NCPA - National Center for Policy Analysis

Job Benefits Growing Faster than Wages

October 23, 2012

While employees complain that their wages remain stagnant, they fail to realize the increase in benefits their employers have begun to offer, says USA Today.

  • Employer-paid benefits accounted for 19.7 percent of worker compensation last year compared to 16.6 percent in 2000.
  • Between 2007 and 2011, benefits climbed $1,302 for full-time workers, or about 10.8 percent after adjusting for inflation.
  • However, wages grew by just $777 over the same time period, about a 1.4 percent increase.
  • Since 2000, wages have risen at a 0.8 percent annual rate above inflation while benefits rose 2.8 percent annually.
  • This is in contrast to the 1990s when wages rose 1.8 percent annually above inflation while benefits grew at 1.1 percent a year.

The primary reason for why benefits are rising faster than wages is because of taxes. Wages are heavily taxed for both the employee and the employer, while benefits are not. Since the financial crisis in 2007, employers have reacted by slowing the growth of wages so as to keep taxes lower.

To quell any disappointment in the lack of wage increases, employers are now beginning to tell their workers the value of their benefits. State Farm, for example, put the information on a website and sends an e-mail to its employees annually describing the value of the benefits they have.

Other findings:

  • The three largest benefits are: health insurance, retirement benefits and employer contributions.
  • In 2011, the average compensation for a full-time employee was $64,744, with $13,331 of that being in benefits.
  • For public employees, benefits have risen at 4.1 percent annually compared to the 1.9 percent annual rate for private-sector employees.

Source:  Dennis Cauchon, "Job Benefits Growing Faster than Wages," USA Today, October 18, 2012.


Browse more articles on Tax and Spending Issues