Employee Benefits technical note

                                               TECHNICAL NOTE

Estimates in this release are from the National Compensation Survey (NCS), conducted by the U.S.
Department of Labor, Bureau of Labor Statistics (BLS). This news release contains March 2017
estimates on the incidence (access to and participation in) of selected employer-sponsored benefits and
the share of premiums paid by employers and employees for medical plans for civilian, private industry,
and state and local government workers in the United States. Workers in the civilian economy are
defined as those employed in private industry and state and local government. Excluded from the
civilian economy are workers employed in federal and quasi-federal agencies, military personnel,
agricultural workers, volunteers, unpaid workers, individuals receiving long-term disability
compensation, and those working overseas. In addition, private industry excludes workers in private
households, the self-employed, workers who set their own pay (e.g., proprietors, owners, major
stockholders, and partners in unincorporated firms), and family members paid token wages.

The NCS provides comprehensive measures of compensation cost levels and trends and also provides
benefits incidence estimates on the percentage of workers with access to and participating in employer-
provided benefit plans. The survey covers a broad range of benefits including holidays and vacations,
sick leave, life insurance, and detailed provisions for health care and retirement plans. Archived NCS
releases are available at www.bls.gov/ncs/ncspubs.htm.

Comparing private and public sector data: Incidence of employee benefits in state and local
government should not be directly compared to private industry. Differences between these sectors stem
from factors such as variation in work activities and occupational structures. Manufacturing and sales,
for example, make up a large part of private industry work activities but are rare in state and local
government. Administrative support and professional occupations (including teachers) account for two-
thirds of the state and local government workforce, compared with one-half of private industry.

Leave benefits for teachers: Primary, secondary, and special education teachers typically have a work
schedule of 37 or 38 weeks per year. Because of this work schedule, they are generally not offered
vacations or holidays. In many cases, the time off during winter and spring breaks during the school year
are not considered vacation days for the purposes of this survey.

Medical plan premiums: The estimates for medical plan premiums are not based on actual decisions
regarding medical coverage made by employees; instead they are based on the assumption that all
employees in the occupation can opt for single or family coverage. Monthly premiums are collected
when possible. Annual premiums are converted to monthly premiums by dividing by 12 months.

Sample rotation: The state and local government sample was replaced in its entirety for the March
2017 reference period. It was last replaced with the March 2007 reference period. The government
sample is replaced less frequently than the private industry sample. One-third of the private industry
sample is rotated each year except in years when the government sample is replaced.

Sample size: See appendix table 1 at the end of this release.

Survey scope: See appendix table 2 at the end of this release.

Geographic areas: Areas are defined by four census regions: Northeast, South, Midwest, and West.
Census divisions within the regions are defined as follows: New England: Connecticut, Maine,
Massachusetts, New Hampshire, Rhode Island and Vermont; Middle Atlantic: New Jersey, New York,
and Pennsylvania; South Atlantic: Delaware, District of Columbia, Florida, Georgia, Maryland, North
Carolina, South Carolina, Virginia, and West Virginia; East South Central: Alabama, Kentucky,
Mississippi, and Tennessee; West South Central: Arkansas, Louisiana, Oklahoma, and Texas; East
North Central: Illinois, Indiana, Michigan, Ohio, and Wisconsin; West North Central: Iowa, Kansas,
Minnesota, Missouri, Nebraska, North Dakota, and South Dakota; Mountain: Arizona, Colorado, Idaho,
Montana, Nevada, New Mexico, Utah, and Wyoming; and Pacific: Alaska, California, Hawaii, Oregon,
and Washington.

Standard errors: To assist users in ascertaining the reliability of benefits estimates, standard errors are
made available shortly after publication of the news release. Standard errors provide users a measure of
the precision of an estimate to ensure that it is within an acceptable range for their intended purpose. For
further information see www.bls.gov/ncs/ebs/nb_var.htm.

Obtaining information: For research articles on employee benefits, see the Monthly Labor Review
benefits section at www.bls.gov/opub/mlr/subject/b.htm and Beyond the Numbers: Pay and Benefits at
www.bls.gov/opub/btn/archive/home.htm. For further technical information, see Chapter 8, "National
Compensation Measures," BLS Handbook of Methods at www.bls.gov/opub/hom/pdf/homch8.pdf.

Definitions of major terms:

Access: Employees are considered to have access to a benefit plan if it is available for their use. For
example, if an employee is permitted to participate in a medical plan offered by the employer, but the
employee declines to do so, he or she is placed in a category with those having access to medical care

Participation: Employees in contributory plans are considered participants in an insurance or retirement
plan if they have paid required contributions and fulfilled any applicable service requirements.
Employees in noncontributory plans are counted as participating regardless of whether they have
fulfilled the service requirements. Note that the term "incidence" can refer to either rates of access or
rates of participation in a benefit plan.

Take-up rate: The percentage of workers with access to a plan who participate in the plan.

Retirement benefits include defined benefit pension plans and defined contribution retirement plans.
Workers are counted as having access or participating in retirement benefits if they have access or
participate in at least one type of plan, defined benefit or defined contribution; some workers may have
access to or participate in both. Differences in retirement plan participation are influenced by type of
plan offered. Participation in defined benefit plans is often mandatory, subject to any applicable
eligibility requirements, while participation in defined contribution plans is often voluntary.

Medical care benefits provide services or payments for services rendered in the hospital or by a
qualified medical care provider.

Calculation details:

Average hourly earnings from sampled occupations within an establishment were used to produce estimates 
for worker groups within six earnings categories: the lowest 10 percent, the lowest 25 percent, the 
second 25 percent, the third 25 percent, the highest 25 percent, and the highest 10 percent. The 
categories are based on unpublished March 2017 wages and salaries series from the Employer Costs for 
Employee Compensation at www.bls.gov/news.release/archives/ecec_06092017.pdf.

The percentiles were computed using earnings and scheduled hours of work reported for individual
workers in sampled establishment jobs. Establishments in the survey are asked to report only individual
worker earnings for each sampled job. For the calculation of the hourly percentile values, the individual
worker hourly earnings are weighted and arrayed from lowest to highest. The values corresponding to
the percentiles are:

    Characteristics                                    Hourly wage percentiles
                                          10         25       50 (median)       75        90
Civilian                               $10.00      $12.86       $19.23        $30.95    $47.02
Private industry                        $9.79      $12.25       $18.16        $29.44    $46.10
State and local government             $13.19      $17.79       $26.50        $37.75    $51.18

The lowest 10-percent and 25-percent wage categories include those occupations with an average hourly
wage less than the 10th percentile value and 25th percentile value, respectively. The second 25-percent
category includes those occupations that earn at or above the 25th percentile value but less than the 50th
percentile value. The third 25-percent category includes those occupations that earn at or above the 50th
percentile value but less than the 75th percentile value. Finally, the highest 25- and 10-percent wage
categories include those occupations with an average wage value greater than or equal to the 75th and
90th percentile value, respectively.

Individual workers can be in an earnings category that is different from the occupation into which they
are classified because average hourly earnings for the occupation are used to produce the benefit

Information in this release will be made available to sensory impaired individuals upon request.
Voice phone: (202) 691-5200; Federal Relay Service: (800) 877-8339.

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Last Modified Date: July 21, 2017