Compensation Percentiles: A tool for assessing employee compensation
Compensation percentiles are based on the National Compensation Survey (NCS) program’s Employer Costs for Employee Compensation (ECEC) to identify compensation ranges. Compensation percentiles provide another NCS tool to assess employee compensation.
Evaluating compensation costs by examining wages and salaries only, excludes a significant portion of employers’ costs for employee compensation per hour worked. On average, wages and salaries account for approximately 70 percent of total compensation while benefit costs account for the remaining 30 percent of these costs, see table A.
The compensation percentile data are constructed using wages and salaries to determine the 10th, 50th (median), and 90th percentile bands and the average benefit costs for observations included in those percentile wage bands. The compensation costs for each of the percentile bands are available separately for private industry workers as well as state and local government workers. Compensation costs are also available for civilian workers, which is the combination of the two aforementioned groups of workers. Chart 1 demonstrates the wages and salaries and total benefits costs for civilian workers by the three wage percentile bands.
Total compensation includes employer costs for wages and salaries and benefits. Total benefit costs are derived from employer costs for paid leave, supplemental pay, insurance (including health care), retirement and savings, and legally required benefits. Chart 2 provides the March 2020 compensation costs for civilian workers for each of the wage percentile bands. For additional information on compensation components, see the National Compensation Measures in the BLS Handbook of Methods.
Compensation percentiles are provided in current dollar (nominal) and constant dollar (real) to facilitate assessment of compensation costs. Constant dollar estimates are produced by taking the current dollar (nominal) compensation costs and adjusting them by the Consumer Price Index (CPI) in order to produce real or price-adjusted estimates. Constant dollar estimates remove the effect of changes in consumer prices, such that compensation estimates are comparable on a same-dollar basis. The CPI for All Urban Consumers (CPI-U) U.S. City Average All Items (series id CUUR0000SA0) is used for to adjust prior years’ costs to current dollar costs (March 2020). Each year the constant dollar (real) estimates will be updated to reflect the most recent reference period. The current dollar estimates are based on the costs associated with the reference period and no adjustment for consumer prices are applied. Chart 3 provides the total compensation costs from March 2009 to March 2020 in both current and constant dollar terms.
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.
Compensation percentiles are available from March 2009 to March 2020, and will be produced annually for the March reference period. 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. For prior research on the use of benefits to assess employee compensation by wage percentiles, see Compensation inequality: evidence from the National Compensation Survey.
The complete set of estimates and relative standard errors are available in Excel.
Last Modified Date: June 18, 2020