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FOR EMPLOYERS, EXPENSES SOARING
Date published: 2/27/2008
By DIANE STAFFORD
McCLATCHY NEWSPAPERS
KANSAS CITY, Mo.-- The average cost of employer-paid benefits received by employees increased from $18,489 in 2005 to $21,527 in 2006, according to a study of 400 U.S. companies.
The U.S. Chamber of Commerce said in a new report that medical benefits accounted for the largest share of employee benefits costs at 12.1 percent of companies' total payroll costs.
Looking at the cost of benefits another way, the Employee Benefit Research Institute said last week that Americans in 2006 received a gross total of $2.33 trillion in major employee benefits programs--an increase of nearly 50 percent over 2000--and employers spent $1.42 trillion of that total on mandatory and voluntary employee benefit programs.
According to the Chamber of Commerce study, retirement benefits accounted for 10.4 percent of benefits costs, and paid time off for vacations, holidays and other time-off plans represented 9.8 percent of costs.
The Chamber said companies in metropolitan areas paid about $3,600 more in medical benefits and $4,400 more in retirement benefits than companies in non-metro areas.
When looked at from the Employee Benefit Research Institute's macro perspective, the amount paid in retirement benefits exceeded the cost of health benefits. Retirement benefit payments in 2006 accounted for $1.17 trillion, or half of the total benefits costs.
According to the EBRI, health benefits payments totaled $1.01 trillion, or 43.5 percent of total 2006 benefits payments, of which 60 percent was paid by private group health insurance plans and 39.6 percent by Medicare.
The report also said that other benefits programs, including unemployment insurance, workers' compensation, group life insurance, disability and veterans' benefits, represented 6.4 percent of total benefits payments in 2006.
Many studies show that employees value their benefits as much as their base compensation. Randel Johnson, a Chamber vice president, said that benefits packages were a competitive tool to attract and keep workers. Such studies also helped businesses know what other companies were offering.
The EBRI study also found that individuals paid $655.6 billion into benefit plans in 2006. Personal payments included contributions to Social Security, private-sector retirement plans, and health benefits.
Date published: 2/27/2008
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