, 2008
GENERAL INFORMATION:	(312) 353-1880
MEDIA CONTACT:	Paul LaPorte (312) 353-1138

Employer Costs for Employee Compensation
for the Regions - December 2007 (PDF)

Employer costs for employee compensation in private industry among the four geographic regions of the country ranged from $23.64 per hour in the South to $30.18 in the Northeast in December 2007, according to the U.S. Department of Labor’s Bureau of Labor Statistics. Regional Commissioner Jay A. Mousa noted that employer costs for employee compensation in the other two regions were $25.63 in the Midwest and $28.27 in the West. (See chart 1.) In addition to regional estimates, employer costs for nine geographic divisions are also available. Within divisions, total compensation costs ranged from $20.05 in the East South Central division to $30.38 in the New England division. Employer Costs for Employee Compensation are based on the National Compensation Survey, which measures employer costs for wages, salaries, and employee benefits. (See table 1. Geographic definitions of the regions and divisions are contained in the Explanatory Note.)

In the Northeast, wages and salaries, at $20.99, made up 69.5 percent of total compensation costs. Benefits costs, at $9.20, accounted for the remaining 30.5 percent. Legally required benefits, which includes Social Security, workers’ compensation, and unemployment insurance, averaged $2.50 per hour worked in the Northeast and represented 8.3 percent of total compensation costs. Paid leave including vacation, holiday, sick, and other leave, averaged $2.26 per hour worked and accounted for 7.5 percent of total compensation costs, while insurance costs, which includes life, health, short- and long-term disability, was $2.25 per hour worked and represented 7.5 percent of all compensation costs.

Wages and salaries averaged $20.05 in the West and accounted for 70.9 percent of all compensation costs. Costs for benefits averaged $8.22, representing 29.1 percent of total compensation. Legally required benefits averaged $2.53 per hour worked, accounting for 9.0 percent of total compensation costs in the West. The cost of insurance benefits averaged $2.05 per hour worked and represented 7.2 percent of total compensation, while paid leave was $1.90 per hour or 6.7 percent of all costs.

Wages and salaries in the Midwest, which averaged $17.93, represented 69.9 percent of all compensation costs. Benefits, averaging $7.71 per hour, accounted for 30.1 percent of total compensation. Legally required benefits cost employers $2.15 per hour worked or 8.4 percent of total compensation costs. Insurance was $2.15 per hour worked and represented 8.4 percent of total compensation. The cost of paid leave in the Midwest averaged $1.70 per hour, accounting for 6.6 percent of total compensation.

In the South, wages and salaries, at $16.99, made up 71.9 percent of total compensation, and benefits, at $6.65, accounted for the remaining 28.1 percent. Among the largest benefit categories were legally required benefits averaging $1.92 per hour worked and representing 8.1 percent of total compensation costs in the South. Insurance costs averaged $1.74 per hour worked and accounted for 7.3 percent of total compensation, while paid leave averaged $1.49 per hour and represented 6.3 percent of all costs.

Overall, compensation costs among private industry employers in the United States averaged $26.42 per hour worked in December 2007. Wages and salaries, at $18.67, accounted for 70.7 percent of these costs, while benefits, at $7.75, made up the remaining 29.3 percent. Wages and salaries, as a percentage of total compensation in the private sector, have declined over the past six years from 73 percent of total compensation in 2000.

Table 1. Employer costs per hour worked for employee compensation and costs as a percent of total compensation: Private industry workers, by census region and division, December 2007
Compensation component	Census region and division(1)
	Northeast		Northeast divisions				South		South divisions
	Cost	Percent	New England		Middle Atlantic		Cost	Percent	South Atlantic
	Cost	Percent	Cost	Percent	Cost	Percent	Cost	Percent	Cost	Percent
Total compensation	$30.18	100.0	$30.38	100.0	$30.10	100.0	$23.64	100.0	$25.19	100.0
Wages and salaries	20.99	69.5	21.62	71.2	20.72	68.9	16.99	71.9	18.09	71.8
Total benefits	9.20	30.5	8.76	28.8	9.37	31.1	6.65	28.1	7.10	28.2
Paid leave	2.26	7.5	2.25	7.4	2.27	7.5	1.49	6.3	1.61	6.4
Vacation	1.13	3.7	1.14	3.7	1.13	3.7	0.77	3.2	0.82	3.3
Holiday	0.74	2.4	0.77	2.5	0.73	2.4	0.49	2.1	0.52	2.1
Sick	0.30	1.0	0.26	0.8	0.31	1.0	0.18	0.8	0.21	0.8
Other	0.10	0.3	0.09	0.3	0.11	0.4	0.05	0.2	0.06	0.2
Supplemental pay	1.04	3.4	0.86	2.8	1.12	3.7	0.63	2.7	0.63	2.5
Overtime and premium(2)	0.29	1.0	0.27	0.9	0.30	1.0	0.25	1.0	0.25	1.0
Shift differentials	0.07	0.2	0.05	0.2	0.07	0.2	0.06	0.3	0.07	0.3
Nonproduction bonuses	0.68	2.3	0.53	1.8	0.75	2.5	0.32	1.4	0.32	1.3
Insurance	2.25	7.5	2.10	6.9	2.31	7.7	1.74	7.3	1.80	7.1
Life	0.04	0.1	0.04	0.1	0.04	0.1	0.04	0.2	0.05	0.2
Health	2.09	6.9	1.97	6.5	2.14	7.1	1.61	6.8	1.66	6.6
Short-term disability	0.08	0.3	0.05	0.2	0.09	0.3	0.05	0.2	0.05	0.2
Long-term disability	0.04	0.1	0.04	0.1	0.04	0.1	0.04	0.2	0.04	0.2
Retirement and savings	1.14	3.8	1.05	3.4	1.18	3.9	0.87	3.7	1.04	4.1
Defined benefit	0.53	1.7	0.44	1.4	0.57	1.9	0.36	1.5	0.43	1.7
Defined contribution	0.61	2.0	0.61	2.0	0.62	2.0	0.51	2.2	0.62	2.5
Legally required benefits	2.50	8.3	2.51	8.2	2.50	8.3	1.92	8.1	2.02	8.0
Social Security and Medicare	1.77	5.9	1.82	6.0	1.75	5.8	1.41	5.9	1.49	5.9
Social Security(3)	1.42	4.7	1.46	4.8	1.40	4.7	1.13	4.8	1.19	4.7
Medicare	0.35	1.2	0.36	1.2	0.35	1.2	0.28	1.2	0.30	1.2
Federal unemployment insurance	0.03	0.1	0.03	0.1	0.03	0.1	0.03	0.1	0.03	0.1
State unemployment insurance	0.22	0.7	0.22	0.7	0.22	0.7	0.10	0.4	0.10	0.4
Workers' compensation	0.48	1.6	0.43	1.4	0.49	1.6	0.38	1.6	0.40	1.6
See footnotes at end of table.

Table 1. Employer costs per hour worked for employee compensation and costs as a percent of total compensation: Private industry workers, by census region and division, December 2007 - Continued
Compensation component	Census region and division(1)
	South divisions				Midwest		Midwest divisions
	East South Central		West South Central		Cost	Percent	East North Central		West North Central
	Cost	Percent	Cost	Percent	Cost	Percent	Cost	Percent	Cost	Percent
Total compensation	$20.05	100.0	$23.09	100.0	$25.63	100.0	$26.75	100.0	$23.18	100.0
Wages and salaries	14.31	71.4	16.69	72.2	17.93	69.9	18.63	69.6	16.40	70.7
Total benefits	5.74	28.6	6.41	27.8	7.71	30.1	8.12	30.4	6.79	29.3
Paid leave	1.19	6.0	1.46	6.3	1.70	6.6	1.79	6.7	1.51	6.5
Vacation	0.66	3.3	0.73	3.2	0.89	3.5	0.92	3.4	0.82	3.5
Holiday	0.38	1.9	0.50	2.2	0.57	2.2	0.60	2.2	0.49	2.1
Sick	0.11	0.6	0.18	0.8	0.19	0.7	0.20	0.7	0.16	0.7
Other	0.04	0.2	0.05	0.2	0.06	0.3	0.07	0.3	0.04	0.2
Supplemental pay	0.55	2.7	0.68	3.0	0.78	3.0	0.84	3.1	0.63	2.7
Overtime and premium(2)	0.22	1.1	0.27	1.2	0.30	1.2	0.31	1.2	0.25	1.1
Shift differentials	0.07	0.4	0.06	0.2	0.09	0.3	0.10	0.4	0.07	0.3
Nonproduction bonuses	0.26	1.3	0.36	1.6	0.39	1.5	0.43	1.6	0.31	1.4
Insurance	1.72	8.6	1.64	7.1	2.15	8.4	2.28	8.5	1.87	8.1
Life	0.04	0.2	0.04	0.2	0.04	0.2	0.05	0.2	0.04	0.2
Health	1.61	8.0	1.52	6.6	2.00	7.8	2.11	7.9	1.75	7.5
Short-term disability	0.04	0.2	0.04	0.2	0.07	0.3	0.07	0.3	0.05	0.2
Long-term disability	0.03	0.2	0.04	0.2	0.04	0.2	0.04	0.2	0.03	0.1
Retirement and savings	0.57	2.9	0.75	3.2	0.93	3.6	0.99	3.7	0.79	3.4
Defined benefit	0.22	1.1	0.32	1.4	0.46	1.8	0.51	1.9	0.36	1.5
Defined contribution	0.35	1.8	0.42	1.8	0.47	1.8	0.48	1.8	0.43	1.9
Legally required benefits	1.70	8.5	1.87	8.1	2.15	8.4	2.23	8.3	1.98	8.5
Social Security and Medicare	1.22	6.1	1.38	6.0	1.51	5.9	1.57	5.9	1.39	6.0
Social Security(3)	0.99	4.9	1.10	4.8	1.22	4.7	1.26	4.7	1.12	4.8
Medicare	0.24	1.2	0.27	1.2	0.30	1.2	0.31	1.2	0.27	1.2
Federal unemployment insurance	0.03	0.2	0.03	0.1	0.03	0.1	0.03	0.1	0.03	0.1
State unemployment insurance	0.08	0.4	0.10	0.5	0.16	0.6	0.17	0.6	0.14	0.6
Workers' compensation	0.37	1.8	0.36	1.6	0.44	1.7	0.45	1.7	0.42	1.8
See footnotes at end of table.

Table 1. Employer costs per hour worked for employee compensation and costs as a percent of total compensation: Private industry workers, by census region and division, December 2007 - Continued
Compensation component	Census region and division(1)
	West		West divisions
	Cost	Percent	Mountain		Pacific
	Cost	Percent	Cost	Percent	Cost	Percent
Total compensation	$28.27	100.0	$24.21	100.0	$29.99	100.0
Wages and salaries	20.05	70.9	17.44	72.0	21.16	70.6
Total benefits	8.22	29.1	6.78	28.0	8.83	29.4
Paid leave	1.90	6.7	1.47	6.1	2.09	7.0
Vacation	0.98	3.5	0.77	3.2	1.07	3.6
Holiday	0.62	2.2	0.49	2.0	0.68	2.3
Sick	0.25	0.9	0.18	0.7	0.28	0.9
Other	0.04	0.2	0.03	0.1	0.05	0.2
Supplemental pay	0.80	2.8	0.76	3.1	0.82	2.7
Overtime and premium(2)	0.26	0.9	0.23	1.0	0.27	0.9
Shift differentials	0.06	0.2	0.05	0.2	0.06	0.2
Nonproduction bonuses	0.49	1.7	0.47	2.0	0.49	1.6
Insurance	2.05	7.2	1.75	7.2	2.17	7.2
Life	0.04	0.1	0.04	0.1	0.04	0.1
Health	1.93	6.8	1.65	6.8	2.05	6.8
Short-term disability	0.04	0.1	0.03	0.1	0.04	0.1
Long-term disability	0.04	0.1	0.03	0.1	0.04	0.1
Retirement and savings	0.93	3.3	0.71	2.9	1.03	3.4
Defined benefit	0.43	1.5	0.27	1.1	0.49	1.6
Defined contribution	0.51	1.8	0.44	1.8	0.53	1.8
Legally required benefits	2.53	9.0	2.09	8.6	2.72	9.1
Social Security and Medicare	1.67	5.9	1.46	6.0	1.76	5.9
Social Security(3)	1.34	4.7	1.17	4.8	1.41	4.7
Medicare	0.33	1.2	0.29	1.2	0.35	1.2
Federal unemployment insurance	0.03	0.1	0.03	0.1	0.03	0.1
State unemployment insurance	0.18	0.7	0.12	0.5	0.21	0.7
Workers' compensation	0.64	2.3	0.47	2.0	0.72	2.4
Footnotes: (1) The States that comprise the census divisions are: New England: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont; Middle Atlantic: New Jersey, New York, and Pennsylvania; South Atlantic: Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and West Virginia; East South Central: Alabama, Kentucky, Mississippi, and Tennessee; West South Central: Arkansas, Louisiana, Oklahoma, and Texas; East North Central: Illinois, Indiana, Michigan, Ohio, and Wisconsin; West North Central: Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota; Mountain: Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming; and Pacific: Alaska, California, Hawaii, Oregon, and Washington. (2) Includes premium pay for work in addition to the regular work schedule (such as overtime, weekends, and holidays). (3) Comprises the Old-Age, Survivors, and Disability Insurance (OASDI) program.
Note: The sum of individual items may not equal totals due to rounding.

Technical Note

Employer Costs for Employee Compensation (ECEC) measures the average cost to employers for wages and salaries and benefits per employee hour worked.

Wages and salaries are defined as the hourly straight-time wage rate or, for workers not paid on an hourly basis, straight-time earnings divided by the corresponding hours. Straight-time wage and salary rates are total earnings before payroll deductions and include production bonuses, incentive earnings, commission payments, and cost-of-living adjustments. Not included in straight-time earnings are nonproduction bonuses such as end-of-year payments, shift differentials, and premium pay for overtime and for work on weekends and holidays; these payments are included in the benefits component.

Benefits include: Paid leave-vacations, holidays, sick leave, and other leave; supplemental pay-premium pay for work in addition to the regular work schedule (such as overtime, weekends and holidays), shift differentials, and nonproduction bonuses (such as referral bonuses and attendance bonuses); insurance benefits-life, health, short-term disability, and long-term disability; retirement and savings benefits-defined benefit and defined contribution plans; and legally required benefits-Social Security, Medicare, federal and state unemployment insurance, and workers’ compensation.

Employer Costs for Employee Compensation includes data for the civilian economy, which includes data from both private industry and state and local government. Excluded from private industry are the self-employed and farm and private household workers. Federal government workers are excluded from the public sector. The private industry series and the state and local government series provide data for the two sectors separately.

The cost levels for this quarter were collected from a probability sample of approximately 57,600 occupations selected from a sample of about 12,200 establishments in private industry and approximately 11,900 occupations from a sample of about 2,000 establishments in state and local governments. This quarter, the state and local government sample, which is replaced less frequently than the private industry sample, was replaced in its entirety. As a result of this replacement, the number of state and local government occupations and establishments increased substantially this quarter. The private industry sample is rotated over approximately 5 years, which makes the sample more representative of the economy and reduces respondent burden. Data are collected for the pay period including the 12th day of the survey months of March, June, September, and December. The sample is replaced on a cross-area, cross-industry basis.

When respondents do not provide all the data needed, a procedure for assigning missing values is used. This imputation procedure is comparable to that used for the Employment Cost Index (ECI). For a description, see "Accounting for missing data in the Employment Cost Index," in the April 2006 issue of the Monthly Labor Review at http://www.bls.gov/opub/mlr/2006/04/art4abs.htm .

The ECEC percent of total compensation estimates are calculated from cost aggregates and then rounded to the published level of precision. This method provides the most precise estimates of the percent of total compensation; however, estimates of the percentage of total compensation calculated from the published cost estimates may differ slightly from those calculated from the unpublished cost aggregates.

Beginning with this release, sample establishments are classified by the industry categories based on the 2007 North American Industry Classification System (NAICS). Prior to this release, the 2002 NAICS classification system was used. Differences between the two NAICS systems did not affect any of the published series. Within a sample establishment, specific job categories are selected and classified into about 800 occupational classifications according to the 2000 Standard Occupational Classification (SOC) system. Individual occupations are combined to represent one of ten intermediate aggregations, such as professional and related occupations, or one of five higher-level aggregations such as management, professional, and related occupations. Both the NAICS and the SOC classification systems are defined by the US Office of Management and Budget (OMB). For more detailed information on NAICS and SOC, including background definitions, see the BLS Web sites: www.bls.gov/bls/naics.htm and www.bls.gov/soc/home.htm .

The state and local government sample consists of 152 areas that represent the Nation’s 361 metropolitan statistical areas and 573 micropolitan statistical areas as defined by OMB in June 2003 and the remaining portions of the 50 states. The private industry sample consists of 151 metropolitan areas and nonmetropolitan areas that represent the Nation’s 326 metropolitan statistical areas as defined by OMB in 1994 and the remaining portions of the 50 states. Metropolitan areas are defined as Metropolitan Statistical Areas (MSAs) or Consolidated Metropolitan Statistical Areas (CMSAs). Nonmetropolitan areas are counties and other geographic designations that do not fit the metropolitan area definition. The private industry sample will begin the conversion to June 2003 OMB area definitions in the future.

Current employment weights are used to calculate cost levels. These weights are derived from two BLS programs: the Quarterly Census of Employment and Wages (QCEW) and the Current Employment Statistics (CES). Combined, these programs provide the appropriate industry coverage and currency of data needed to match the ECEC. For more information on these changes, see "Changes in Calculations for the BLS Employer Costs for Employee Compensation Data, March 2007," at http://www.bls.gov/ncs/ect/sp/ececcalc.pdf . In most instances, private industry employment weights used in the ECEC were total employment estimates for 2-digit industry groups, such as utilities (NAICS 22) or wholesale trade (NAICS 42). In a few cases, more detailed private industry employment weights were used. These include 4-digit educational establishments -- elementary and secondary schools (6111), junior colleges (6112), and colleges and universities (6113) -- as well as the 6-digit aircraft manufacturing industry (336411). For state and local governments, a more aggregated level was used reflecting the level of detail published by the CES program. For both private and government establishments, the employment data were apportioned based on the sampling weights assigned to the Employment Cost Index (ECI) sample.

The ECI, which measures the change in employer costs for employee compensation, is calculated with fixed 2002 employment counts to prevent employment shifts among occupations and industries from influencing the changes. Therefore, changes over time in the Employer Costs for Employee Compensation survey will differ from those in the ECI.

Historical ECEC data are available in three listings, all available at: http://www.bls.gov/ncs/ect/#tables . The first historical listing covers data for the March references periods from 1986 to 2002. These data use the Standard Industrial Classification (SIC) and Census of Population classification systems. The second listing contains data for the March, June, September, and December reference periods from June 2002 to December 2003. These data also are based on the SIC and Census of Population classification systems. The final listing includes data for March 2004 to the current reference period. These are based on the NAICS and SOC classification systems. Also, data and related articles are included in the bulletin, Employer Costs for Employee Compensation, 1986-99 (Bulletin 2526), available upon request by calling (202) 691-6199 or by email to: NCSinfo@bls.gov.

Beginning with the March 2004 quarter, historical data are available based on the 2002 North American Industry Classification System and the 2000 Standard Occupational Classification. The new historical tables are available on the Internet site http://www.bls.gov/ncs/ect/home.htm or upon request. Information on how costs are calculated appears in "Measuring Trends in the Structure and Levels of Employer Costs for Employee Compensation," Compensation and Working Conditions, Summer 1997, at http://www.bls.gov/opub/cwc/archive/summer1997art1.pdf . An article on changes in employer compensation costs, "Tracking Changes in Benefit Costs," appears in Compensation and Working Conditions, Spring 1999, at http://www.bls.gov/opub/cwc/archive/spring1999brief3.pdf .

Relative Standard Errors

Because the ECEC is a sample survey, it is subject to sampling errors. Sampling errors are differences that occur between the results computed from a sample of observations and those computed from all observations in the population. The estimates derived from different samples selected using the same sample design may differ from one another. A measure of the variation among these differing estimates is the standard error. It can be used to measure the precision with which an estimate from a particular sample approximates the expected result of all possible samples. For more information on the calculation procedure, see "Changes in Variance Estimation Calculations for the BLS Employer Costs for Employee Compensation Data, March 2007," at http://www.bls.gov/ncs/ect/sp/ececvmet.pdf . The chances are about 68 out of 100 that an estimate from the survey differs from a complete population figure by less than the standard error. The chances are about 90 out of 100 that this difference would be less than 1.6 times the standard error. All the statements of comparisons appearing in this publication are significant at a 1.6 standard error level or better, unless otherwise indicated. This means that for differences cited, the estimated difference is greater than 1.6 times the standard error of the difference. The relative standard errors (RSE) for all estimates are available shortly after the release is issued at http://www.bls.gov/ncs/ect/#tables .

For a more detailed explanation of relative standard errors, see "Measuring Trends in the Structure and Levels of Employer Costs for Employee Compensation," Compensation and Working Conditions, Summer 1997, at http://www.bls.gov/opub/cwc/archive/summer1997art1.pdf . For a detailed explanation of how to use standard error data to analyze differences in changes over time, see "Analyzing Year-to-Year Changes in Employer Costs for Employee Compensation," Compensation and Working Conditions, Spring 1998, at http://www.bls.gov/opub/cwc/archive/spring1998art3.pdf . This article supplements an article from the Summer 1997 issue of Compensation and Working Conditions, "Explaining the Differential Growth Rates of the ECI and ECEC," available at http://www.bls.gov/opub/cwc/archive/summer1997art2.pdf which examined how differences in the construction of these measures contribute to differing trends.

Standard errors relate to differences that occur from sampling errors, but not from nonsampling errors. Nonsampling errors are not measured and include survey nonresponse and data collection and processing errors. Survey nonresponse occurs when sample members are unwilling or unable to participate in the survey. Data collection errors include inaccurate data by respondents and definitional difficulties. Processing errors include errors in recording, coding, and entering data. Although nonsampling errors are not measured, BLS quality assurance programs include procedures for reducing such errors. These procedures include data collection reinterviews, observed interviews, computer data edits, and systematic review of reports on which data are recorded. Extensive field economist training also is conducted to maintain high data collection standards.

Regional definitions

Northeast region

New England division: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont
Middle Atlantic division: New Jersey, New York, Pennsylvania

Midwest region

East North Central division: Illinois, Indiana, Michigan, Ohio, Wisconsin
West North Central division: Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota

South region

South Atlantic division: Delaware, District of Columbia, Florida, Georgia, Maryland,
North Carolina, South Carolina, Virginia, West Virginia
East South Central division: Alabama, Kentucky, Mississippi, Tennessee
West South Central division: Arkansas, Louisiana, Oklahoma, Texas

West region

Mountain division: Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming
Pacific division: Alaska, California, Hawaii, Oregon, Washington

Obtaining information

We encourage users interested in learning more about changes to the Employer Costs for Employee Compensation to contact the Bureau of Labor Statistics. Information on the ECEC and other surveys are available on our Web site at www.bls.gov. Current and historical BLS data are also posted on our Web site at www.bls.gov/ect. If you have additional questions, you can contact an Information Specialist in the Midwest information office at (312) 353-1880, menu option 0. Information from the Employer Costs for Employee Compensation program is available to sensory impaired individuals upon request. Voice phone: (202) 691-5200, Federal Relay Services: 1-800-877-8339.

Last Modified Date: March 18, 2008

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