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Bureau of Labor Statistics > Employer Costs for Employee Compensation > Home

Economic safety net: Social Security and other legally required benefits

The federal government mandates that employers provide workers with several legally required benefits. Unlike any voluntarily provided benefits, legally required benefits act like a safety net for employees, providing workers and their families with retirement income and medical care, mitigating economic hardship resulting from loss of work and disability, and covering liabilities resulting from workplace injuries and illnesses.

The Employer Cost for Employee Compensation (ECEC) focuses on the employer’s portion of the cost of providing benefits, both voluntary and legally required. For legally required benefits, employers are obligated to pay their part of the cost in the form of either a payroll tax or a compulsory insurance premium. The National Compensation Survey (NCS) collects and publishes information on employer costs for workers’ wages and benefits and converts the information into a cost-per-hour basis on the work schedule for a particular occupation.

Different types of legally required benefits

Legally required benefits accounted for 7.2 percent of total compensation, and 23.2 percent of total benefits in September 2022. The components of legally required benefits ranged from 0.1 percent of total compensation for federal unemployment insurance to 4.5 percent of total compensation for Social Security. (See chart 1.)

Chart 1 data table

Table 1. Percentage of total compensation for ECEC benefits, civilian workers, September 2022
Benefit Type	Percentage
Insurance	8.3
Paid leave	7.4
Legally required benefits	7.2
Retirement and savings	5.1
Supplemental pay	3.1
Source: U.S. Bureau of Labor Statistics, National Compensation Survey

The ECEC breaks legally required benefits into five different subgroups:

Social Security - also known as Old Age, Survivors, and Disability Insurance, provides income for retired workers, for dependents, and for disabled workers and their families

Medicare - a benefit that pays medical care for retirees and persons with long-term disabilities

Federal unemployment insurance - along with state unemployment programs, provides benefits to workers who have lost their jobs

State unemployment insurance - provides income payments to eligible workers who have been laid off from their jobs; benefits usually are paid weekly as a percentage of an unemployed worker’s previous salary up to a weekly maximum amount

Workers’ compensation - pays medical expenses and provides for lost income resulting from work-related injuries and illnesses

Trends in legally required benefits

Among private union workers, legally required benefits cost employers $3.92 dollars per hour, with the components ranging from $0.02 dollars per hour for federal unemployment insurance to $2.20 dollars per hour for Social Security in September 2022. Among private nonunion workers, legally required benefits cost employers $2.89 dollars per hour with the components ranging from $0.03 dollars per hour for federal unemployment insurance to $1.85 dollars per hour for Social Security. (See chart 2.)

Chart 2 data table

Table 2. Legally required benefits cost of compensation (cost per hour) by worker status, private workers, September 2022
Bargaining Status	Social Security	Workers' compensation	Medicare	State unemployment insurance	Federal unemployment insurance
Union	$2.20	$0.97	$0.54	$0.19	$0.02
Nonunion	$1.85	$0.41	$0.46	$0.14	$0.03
Source: U.S. Bureau of Labor Statistics, National Compensation Survey

Among industries for private workers, the percent of total compensation accounted for by legally required benefits was 6.2 percent for financial activities to 9.7 percent and leisure and hospitality. Costs of compensation (per hour) for legally required benefits among industry groups ranged from $1.77 dollars for leisure and hospitality to $4.13 dollars for information. (See chart 3.)

Chart 3 data table

Table 3. Legally required benefits percentage of total compensation by industry group, private workers, September 2022
Industry group	Percentage
Leisure and hospitality	9.7
Construction	9.3
Trade, transportation, and utilities	7.9
Other services (except public administration)	7.8
Manufacturing	7.4
Education and health services	7.2
Professional and business services	7.1
Information	6.3
Financial activities	6.2
Source: U.S. Bureau of Labor Statistics, National Compensation Survey

Accessing the data

To assist users in evaluating the reliability of these compensation costs, relative standard errors are also published for each estimate. The standard error for the series is divided by the cost estimate and expressed as a percent of the compensation cost.

ECEC data involving legally required benefits, are available for private industry workers, civilian workers, and state and local government workers from 2004 to the present and will be produced for the March, June, September and December reference periods. ECEC data is available through the public database, as well as in Excel form. The cost of benefits is impacted by worker participation and users can obtain information on incidence and provisions of employer-sponsored benefits in the U.S. through the annual benefits publication, also produced by the NCS program.