Employee benefit costs continue to grow

According to a recent U.S. Chamber of Commerce survey, employee benefits now constitute 44% of total payroll costs, a 4% increase over last year.  According to the survey, medical expenses totaled $5,924 per employee, or 14.5% of payroll, an increase from 11.9%.  Payments for time not worked (holidays, vacation or other leave) increased 0.6% to 11.1%.  Retirement plan contributions increased slightly to 8.6% of payroll, or $3,612 per employee.  Urban employers reported spending about $1,500 more than non-urban employers for each employee, and for-profit employers far outspent non-profits, which reported spending 34.8% of payroll on benefits.

Employers should be commended for continuing to shoulder an ever-increasing cost to provide their employees with benefits.  However, employers should also approach benefit expenses with the same strategic analysis they would any other expense: what critical business objective is advanced by offering this benefit (or level of benefit) to our employees?  And as benefit costs continue to increase, employers should consider alternative designs or approaches that might offer strategic advantages over competitors as well as lower costs.