National Compensation Trends

William WiatrowskiAssociate Commissioner

Compensation and Working Conditions

COPAFSSeptember 24, 2010

Why the Interest in Wage and Benefit

Data?

Benefits make up one-third of private sector compensation costs

Employer costs for benefits typically rise faster than wages

The landscape is changing Health reform Changes to retirement plans Other benefit issues

2

Today’s Road Map

Highlights Survey background Cost of compensation Changing landscape of benefits What local data are available?

3

HIGHLIGHTS

4

Highlight – Change in Wage and Benefit Costs

5

Highlight – Componentsof Compensation

Wages71%Supplemental

pay3%

Paid leave7%

Insurance8%

Retirement and savings

3%

Legally required benefits

8%

March 2010

6

Highlight – Changes in Retirement Coverage

0

10

20

30

40

50

60

1989-90 1993-94 1996-97 2003 2009

Defined benefit Defined contribution

7Full-time workers, private industry

Highlight – Employees are paying more for health care

$0

$100

$200

$300

$400

$500

$600

1985 1989 1995 2000 2005 2008

Average individual deductible per year

8

Highlight – Wages by Selected

Characteristics

$19.90

$22.71

$11.70

$21.61

$20.18

$0.00 $5.00 $10.00 $15.00 $20.00 $25.00

Nonunion

Union

Part-time

Full-time

All workers

Mean hourly earnings, private industry, United States, July 2009

9

SURVEY DESIGN

10

BLS National Compensation Survey

BLS – source of key economic indicators

National Compensation Survey (NCS) Wage data by occupation and worker

characteristics Employer costs for benefits Details about benefits

– Who has access?– Who is covered?– What do you get from the benefit?

11

NCS Design

Establishment survey Sample of geographic areas

– Includes New York metropolitan area

Sample of establishments– Covers all private industries; all sizes– Also covers State and local governments

Within each establishment, sample of occupations

12

Detailed Characteristics

About the company Industry classification Number of workers Location

About the workers Occupation classification Full-time/part-time Union/non-union Work level

13

Data Elements

Work schedule Wages, including incentives

Commissioners Piece rates Production bonuses

Other cash payments Premium pay for overtime Shift differential Non-production bonuses

14

Data Elements

Benefits Paid and unpaid leave Insurances, including health Retirement and savings Legally required

15

Capturing Benefits Data

For each benefit – Identify each plan

– Is it offered to a specific occupation?• How many workers take advantage/use the

benefit?

– What is the cost to the employer?• What if there is no employer cost?

– What must the worker do to get the benefit?• Eligibility

• Required contribution

– How does the plan work?

16

Survey Timing

Private industry establishments are in the survey for 5 years One-fifth rotate in/out each year

All wage and benefit data captured at start of survey Wages and employer costs updated each

quarter Benefit data updated once a year

Written plan descriptions collected at start of survey

17

SURVEY RESULTS –EMPLOYER COMPENSATION COSTS

18

Change in Wage and Benefit Costs

19

Changes inHealth Care Costs

20

-3

0

3

6

9

12

15

18

21

24

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

12-12-month percent change in employer costs for

health insurance and all benefits, private industry

Health insurance

All benefits

Variations by Industry

21

012345678

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Employment Cost Index: 12-month percent change in wages and salaries, selected private industries

Manufacturing Financial activities

Variations by Occupation

22

0123456

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Employment Cost Index: 12-month percent change in wages and salaries, selected occupational groups, private industry

Management/business/finance workers

Professional and related workers

Office and administrative support workers

Variations by Union Status

23

0

1

2

3

4

5

6

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Employment Cost Index: 12-month percent change in wages and salaries, private industry by union status

Union Nonunion

A Closer Look at Incentive-Paid Workers

24

All Sales Workers, Regardless of Industry

25

Retail Trade Industry

26

Financial Activities Industry

27

Employer Costs for Employee

Compensation

Wages71%Supplemental

pay3%

Paid leave7%

Insurance8%

Retirement and savings

3%

Legally required benefits

8%

March 2010

28

Movement Away from Cash Compensation

0102030405060708090

100

1966 1977 1986 1990 1995 2000 2005 2010

Wages Supplemental pay Paid leave

29

Greater Share of Compensation Dollar Going

to Health Benefits

0

2

4

6

8

10

2000 2002 2004 2006 2008 2010

Health costs as percent of compensation costs

Health insurance Medicare

30

Retirement Costs are Dominated by Social Security

Taxes

0

2

4

6

8

10

2000 2002 2004 2006 2008 2010

Retirement plan costs as percent of compensation costs

Defined benefit Defined contribution Social Security

31

Employer CompensationCosts Vary

$22.90

$19.21

$16.82

$22.74

$14.26

$7.46

$6.02

$10.59

$0.00 $10.00 $20.00 $30.00 $40.00

Union

Nonunion

1-99 employees

100 employees or more

March 2010

Wages Benefits

32

Employer Compensation Costs Vary, as do

Proportions

61.6%

72.0%

73.6%

68.2%

38.4%

28.0%

26.4%

31.8%

0% 20% 40% 60% 80% 100%

Union

Nonunion

1-99 employees

100 employees or more

March 2010

Wages Benefits

33

BENEFITS – THE LANDSCAPE IS CHANGING

Benefits – Yesterday and Today

Benefits – 1980 Basic plus Major

Medical health plan Defined benefit

retirement plan Vacation, sick leave

Specific plans for specific purposes

Little or no employee cost or decision

Benefits – 2010 Health plan types;

choices; accounts Defined

contribution plans Paid time off

Plans serve multiple purposes

Employee must pay and decide

35

Who has Health Benefits?

71

90

6959

84 86

240

20

40

60

80

100

Private industry

Union Nonunion 1-99 employees

100 or more

employees

Full-time Part-time

Access to health insurance, March 2009

36

Who has Retirement Benefits?

67

87

6553

83 76

39

0

20

40

60

80

100

Private industry

Union Nonunion 1-99 employees

100 or more

employees

Full-time Part-time

Access to retirement benefits, March 2009

37

Wage Level Affects Benefits

0

20

40

60

80

100

Private industry

Bottom wage quartile

Second wage quartile

Third wage quartile

Top wage quartile

Defined contribution plans offered and taken, March 2009

Benefit offered Benefit taken

38

How Does your Health Plan Stack Up?

Plan types are changing Hybrids Accounts

Employees must assume more responsibility Contributions Choice of provider effects costs

Increase in out-of-pocket costs

39

How are HealthBenefits Provided?

0%

20%

40%

60%

80%

100%

1985 1989 1995 2000 2005 2008

Fee-for-service HMO PPO Other

40

Who Pays for Health Benefits?

0

20

40

60

80

100

1985 1989 2000 2005 2009

Required employee contribution for single coverage

Required employee contribution for family coverage

41

How Does your Health Plan Stack Up?

42

Retirement Plans are Changing

Defined benefit plans

Enrollment was automatic

Managed investments

Annuity gave employee “paycheck for life”

Future of defined contribution plans?

Automatic enrollment features

Lifecycle investment funds

Provide/encourage payout in the form of an annuity

43

Movement Toward Defined Contribution

Plans

0

10

20

30

40

50

60

1989-90 1993-94 1996-97 2003 2009

Defined benefit Defined contribution

44Full-time workers, private industry

More Automatic Enrollment

45

More Choice in Retirement Plans

0

10

20

30

40

50

60

70

80

1985 1989 1993 2000 2005

Employee can choose how to invest matching funds

Investment choices include employer stock

46

Benefits – More to Come

Health reform Who’s covered? What benefits are provided? Employer costs/limits?

Retirement – topics of discussion Investment options Investment advise Annuities Frozen defined benefit plans

47

Other Benefit Topics

Paid leave issues Care of family members Pandemic flu

Coverage of domestic partners

48

More Topics for the Future

Health reform Essential health benefits Coverage and limits

Who has leave benefits What will it cost to expand paid leave

Making retirement coverage automatic Payroll deduction IRAs

States and localities out front on benefit issues – testing grounds

49

WHAT DATA ARE AVAILABLE FOR MY LOCAL AREA?

Data by locality

Wages by occupation Employment Cost Index

15 major metropolitan areas Newly-released Employer Costs for

Employee Compensation 15 major metropolitan areas

Experimental benefits data

Wages in New York met area

52

Variation in New York area Wages by Characteristics

$26.66

$22.48

$25.99

$28.00

$14.35

$28.19

$26.56

$0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00

100 employes or more

1-99 employees

Nonunion

Union

Part-time

Full-time

All workers

Mean hourly earnings, New York metropolitan area, May 2009

53

Employment Cost Index – wages and salaries

54

00.5

11.5

22.5

33.5

4

2007 2008 2009 2010

Employment Cost Index: 12-month percent change in wages and salaries, private industry

All US New York

Change in wage and salary costs across

areas

55

0

1

2

3

4

5

2007 2008 2009 2010

Employment Cost Index: 12-month percent change in wages and salaries, private industry

New York Boston Washington, DC

Employment Cost Index – total compensation

56

00.5

11.5

22.5

33.5

4

2007 2008 2009 2010

Employment Cost Index: 12-month percent change in total compensation, private industry

All US New York

First-ever Data on Employer Costs by Location

Metropolitan area

Total compensation

Wages and salaries

Benefits

Boston $38.62 $26.26 $12.36

San Francisco $38.52 $27.10 $11.42

New York $35.18 $24.18 $11.00

United States $27.73 $19.58 $8.15

Miami $24.00 $17.61 $6.39

Employer costs per hour worked for wages and benefits, March 2010

57

First-ever Data on Employer Costs by

Location

58

New York met area Benefits

59

Only a Few Statistically Significant Differences

0

20

40

60

80

100

Health insurance, US versus Seattle

Retirement benefits, US versus Detroit

Life insurance, US versus Los Angeles

Percent of employees offered benefit, December 2008

US Metropolitan area

60

QUESTIONS?

Contact Information

William WiatrowskiCompensation and Working Conditions

202-691-6301wiatrowski.william@bls.gov