Total Compensation Showed Strong Increases in 2023
Author: Robert S. Teachout
March 22, 2024
Employers' total compensation costs increased more than 7% in the past year, according to figures released March 13 by the Bureau of Labor Statistics (BLS), with most of the increase in the second half of 2023. The agency's Employer Costs for Employee Compensation report for December 2023 includes data for wages and salary and the cost of benefits.
According to the report, total employer compensation costs for private industry workers averaged $43.11 per hour worked in December 2023. This reflects a 5% increase since June 2023 ($41.03 per hour worked) and a 7% year-over-year increase from December 2022 ($40.23 per hour worked).
Wages and salaries averaged $30.33 per hour worked, accounting for just under 70.5 percent of employer costs, while benefit costs accounted for the remainder, averaging $12.77 per hour worked, nearly unchanged from June or December 2022.
Total benefit costs consist of five major categories:
- Paid leave - vacation, holiday, sick and personal leave;
- Supplemental pay - overtime and premium, shift differentials, and nonproduction bonuses;
- Insurance - life, health, short-term and long-term disability;
- Retirement and savings - defined benefit and defined contribution; and
- Legally required benefits - Social Security, Medicare, federal and state unemployment insurance, and workers' compensation.
Despite the surge in compensation costs last year, fewer employers are planning to give pay raises in 2024 due to a cooling economy and signs of a more stable labor market, according to Payscale's latest Compensation Best Practices Report.