What Percentage of an Total Compensation Do Employee Benefits Account For? | Total Compensation Reports Blog | COMPackage (2024)

FAQs

What Percentage of an Total Compensation Do Employee Benefits Account For? | Total Compensation Reports Blog | COMPackage? ›

But according to the Bureau of Labor Statistics' 2023 report, benefits account for 29.4% of an employee's total compensation in the private industry. For state and local workers, benefits make up 38.1% of what they earn.

A recent report released by the U.S. Bureau of Labor Statistics showed that benefits make up about 30% of the average worker's paycheck. Show your employees how much their benefits contribute to their pay through a total compensation statements from COMPackage.

While the BLS data is subject to change, a good rule of thumb for employers is that an employee's benefits cost anywhere from 20-40% of their salary. Small, private organizations are likely to pay less, while large, public companies typically pay more.

Legally required benefits – Social Security (refers to Old-Age, Survivors, and Disability Insurance (OASDI) program), Medicare, federal and state unemployment insurance, and workers' compensation. On average, the percentage of employees' compensation spent on benefits was around 30 percent.

The average benefit-cost ratio is approximately 30% to 40%. This means an additional 30 to 40 cents will be spent on employee benefits for every dollar spent on wages or salaries. However, this ratio can vary depending on the benefits offered and the industry.

What is Total Compensation? Total compensation includes all forms of pay and benefits an employee receives. It can include base salary, overtime pay, bonuses, commissions, benefits, and any other cash or non-cash compensation. Total compensation can be divided into two categories: direct and indirect.

The employer-paid portion of any insurance benefits given to you should also be included in your total compensation assessment. You will need to add the value of health, dental, vision, life, disability, worker's compensation, unemployment and any supplemental insurance policies to get the total.

An employee's total compensation equals the value of an employee's compensation, plus the value of the employee's total benefits.

Similarly, total benefit is equal to how much value (monetary or otherwise) is gained from producing or consuming a certain amount of goods or services. It would simply be the product of benefit per unit times quantity. Finally, net benefit is equal to total benefit minus total costs.

A salary of $300,000 is substantially higher than the national average and certainly a “good” salary for a single person in 2024 by most peoples' reckoning. That said, no matter how much you earn, bad financial habits can bite you in the long run, so don't forget about your budget.

What is the benefit percentage? ›

Benefit Percentage means that percentage of Covered Expenses in excess of the Deductible amount, which the Plan pays. It is the basis used to determine any Out-of-Pocket Expenses in excess of the annual Deductible which are to be paid by the Employee.

The average benefit percentage is determined by dividing the actual benefit percentage for the rank-and-file employees by the actual benefit percentage for the highly compensated employees.

All you need to do is add the total cost of the benefits and payroll taxes the employee receives. Next, divide that number by the wages or salary the employee earns in a year. Finally, multiply the number you generate by 100 to get a percentage.

Medical benefits, retirement contributions, and tuition reimbursem*nt programs have the potential to make up 20-40% of your annual income. There are other things to consider, however, that may increase your annual expenses. Do you need to commute, or relocate to a more expensive area for the job?

The percentage of total compensation that should be salary can vary based on the industry, job role, and company policies. However, a common benchmark is that base salary typically comprises about 70-80% of total compensation. The remaining 20-30% usually consists of benefits, bonuses, and other non-cash compensation.

The average civilian worker costs an employer $42.48 per hour in total compensation — 31% on benefits and 69% on wages. The average private industry worker costs an employer $40.23 per hour in total compensation — 29.5% on benefits and 70.5% on wages.

Base Salary vs Total Compensation. Base salary is the annual amount your employer is paying you for one year. Total compensation is your base salary plus the value of the benefits being offered in the package.

Percentage compensation means any compensation, commission, bonus, award, or remuneration, whether direct, indirect, or otherwise, that is calculated by means of a formula, process, evaluation, or other mechanism that considers the amount of funds to be raised or received.

In general, the largest share of personal income is employee compensation (59% of total income in 2021, as shown in Table 1), comprised of wages and salary (46%) and supplements to wages and salaries (i.e., employer paid benefits: 11%).

For an Individual:

Divide the total yearly benefits expense by the employee's annual salary to calculate his individual benefits as a percentage of salary.