Quick question: What do you make? I bet you just flashed on your salary. Or what your last direct deposit pay stub said was transferred into your checking account. If that's your answer, you're coming up about 30 percent short of what you're really paid once all the benefits your employer covers are added in.
According to fresh data from the Bureau of Labor Statistics, total average hourly compensation, which accounts for both salary and benefits, in the first quarter of 2011 was $30.07. Of that total, $20.91 (69.6 percent) was straight up salary and wages, while the other $9.15 (30.4 percent) was the value of benefits paid by employers, including health insurance, vacation and sick days, and the employer share of Social Security and Medicare.
When I recently read my MoneyWatch colleague (and fellow freelancer) Amy Levin-Epstein's take on 5 Myths of Freelancing, I nodded in agreement that the pluses of freelancing outweigh the minuses. But spending some time poring over the BLS benefits data sure does make for a painful day of benefit-challenged freelancing.
The Benefits of Working for the Man
The BLS slices and dices wage and benefit data for both private sector workers and employees of state and local governments. Federal employees are excluded from the survey.
Here's how the $30.07 total hourly compensation breaks down between wages and benefits. The percent figure is the share of total compensation:
- Wage and salary: $20.91 (69.6 percent)
- Insurance (Life/Health/Disability): $2.67 (8.9 percent)
- Social Security/Medicare/Unemployment/Worker's Comp: $2.33 (7.8 percent)
- Paid Vacation/Holiday/Sick Days: $2.09 (7 percent)
- Retirement plan contributions: $1.36 (4.5 percent)
- Overtime & Bonuses: $0.70 (2.3 percent)
Among management and "professional" occupations -- both private and public -- average hourly total compensation is $49.81.
That near $50-per-hour cost includes:
- Wage and salary: $34.86 (70 percent of total comp.)
- Insurance (Life/Health/Disability): $4.02 (8.1 percent)
- Paid Vacation/Holiday/Sick Days: $3.97 (8 percent)
- Social Security/Medicare/Unemployment/Worker's Comp: $3.27 (6.6 percent)
- Retirement plan contributions: $2.59 (5.2 percent)
- Overtime & Bonuses: $1.10 (2.2 percent)
If you're looking for the juiciest benefits package, think big corporations over small businesses. Firms with 100 or fewer employees paid total average compensation of $23.21 per hour with $6.04 of that going toward benefits. The average total compensation for firms with 100-499 employees is $26.89 with $8.63 spent on benefits. Among firms that have at least 500 employees, the average total compensation is $40.53 per hour with $13.70 in benefits. A big chunk in the difference between small and large firms is how much employers shell out for health care coverage. Among the smaller firms, health insurance eats up 6.3 percent of total employee compensation. Among larger firms it is 8.7 percent.
The Real Benefit of Health Care
Indeed, health care is the single most costly employer subsidy. No surprise, right? In the private sector, the average hourly cost for employer-provided health care insurance benefits was $2.12, accounting for 7.5 percent of all average compensation. That's an increase from $1.16 per hour and 5.6 percent of compensation in 2001. Yes, you are paying a bigger share of your health care coverage, but so, too, is your employer. That goes a long way toward explaining new research from McKinsey that found nearly one-third of surveyed companies say they will stop offering employer-sponsored health care after 2014, when new alternatives mandated by health care reform will hit the marketplace.
And it's worth noting that the rise in the cost of employer-provided health insurance benefits far exceeds the general rate of inflation. If the 2001 cost had continued to rise at the general inflation rate, it would be about $1.47 today, not $2.12. Just something to keep in mind the next time you're digesting any Washington proposals for Medicare reform. As this BLS data shows, any proposal that pegs future benefit increases to a general rate of inflation would likely leave beneficiaries having to make up a sizable gap.
Silicon Valley: Total Compensation King
The BLS also takes a look at total compensation levels in broad metro regions set by the Census bureau. Technology may be lagging in the stock market of late, but it's still churning out the highest total compensation packages. The tech-soaked San Jose/San Francisco/Oakland metro area below includes the Googles and Facebooks of Silicon Valley. Here are the metro areas with the highest average total hourly compensation:
- San Jose-San Francisco-Oakland $41.42 ($12.60 in benefits)
- Boston/Worcester- Manchester MA/N.H. $37.33 ($11.20)
- New York-Newark-Bridgeport (NY,NJ-CT) $36.12 ($11.28)
- Seattle-Tacoma-Olympia WA $34.33 ($10.72)
- Washington-Baltimore-N. Virginia (DC, MD, VA, WVA) $33.81 ($9.30)
Photo courtesy of Flickr user blair_25
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