September 1999

 

Compensation Costs in State and Local Governments

March 1991 to March 1999

  • Total hourly compensation costs for state and local government workers in March 1999 were $28.00 per hour worked, up from $22.31 in 1991. Since March 1991, total compensation costs for these workers have increased at an average annual rate of 2.9 percent, according to the U.S. Bureau of Labor Statistics (BLS).
  • The costs of state and local government employee benefits increased at an average annual rate of 2.4 percent from March 1991 to March 1999. In March 1991, benefit costs were $6.79 per hour worked, or 30.4 percent of total compensation. By March 1998, that had changed little, declining to 30.2 percent of total compensation. But in March 1999, even though benefit costs had risen to $8.22 per hour worked, benefits dropped nearly a whole percentage point to 29.4 percent of total compensation.
  • As with private-sector employers, state and local governments have seen their health insurance costs decline as a percentage of total compensation. March 1994 marked the peak for health insurance costs, when they accounted for 8.2 percent of total state and local government compensation. By March 1999, health insurance costs had declined to 7.6 percent of total state and local government compensation costs.
  • Retirement and savings benefit costs have declined steadily for state and local governments. In March 1991, these benefits accounted for 8.3 percent of total compensation, but by March 1999 that had declined to 6.8 percent.
  • BLS data highlight the growing trend of state and local governments to offer defined contribution plans in their retirement and savings benefits. In March 1991, defined contribution plans' costs accounted for less than 0.1 percent of total compensation, but by March 1999 that had increased to 0.6 percent.
  • Among occupation groups in state and local governments, teachers have the highest total compensation costs: $40.83 per hour worked, as of March 1999. Administrative support occupations have the lowest total compensation costs, at $17.88 per hour worked.
  • Administrative support occupations in state and local governments had the highest percentage of total compensation costs accounted for by benefits: 33.4 percent as of March 1999. Teachers had the lowest percentage of total compensation costs accounted for by benefits, at 24.2 percent.
  • Among industry groups in state and local governments, higher education services had the highest total compensation costs: $32.35 per hour worked, as of March 1999. Health services had the lowest total compensation costs, at $22.95 per hour worked in March 1999.
  • Public administrative services in state and local governments had the highest percentage of total compensation costs accounted for by benefits: 33.9 percent as of March 1999. Elementary and secondary education services had the lowest percentage of total compensation costs accounted for by benefits, at 26.0 percent.

For more information, contact Ken McDonnell (202) 775-6342.

Source: EBRI Databook on Employee Benefits, fourth edition (Washington, DC: Employee Benefit Research Institute, 1997); and U.S. Department of Labor, Bureau of Labor Statistics, News, 24 June 1999.

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