U.S. BUREAU OF LABOR STATISTICS GLOSSARY from page 3► hour worked for service jobs. Costs also vary because some Legally required benefits. A grouping WC for private industry employers jobs are more prone to layoffs of benefits that employers typically are was 41 cents per employee hour ROGRAM VOL. 4, ISSUE 1 than others. For example, the expected to participate in and con- worked. relatively high SUI cost for tribute toward. The grouping includes Social Security, Medicare, federal and Employer costs by construction industry jobs state unemployment insurance, and occupational and (35 cents per employee hour workers’ compensation. These benefits industry group worked), compared with financial ERSPECTIVES are affected by federal and state laws. Employer costs for legally activities jobs (21 cents per P employee hour worked) is April 2012 Payroll tax. A tax an employer or required benefits vary by ON LEGALLY REQUIRED BENEFIT COSTS due to such factors as laid-off employee pays based on the wage or benefit and by occupational construction workers collecting salary of the employee. Both federal and industry group, and are How Much Do Private Industry and state governments collect payroll highest for Social Security unemployment benefits during taxes. both per hour worked and the winter; thus, employers that Employers Pay for Legally as a percentage of total employ construction workers Taxable earnings. The amount of an- compensation. (See table 1.) may incur higher unemployment nual income, up to a maximum amount, Required Employee Benefits? The primary factor determining tax rates. on which a tax is payable; sometimes is Employer costs for workers’ mployer costs for worker 8.1 percent of total employee called base earnings or covered earnings. costs for some legally required benefits, including Social compensation vary because compensation typically compensation. (See chart 1.) Experience rating. A rating system un- Security and Medicare, is the some occupations are more include wages plus benefit Estimates of employer costs der which employers are assigned state E wage rate that an employer pays exposed than others to risk of expenses. In general, benefits for legally required benefits unemployment insurance tax rates in an employee for a particular injury, to medical liability, and fall into two broad categories: presented in this issue are from the accordance with their individual experi- job. Tax rates and insurance to lost time due to accidents. voluntary benefits, such as paid U.S. Bureau of Labor Statistics ence with unemployment or with other premiums generally are based These jobs incur higher workers’ leave and life insurance, and (BLS) “National Compensation factors, such as seasonal layoffs, that on salary. Salaries for natural compensation insurance legally required benefits. Legally bear a direct relation to unemployment Survey (NCS): Employer Costs resources, construction, and premium rates—construction required benefits provide workers risk. Generally, the higher an employ- NATIONAL for Employee Compensation – maintenance jobs, for example, industry jobs, for example, and their families with retirement er’s experience rating, the higher the COMPENSATION December 2011,” available online compared with jobs in leisure employer’s tax. usually are higher than are SURVEY income and medical care, mitigate at http://www.bls.gov/news. salaries for service jobs. In and hospitality. In December economic hardship resulting from release/archives/ecec_03142012. Self-insured coverage. The practice www.bls.gov/ebs December 2011, the employer 2011, workers’ compensation loss of work and disability, and pdf. NCS collects and publishes by an employer of insuring workers’ cost for Social Security was costs were $1.16 per employee cover liabilities resulting from information on employer costs compensation liabilities by setting aside Benefit Series $1.46 per employee hour hour worked for occupations in workplace injuries and illnesses. for workers’ wages and benefits; reserve funds that can be used only for worked for natural resources, construction, significantly higher workers’ compensation claims, rather The legally required benefits all cost information is converted construction, and maintenance than the 24 cents for occupations than by purchasing an insurance policy. This marks the last issue covered in this issue of Program into a cost-per-hour based on the jobs and 74 cents per employee in leisure and hospitality.● of Program Perspectives. Perspectives are Social Security, work schedule for a particular Medicare, federal and state occupation. The upcoming topic will be featured in Beyond the Numbers: In May 2012, BLS “Health Benefits in State and Local Government” unemployment insurance, and will introduce a new workers’ compensation. The Legally required benefits For additional assistance on REGIONAL: NEW YORK focus here is on the employer’s in detail (646) 264-3600 benefits, contact one of our ATLANTA publication that will portion of the cost of these Social Security, also known as information offices: (404) 893-4222 PHILADELPHIA benefits. Employers are obligated Old Age, Survivors, and Disability (215) 597-3282 consolidate five BLS NATIONAL: WASHINGTON, DC BOSTON Insurance, provides income for (617) 565-2327 publications. As a result, to pay their part of the cost in the SAN FRANCISCO form of either a payroll tax or a retired workers, for dependents, CHICAGO (415) 625-2270 the content for Program compulsory insurance premium. and for disabled workers and National Compensation Survey: (312) 353-1880 (202) 691-6199 TDD: (800) 877-8339 In December 2011, the average their families. The Social Security Health Plan Provisions in State DALLAS Perspectives will appear in and Local Government in the (972) 850-4800 cost to private industry employers Act of 1935 is the basis for this United States, 2011 Beyond the Numbers: Pay for these benefits was $2.33 benefit. In March 2012, more than KANSAS CITY BUREAU OF LABOR STATISTICS [email protected] www.bls.gov ebs (816) 285-7000 U.S. DEPARTMENT OF LABOR per employee hour worked, or www.bls.gov/ebs / and Benefits. continued inside► providing an effective tax rate of administered by state governments from work-related injuries and CHART 1 0.6 percent. In December 2011, within guidelines established illnesses; the payout depends on the average cost for FUTA to by FUTA. Each state sets its the nature and severity of the Employer cost for legally required benefits per employee hour worked, by selected occupational private industry employers was 2 own eligibility requirements, injury or illness. WC programs are groups, private industry, December 2011 cents per employee hour worked. benefit amounts, and the length administered by state governments State Unemployment Insurance of time benefits are paid. In most and paid for by the employer. WC All workers 2.33 (SUI) provides income payments states, SUI is funded by a state insurance coverage is available to eligible workers who have payroll tax that is paid solely through state-approved insurance Management, professional, and related 3.46 been laid off from their jobs; by employers. An employer’s plans, private insurance carriers, benefits usually are paid weekly cost for SUI is based on the self-insured coverage, or some Natural resources, construction, and 3.11 maintenance as a percentage of an unemployed employer’s experience rating with combination of them. Self-insured worker’s previous salary up to unemployment. The cost also is employers or groups of employers Production, transportation, and 2.32 material moving a weekly maximum amount. based on the taxable wage base must have funds set aside and Unemployed workers can collect and tax rate set by each state. In certified as funds to be used only Sales and office 1.80 benefits until they find a new job December 2011, the average for WC claims. WC insurance rates or until benefits run out. SUI also cost for SUI for private industry that employers pay are higher for Service 1.43 funds training programs aimed employers was 21 cents per some jobs than for others because 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 at improving reemployment employee hour worked. of the risk of injury or illness Dollars per hour worked prospects. Workers’ Compensation (WC) that comes with a particular job. In pays medical expenses and December 2011, the average cost for Source: U.S. Bureau of Labor Statistics. SUI programs are mandated by the federal government and provides for lost income resulting continued on back page► industry workers for Social Act (FUTA) also known as from cover page► TABLE 1 Security was $1.34 per employee federal unemployment insurance, 55 million Americans received an hour worked. (See table 1.) along with state unemployment average monthly Social Security programs, provides benefits to Employer cost for legally required benefits per employee hour worked and percent of total compensation, by benefit of $1,125. See “Monthly Medicare is a benefit that workers who have lost their jobs. selected occupational and industry groups, private industry, December 2011 Statistical Snapshot,” in Research, pays medical care for retirees Federal unemployment State unemployment Workers’ compensation FUTA covers the federal share Total Social Security Medicare Occupational and insurance insurance insurance compensation Statistics, and Policy Analysis and persons with long-term of the costs of administering industry groups cost Cost Percent Cost Percent Cost Percent Cost Percent Cost Percent (Social Security Online, updated disabilities. The basis for unemployment insurance and All workers $28.57 $1.34 4.7 $0.33 1.2 $0.02 0.1 $0.21 0.8 $0.41 1.4 monthly), available online at Medicare is a 1965 amendment job service programs in all Occupational group http://www.ssa.gov/policy/docs/ to the Social Security Act. states. In addition, FUTA pays Management, professional, quickfacts/stat_snapshot/. Medicare reimburses doctors, one-half of the cost of extended and related 50.48 2.29 4.5 0.60 1.2 0.02 – 0.22 0.4 0.33 0.7 medical clinics, and hospitals for Natural resources, Social Security is financed by unemployment benefits during construction, and a payroll tax on workers’ wages, providing services to Medicare periods of high unemployment. maintenance 31.21 1.46 4.7 0.34 1.1 0.02 0.1 0.27 0.9 1.02 3.3 beneficiaries. Medicare is funded Production, transportation, with a portion of the tax paid by FUTA funds held by the federal and material moving 23.89 1.10 4.6 0.26 1.1 0.02 0.1 0.25 1.0 0.69 2.9 the worker and a portion paid by by both the employee and the government are loaned to states, Sales and office 22.39 1.08 4.8 0.26 1.2 0.03 0.1 0.20 0.9 0.24 1.1 the employer. For 2012, the Social employer through a payroll tax when necessary, to help pay Service 14.01 0.74 5.3 0.17 1.2 0.03 0.2 0.18 1.3 0.31 2.2 Security tax rate for employers on covered earnings. In 2012, unemployment benefits. FUTA is Industry group Construction 33.08 1.53 4.6 0.37 1.1 0.02 0.1 0.35 1.1 1.16 3.5 is 6.2 percent of taxable earnings the Medicare tax rate paid by funded by an employer payroll Manufacturing 32.93 1.49 4.5 0.36 1.1 0.02 0.1 0.27 0.8 0.53 1.6 up to $110,100 per employee. In employees and employers alike is tax: 6.0 percent on individual Trade, transportation, and 2012, employees pay 4.2 percent 1.45 percent of taxable earnings. employee wages up to a utilities 23.88 1.13 4.7 0.27 1.1 0.03 0.1 0.20 0.8 0.48 2.0 In December 2011, the average Education and health of taxable earnings toward Social maximum salary of $7,000 a year. services 30.53 1.45 4.8 0.36 1.2 0.02 0.1 0.17 0.5 0.35 1.1 Security, a temporary reduction cost for this benefit to all private However, employers that pay Leisure and hospitality 12.14 0.68 5.6 0.16 1.3 0.03 0.3 0.17 1.4 0.24 2.0 from the usual 6.2 percent rate. industry employers was 33 cents state unemployment taxes on a Financial activities 39.70 1.74 4.4 0.46 1.2 0.02 0.1 0.21 0.5 0.20 0.5

In December 2011, the average per employee hour worked. timely basis typically are eligible Note: Dash indicates the employer cost as percent of total compensation is less than .05 percent. employers’ cost for all private Federal Unemployment Tax to receive a credit of 5.4 percent, Source: U.S. Bureau of Labor Statistics.

2 PROGRAM PERSPECTIVES • April 2012 U.S. BUREAU OF LABOR STATISTICS www.bls.gov/ebs April 2012 • PROGRAM PERSPECTIVES 3 providing an effective tax rate of administered by state governments from work-related injuries and CHART 1 0.6 percent. In December 2011, within guidelines established illnesses; the payout depends on the average cost for FUTA to by FUTA. Each state sets its the nature and severity of the Employer cost for legally required benefits per employee hour worked, by selected occupational private industry employers was 2 own eligibility requirements, injury or illness. WC programs are groups, private industry, December 2011 cents per employee hour worked. benefit amounts, and the length administered by state governments State Unemployment Insurance of time benefits are paid. In most and paid for by the employer. WC All workers 2.33 (SUI) provides income payments states, SUI is funded by a state insurance coverage is available to eligible workers who have payroll tax that is paid solely through state-approved insurance Management, professional, and related 3.46 been laid off from their jobs; by employers. An employer’s plans, private insurance carriers, benefits usually are paid weekly cost for SUI is based on the self-insured coverage, or some Natural resources, construction, and 3.11 maintenance as a percentage of an unemployed employer’s experience rating with combination of them. Self-insured worker’s previous salary up to unemployment. The cost also is employers or groups of employers Production, transportation, and 2.32 material moving a weekly maximum amount. based on the taxable wage base must have funds set aside and Unemployed workers can collect and tax rate set by each state. In certified as funds to be used only Sales and office 1.80 benefits until they find a new job December 2011, the average for WC claims. WC insurance rates or until benefits run out. SUI also cost for SUI for private industry that employers pay are higher for Service 1.43 funds training programs aimed employers was 21 cents per some jobs than for others because 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 at improving reemployment employee hour worked. of the risk of injury or illness Dollars per hour worked prospects. Workers’ Compensation (WC) that comes with a particular job. In pays medical expenses and December 2011, the average cost for Source: U.S. Bureau of Labor Statistics. SUI programs are mandated by the federal government and provides for lost income resulting continued on back page► industry workers for Social Act (FUTA) also known as from cover page► TABLE 1 Security was $1.34 per employee federal unemployment insurance, 55 million Americans received an hour worked. (See table 1.) along with state unemployment average monthly Social Security programs, provides benefits to Employer cost for legally required benefits per employee hour worked and percent of total compensation, by benefit of $1,125. See “Monthly Medicare is a benefit that workers who have lost their jobs. selected occupational and industry groups, private industry, December 2011 Statistical Snapshot,” in Research, pays medical care for retirees Federal unemployment State unemployment Workers’ compensation FUTA covers the federal share Total Social Security Medicare Occupational and insurance insurance insurance compensation Statistics, and Policy Analysis and persons with long-term of the costs of administering industry groups cost Cost Percent Cost Percent Cost Percent Cost Percent Cost Percent (Social Security Online, updated disabilities. The basis for unemployment insurance and All workers $28.57 $1.34 4.7 $0.33 1.2 $0.02 0.1 $0.21 0.8 $0.41 1.4 monthly), available online at Medicare is a 1965 amendment job service programs in all Occupational group http://www.ssa.gov/policy/docs/ to the Social Security Act. states. In addition, FUTA pays Management, professional, quickfacts/stat_snapshot/. Medicare reimburses doctors, one-half of the cost of extended and related 50.48 2.29 4.5 0.60 1.2 0.02 – 0.22 0.4 0.33 0.7 medical clinics, and hospitals for Natural resources, Social Security is financed by unemployment benefits during construction, and a payroll tax on workers’ wages, providing services to Medicare periods of high unemployment. maintenance 31.21 1.46 4.7 0.34 1.1 0.02 0.1 0.27 0.9 1.02 3.3 beneficiaries. Medicare is funded Production, transportation, with a portion of the tax paid by FUTA funds held by the federal and material moving 23.89 1.10 4.6 0.26 1.1 0.02 0.1 0.25 1.0 0.69 2.9 the worker and a portion paid by by both the employee and the government are loaned to states, Sales and office 22.39 1.08 4.8 0.26 1.2 0.03 0.1 0.20 0.9 0.24 1.1 the employer. For 2012, the Social employer through a payroll tax when necessary, to help pay Service 14.01 0.74 5.3 0.17 1.2 0.03 0.2 0.18 1.3 0.31 2.2 Security tax rate for employers on covered earnings. In 2012, unemployment benefits. FUTA is Industry group Construction 33.08 1.53 4.6 0.37 1.1 0.02 0.1 0.35 1.1 1.16 3.5 is 6.2 percent of taxable earnings the Medicare tax rate paid by funded by an employer payroll Manufacturing 32.93 1.49 4.5 0.36 1.1 0.02 0.1 0.27 0.8 0.53 1.6 up to $110,100 per employee. In employees and employers alike is tax: 6.0 percent on individual Trade, transportation, and 2012, employees pay 4.2 percent 1.45 percent of taxable earnings. employee wages up to a utilities 23.88 1.13 4.7 0.27 1.1 0.03 0.1 0.20 0.8 0.48 2.0 In December 2011, the average Education and health of taxable earnings toward Social maximum salary of $7,000 a year. services 30.53 1.45 4.8 0.36 1.2 0.02 0.1 0.17 0.5 0.35 1.1 Security, a temporary reduction cost for this benefit to all private However, employers that pay Leisure and hospitality 12.14 0.68 5.6 0.16 1.3 0.03 0.3 0.17 1.4 0.24 2.0 from the usual 6.2 percent rate. industry employers was 33 cents state unemployment taxes on a Financial activities 39.70 1.74 4.4 0.46 1.2 0.02 0.1 0.21 0.5 0.20 0.5

In December 2011, the average per employee hour worked. timely basis typically are eligible Note: Dash indicates the employer cost as percent of total compensation is less than .05 percent. employers’ cost for all private Federal Unemployment Tax to receive a credit of 5.4 percent, Source: U.S. Bureau of Labor Statistics.

2 PROGRAM PERSPECTIVES • April 2012 U.S. BUREAU OF LABOR STATISTICS www.bls.gov/ebs April 2012 • PROGRAM PERSPECTIVES 3 U.S. BUREAU OF LABOR STATISTICS GLOSSARY from page 3► hour worked for service jobs. Costs also vary because some Legally required benefits. A grouping WC for private industry employers jobs are more prone to layoffs of benefits that employers typically are was 41 cents per employee hour ROGRAM VOL. 4, ISSUE 1 than others. For example, the expected to participate in and con- worked. relatively high SUI cost for tribute toward. The grouping includes Social Security, Medicare, federal and Employer costs by construction industry jobs state unemployment insurance, and occupational and (35 cents per employee hour workers’ compensation. These benefits industry group worked), compared with financial ERSPECTIVES are affected by federal and state laws. Employer costs for legally activities jobs (21 cents per P employee hour worked) is April 2012 Payroll tax. A tax an employer or required benefits vary by ON LEGALLY REQUIRED BENEFIT COSTS due to such factors as laid-off employee pays based on the wage or benefit and by occupational construction workers collecting salary of the employee. Both federal and industry group, and are How Much Do Private Industry and state governments collect payroll highest for Social Security unemployment benefits during taxes. both per hour worked and the winter; thus, employers that Employers Pay for Legally as a percentage of total employ construction workers Taxable earnings. The amount of an- compensation. (See table 1.) may incur higher unemployment nual income, up to a maximum amount, Required Employee Benefits? The primary factor determining tax rates. on which a tax is payable; sometimes is Employer costs for workers’ mployer costs for worker 8.1 percent of total employee called base earnings or covered earnings. costs for some legally required benefits, including Social compensation vary because compensation typically compensation. (See chart 1.) Experience rating. A rating system un- Security and Medicare, is the some occupations are more include wages plus benefit Estimates of employer costs der which employers are assigned state E wage rate that an employer pays exposed than others to risk of expenses. In general, benefits for legally required benefits unemployment insurance tax rates in an employee for a particular injury, to medical liability, and fall into two broad categories: presented in this issue are from the accordance with their individual experi- job. Tax rates and insurance to lost time due to accidents. voluntary benefits, such as paid U.S. Bureau of Labor Statistics ence with unemployment or with other premiums generally are based These jobs incur higher workers’ leave and life insurance, and (BLS) “National Compensation factors, such as seasonal layoffs, that on salary. Salaries for natural compensation insurance legally required benefits. Legally bear a direct relation to unemployment Survey (NCS): Employer Costs resources, construction, and premium rates—construction required benefits provide workers risk. Generally, the higher an employ- NATIONAL for Employee Compensation – maintenance jobs, for example, industry jobs, for example, and their families with retirement er’s experience rating, the higher the COMPENSATION December 2011,” available online compared with jobs in leisure employer’s tax. usually are higher than are SURVEY income and medical care, mitigate at http://www.bls.gov/news. salaries for service jobs. In and hospitality. In December economic hardship resulting from release/archives/ecec_03142012. Self-insured coverage. The practice www.bls.gov/ebs December 2011, the employer 2011, workers’ compensation loss of work and disability, and pdf. NCS collects and publishes by an employer of insuring workers’ cost for Social Security was costs were $1.16 per employee cover liabilities resulting from information on employer costs compensation liabilities by setting aside Benefit Series $1.46 per employee hour hour worked for occupations in workplace injuries and illnesses. for workers’ wages and benefits; reserve funds that can be used only for worked for natural resources, construction, significantly higher workers’ compensation claims, rather The legally required benefits all cost information is converted construction, and maintenance than the 24 cents for occupations than by purchasing an insurance policy. This marks the last issue covered in this issue of Program into a cost-per-hour based on the jobs and 74 cents per employee in leisure and hospitality.● of Program Perspectives. Perspectives are Social Security, work schedule for a particular Medicare, federal and state occupation. The upcoming topic will be featured in Beyond the Numbers: In May 2012, BLS “Health Benefits in State and Local Government” unemployment insurance, and will introduce a new workers’ compensation. The Legally required benefits For additional assistance on REGIONAL: NEW YORK focus here is on the employer’s in detail (646) 264-3600 benefits, contact one of our ATLANTA publication that will portion of the cost of these Social Security, also known as information offices: (404) 893-4222 PHILADELPHIA benefits. Employers are obligated Old Age, Survivors, and Disability (215) 597-3282 consolidate five BLS NATIONAL: WASHINGTON, DC BOSTON Insurance, provides income for (617) 565-2327 publications. As a result, to pay their part of the cost in the SAN FRANCISCO form of either a payroll tax or a retired workers, for dependents, CHICAGO (415) 625-2270 the content for Program compulsory insurance premium. and for disabled workers and National Compensation Survey: (312) 353-1880 (202) 691-6199 TDD: (800) 877-8339 In December 2011, the average their families. The Social Security Health Plan Provisions in State DALLAS Perspectives will appear in and Local Government in the (972) 850-4800 cost to private industry employers Act of 1935 is the basis for this United States, 2011 Beyond the Numbers: Pay for these benefits was $2.33 benefit. In March 2012, more than KANSAS CITY BUREAU OF LABOR STATISTICS [email protected] www.bls.gov ebs (816) 285-7000 U.S. DEPARTMENT OF LABOR per employee hour worked, or www.bls.gov/ebs / and Benefits. continued inside►