October 29, 1998
Between June 1981 and December 1997, total compensation costs increased 100 percent for civilian workers, including those in private industry and State and local governments. Benefits costs increased by 126 percent, compared with a 92-percent increase in wages and salaries.
From 1982 to 1984, the increase in benefits costs averaged 7.3 percent annually (December to December), a rate 2.0 percent more than the increase for wages and salaries during the same period.
Benefit cost increases slowed between 1985-87. Wage and salary costs increased at the same average annual rate (3.8 percent) as benefit costs during the period. The benefit cost slowdown occurred because of a decline in the growth of health insurance costs, a rapid fall in the growth of retirement plan costs, and smaller increases in the Social Security tax rate.
Beginning in 1988, the rate of increase in health insurance costs accelerated once more, and a Social Security tax increase took effect in January. The 1988 increase in benefit costs rose to 7.0 percent. Benefit costs rose more rapidly than wages each year through 1994.
From 1995 to 1997, benefit cost increases averaged 2.1 percent, and lagged behind wage and salary cost increases each year. The moderation in benefit costs from 1995-97 reflected a renewed slowdown in the rate of increases of health insurance costs, and continuing moderation in the cost of workers' compensation and State unemployment insurance.