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Employer Costs for Employee Compensation

Keeping a Competitive Benefits Package: a history of changes to benefits in the ECEC

Employers can use a generous benefits package to attract and retain workers. Measuring these non-wage costs can provide a more complete picture of current compensation trends. The National Compensation Survey (NCS) focuses on the costs that employers incur when employing a worker, including those for benefits. Benefit cost data from the NCS is then published through the Employment Cost Index (ECI) and Employer Costs for Employee Compensation (ECEC).

Benefits are a significant portion of compensation. ECEC data shows that benefits typically account for roughly 30 percent of a total compensation package. However, this split can vary among ownerships, industries, occupations, bargaining status, and full-time/part-time status.

Chart 1 data table
Table 1. Private industry employer compensation costs as a percentage of total compensation by industry, December 2025
IndustryWages and salariesBenefits

Leisure and hospitality

81.019.0

Trade, transportation, and utilities

71.428.6

Education and health services

70.929.1

All industries

70.129.9

Construction

69.730.3

Professional and business services

69.430.6

Manufacturing

66.933.1

Financial activities

65.534.5

Information

64.435.6

Source: U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation (ECEC).

 

The individual benefits can also vary among different establishments. For example, while state and local government establishments often have a higher cost for a benefit package, supplemental pay in the private industry outpaces government establishments.

Chart 2 data table
Table 2. Employer compensation costs by ownership, December 2025
Compensation componentCivilianPrivate industryState and local government

Wages and salaries

$33.45$32.36$40.49

Paid leave

$3.70$3.52$4.84

Supplemental pay

$1.71$1.87$0.69

Insurance

$4.04$3.51$7.49

Retirement and savings

$2.52$1.55$8.69

Legally required

$3.36$3.34$3.48

Source: U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation (ECEC).

 

What benefits are included in the ECEC?

The NCS collects and publishes employer costs for 18 benefits:

  • Paid leave (vacation, holiday, sick, and personal leave)
  • Supplemental pay (overtime and premium, shift differentials, and nonproduction bonuses)
  • Insurance (life, health, short-term disability, and long-term disability)
  • Retirement and savings (defined benefit and defined contribution)
  • Legally required benefits (Social Security [refers to Old-Age, Survivors, and Disability Insurance (OASDI) program], Medicare, federal and state unemployment insurance, and workers’ compensation)

Employer benefit costs are captured as the cost per worker based on all who have access to a benefit plan. Every benefit cost is annualized and divided by the number of annual hours worked to derive a cost per hour per worker.

Benefit costs are captured in the ECEC when the benefit is permanent and available to all employees or a class of employees. A benefit is permanent when the employer provides the benefit continuously. A temporary change in benefit offerings (e.g., extra vacation time provided to workers due to a workplace fire or the additional cost the employer incurs when paying the full medical coverage for all eligible workers during a flu outbreak) is not included.

History of changes in benefits definitions

Over time the scope of benefits included in the ECEC has changed to account for changing trends in compensation packages.

  • March 1986: ECEC estimates are first published, including costs for employer provided benefits.▸
    • Benefits were first introduced with the March 1986 ECEC and included costs for:
      • Paid leave
        • Vacation pay
        • Holiday pay
        • Sick leave
        • Other leave pay
      • Supplemental pay
        • Premium pay
        • Nonproduction bonuses
        • Shift pay
      • Insurance
      • Retirement and savings
      • Legally required benefits (Includes railroad retirement and supplemental retirement, railroad unemployment insurance, and other legally required benefits in addition to those published separately)
        • Social Security
        • Federal unemployment insurance
        • State unemployment insurance
        • Workers' compensation
      • Other benefits (Includes severance pay and supplemental unemployment benefits)
  • March 1987: Separate estimates for pensions and savings and thrift plans are published. ▸
    • Retirement and savings estimates were previously published as only one combined estimate. With the March 1987 release, separate estimates for pensions and for savings and thrift plans were published.
  • March 1992: Separate estimates for life, health, and sickness and accident insurance are published. ▸
    • Employer costs for insurance were previously published as one combined ‘Insurance’ estimate. With the March 1992 release, separate estimates for life, health, and sickness and accident insurance were published.
  • March 1996: Numerous benefits were recategorized. ▸
    • Social Security was previously published as one estimate, but with the March 1996 release, old-age, survivors, and disability (OASDI) costs and Medicare costs are published separately.
    • Long-term disability insurance was previously included with sickness and accident insurance, and is now reported as a separate benefit. .
    • Pension and savings and thrift plans were recategorized into defined benefit and defined contribution plans. All pension and savings and thrift plans with the existing sample units were examined to determine if they were defined benefit or defined contribution plans, and then reclassified. Although these old and new categories are not comparable with each other, the overall category of retirement and savings remains comparable.
    • Railroad retirement and unemployment insurance benefits were previously included with the legally required benefits estimate. Now, railroad benefit costs have been reclassified into the benefits that match their intended purpose (Social Security, retirement and savings, sickness and accident insurance, and state unemployment insurance).
  • March 1998: Sickness and accident insurance renamed to Short-term disability insurance. ▸
    • Short-term disability, previously titled sickness and accident insurance) includes all insured, self-insured, and state-mandated plans that provide benefits for each disability, including unfunded plans.
  • March 2001: Definition of nonproduction bonuses is expanded. ▸
    • In addition to the traditional types of nonproduction bonuses such as attendance bonuses and lump sum payments, the definition was expanded to include hiring and referral bonuses. Hiring bonuses are payments made by the employer to induce an individual to accept employment; referral bonuses are payments made by the employer for recommending an applicant who is hired by the establishment.
  • March 2006: Severance pay and supplemental unemployment benefit plans are no longer collected.▸
    • Collection of severance pay and supplemental unemployment benefit plans which comprised “other benefits” was discontinued beginning with the March 2006 estimates to reduce the burden on survey respondents. The “other benefits” series was therefore discontinued. This change had minimal impact on most series because the cost of these benefits averaged only 4 cents per hour worked in 2005.
  • June 2008: Other leave benefit estimates will include only paid personal leave. ▸
    • Paid personal leave accounts for the majority of the cost of the overall other leave benefit category. The National Compensation Survey will no longer collect costs for paid military leave, paid funeral leave, paid jury leave, and paid family.

More Information

For a history of changes to the benefits provided through the Employment Cost Index (ECI), see Capturing the full compensation package: a history of changes to benefits in the ECI.

For more information on the concepts and calculation methods of the ECEC, see the Handbook of Methods.

Last updated: August 7, 2026