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Employer Costs for Employee Compensation
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Cash Compensation: Supplemental pay and what it includes
When observing overall employee compensation, it is important to consider not just the costs of wages and salaries but also the costs of providing various benefits. Aside from wage data, the Employer Costs for Employee Compensation (ECEC) provides detailed benefits cost data for a more comprehensive look at overall compensation. The ECEC provides the employer cost of a specific benefit as well as the percent of total compensation that the benefit represents.
Measuring the costs of supplemental pay
The most important criteria for many prospective job seekers consider when looking for work is overall compensation. Wage data is likely the first thing that most people consider when observing overall compensation. While wages and salaries are the largest component of compensation, supplemental pay is an important component of overall cash compensation.
Although it makes up a relatively small part of compensation for the civilian work force, supplemental pay is still worth examining because it is the only benefit that the employee receives as a direct cash payment, essentially making it a part of cash earnings from the worker’s perspective. Of the five benefit groups for which the ECEC provides data, supplemental pay accounted for 3.1 percent among civilian workers in September 2022. (See chart 1.)
| 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 |
|
Supplemental pay is broken down into three categories within ECEC data:
Shift differentials- extra payment for working a schedule that varies from the norm within a regular work schedule, such as night or weekend work
Overtime and premium pay- pay at a higher rate for overtime(1), holiday, or weekend work
Nonproduction bonuses- bonuses not directly tied to production (such as end-of-year and profit-sharing bonuses(2))
Among supplemental pay components, nonproduction bonuses accounted for 2.1 percent and cost employers $0.87 per hour worked in September 2022. Overtime and premium pay made up 0.8 percent of total compensation and cost $0.36 per hour worked while shift differentials made up 0.2 percent of total compensation and cost $0.07 dollars per hour to provide. (See chart 2.)
| Benefit type | Percentage |
|---|---|
|
Supplemental Pay |
3.1% |
|
Nonproduction bonuses |
2.1% |
|
Overtime and premium pay |
0.8% |
|
Shift differentials |
0.2% |
|
Source: U.S. Bureau of Labor Statistics, National Compensation Survey |
|
Breakdown by industry
Separate estimates for overtime, bonuses, and shift differentials are published for management and professional occupations, sales and office workers, service occupations and similar broad occupational groups. Estimates for supplemental pay, i.e., the sum of overtime, bonuses, and shift differentials, are also available for a selection of more detailed occupations, including professional and related occupations, teachers, nurses, sales and related occupations, and office and administrative support occupations, but the components of supplemental pay (overtime, bonuses, and shift differentials) are not published at this level of detail.
Since supplemental pay is considered a direct cash payment and is not included within wages and salaries, it makes sense to observe it as a percentage of cash compensation(3), emphasizing the fact that supplemental pay is more closely related to wages and salaries than most other benefits. Among private industry occupations, supplemental pay as a percent of cash compensation ranged from 2.7 percent among service occupations to 7.1 percent among production occupations in September 2022. (See chart 3.)
| Occupational group | Percentage of cash compensation |
|---|---|
|
Production |
7.1% |
|
Management, business, and financial |
6.5% |
|
Production, transportation, and material moving |
6.1% |
|
Construction, and extraction, farming, fishing, and forestry |
5.5% |
|
Management, professional and related |
5.4% |
|
Natural resources, construction, and maintenance |
5.3% |
|
Transportation and material moving |
5.2% |
|
Installation, maintenance, and repair |
5.0% |
|
Professional and related |
4.6% |
|
Office and administrative support |
3.8% |
|
Sales and office |
3.7% |
|
Sales and related |
3.6% |
|
Service |
2.7% |
|
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 supplemental pay 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 National Compensation Survey program.