Employee benefits are considered one of the most important parts of employee compensation. Although an employee’s salary is the most debated part of the job. Employees also take into account the Average Cost Of Employee Benefits. The employee benefits included health insurance, disability insurance, retirement, paid leaves off, and legal benefits like social security benefits. Most employees don’t know how much these benefits cost. In this article, I will explain the average cost of employee benefits in detail. Read more to explore…
What Is The Average Cost Of Employee Benefits
What Are Employee Benefits?
Employee benefits can be defined as any kind of indirect payment that employers offer to their employees. These benefits can be voluntary or mandatory.
Typically employee benefits are types of perks, incentives, or compensation that employees get from their employers together with their basic wage or salary.
Generally, employee benefit packages included a life insurance plan, health insurance plan, retirement, paid time off many other benefits.
Some employee benefits are optional while others are legally required. Therefore, if any employee is responsible for these benefits, he or she must be well-known for the employee benefits.
Many other additional benefits are typically not required by employees called fringe benefits.
What Are Examples Of Employee Benefits?
The examples of employee benefits are as follows:
- Life insurance
- Health insurance
- Dental Insurance
- Disability insurance
- Paid time off (PTO)
- Mental health benefits
- Retirement benefits
- Education benefits
- Professional development
- Flexible work schedule
- Paid family leave
- Vision insurance
There are many other benefits that employers can offer to their employees. These benefits include daycare services, pet insurance, financial wellness plans, and tuition assistance.
The employee’s benefits are different based on different factors such as gender, age, and location of work. Whenever an employee is developing their employee benefits, he must keep in mind these factors.
How Much Do Employee Benefits Typically Cost?
According to Statista, in September 2022 the local or state government worker’s highest average compensation cost was calculated at $57.02 per hour. Whereas the highest average compensation cost was calculated at $41.86 per hour in the United States.
The U.S. Bureau of Labor Statistics, reports that the total cost of wages and salaries of employees is 69.0% or 28.88 U.S. dollars. While total benefits cost 31.0% or $12.98.
In September 2022, the average cost for private employee compensation accounted for $39.61 per hour. The average cost of wage and salary accounted for 70.5% or $27.93 of employer costs. While employee benefits cost averaged 29.5% or 11.68 U.S. dollars.
The average cost for Union Worker compensation accounted for 1.95 U.S. dollars per hour or 3.7% of total employee compensation cost, the average cost for employee insurance was $7.06 or 13.3% of total compensation cost.
What Are Some Factors That Contributed To The Increase In The Costs Of Benefits?
Generally, the cost of employee benefits relies on the specific needs of employees. Therefore, it’s better to contact an expert and discuss all the basic needs.
Employee benefits are specifically designed to attract and retain new employees. If an employer set higher amounts of premiums, it will interact more with employees. More employee benefits can increase the cost of premiums.
Five factors contributed to the increase in the cost of benefits. Such as aging of employees, paramedical costs, dental work, increase in drug costs, and fraud.
Many other factors can enhance the cost of employee benefits. Some of these factors can be controlled and others aren’t.
Top 10 Employee Benefits
Some companies cut back employees’ benefits due to inflation and slowing growth. According to SHRM’s Employee Benefits Survey, the companies that offer paid maternity leaves decreased the percentage to 35% in 2022 and 53% in 2020.
In the United States and Europe, not long ago, payroll companies and global HR interviewed almost 10,000 employees to figure out the most valued employee benefits.
Here are the top ten employee benefits:
- Family health insurance
- Private health insurance
- Leave early on Fridays
- Flexible work hours
- Company-sponsored retirement program
- Healthcare cost reimbursements
- Four-day work week
- Miscarriage leave
- Time off for mental health
- Private dental insurance
Legally Required Benefits For An Employee
Some benefits are legally required for an employee. For example medicare, social security, sick leaves, workers’ compensation insurance, and unemployment insurance.
The cost and percentage of these benefits vary from each other. The cost of legally required benefits was 2.91 dollars in 2022 and the percentage of total benefits was 25.5%.
In 2022, the average cost for social security and medicare was $2.29 and the total benefit cost percentage was 78.8%. The total cost for workers’ compensation was 0.45 dollars and the total percentage of employee benefits was 15.5%.
The cost of Federal unemployment insurance was $0.03 and the percentage was 1%. The cost of state unemployment insurance was $0.14 and the percentage of total benefits was 4.8%.
How To Calculate The Cost Of Employee Benefits
There are several methods in the market to calculate the average cost of benefits per employee. If employees have good benefits as compared to their basic salaries, they must calculate the average cost of benefits. Because it is a good decision to take this step. Each company offers several different kinds of employee benefits.
For instance, the Bureau of Labor Statistics counts the paid leaves of employees as benefits. To make a fine calculation employees must include all the individual benefits in the calculation.
For example, valued benefits of employees like health and life insurance, dental and vision insurance, LTD and AD&D, etc, and retirement plans.
If an employee wants to calculate the average cost of his benefits, he must add the value of fringe benefits to get the value of yearly benefits.
If an employee considered his vocations or leaves as benefits, he should calculate these vocations as a benefit. For instance, his company offers him ten days of vacation every year. He needs to add the value of these ten days of salary to the cost of other benefits.
What Do Employees Want From Their Employers
Typically employees want from their employer their job reliability and safety. In the United States, nearly 27% of employees bother about the safety of their jobs.
Companies make teams of members are the main function to satisfy the employees about their job security and safety. This step of companies also enhances the engagement of employees and decreases employee turnover.
Companies give full authority to employees to share their unique ideas and speak up frankly. When employees share unique ideas, this will increase the performance of the company. Google also found that the security or safety of the job makes employers perform better.