April 28, 1999
Employer costs for employee benefits include "legally-required benefits", those employer obligations that have been enacted in State or Federal law. Such benefits include Social Security, Medicare, unemployment insurance, and workers’ compensation. In 1998, the share of all compensation that went to these legally-required benefits was 8.2 percent, up from 5.1 percent in 1966.
From 1966-1998, Social Security was the legally-required benefit with the highest cost to employers. The share of total compensation going to Social Security rose from 2.8 percent in 1966 to 4.7 percent in 1998. However, the overall share of legally-required benefit costs represented by Social Security was relatively stable—54.9 percent in 1966, compared to 56.4 percent in 1998.
In recent years, workers’ compensation and Medicare have taken up a greater proportion of employers’ legally-required compensation costs, while the share for unemployment insurance has declined. Unemployment insurance accounted for 21.6 percent of legally-required compensation in 1966, but only 7.9 percent in 1998. In contrast, the portion of legally-required benefits that pays for workers’ compensation rose from 17.6 percent in 1966 to 21.5 percent in 1998, and that for Medicare rose from 5.9 percent to 14.1 percent over the same period.
Data on employer costs for legally-required benefits and other compensation are available from the BLS Employment Cost Trends program. For additional information, see "Tracking Changes in Benefits Costs" (PDF 46K), Compensation and Working Conditions, Spring 1999.