November 4, 1998 (The Editor’s Desk is updated each business day.)
Compensation costs increase with
establishment size
Employer costs for employee compensation are
generally higher in large establishments than in small. In March 1997, compensation costs
for establishments with 500 or more employees were 46 percent higher than for
establishments with 100-499 employees, and 61 percent higher than for establishments with
less than 100 employees.
[Table dataTXT]
The proportion of total compensation made up of benefit costs was
greater in large establishments. Benefit costs accounted for 30.8 percent of total
compensation costs for workers in establishments with 500 or more employees, compared with
24.9 percent of compensation in establishments with less than 100 workers.
In addition to employment size, a variety of factorsincluding differences in the
mix of industries, occupations, union coverage, and locationinfluence compensation
cost levels. Compared with small establishments, large establishments tend to be located
in metropolitan areas and are more likely to be covered by union contracts, two factors
often associated with higher compensation costs.
Note that establishment size may differ from firm size. The Bureau of Labor Statistics
defines an establishment as a single physical location where business is conducted.
Establishments can be parts of a larger company. About three-quarters of the employees in
small establishments work in small, independent private businesses; the remainder are in
establishments that are part of larger firms.
These data are a product of the BLS Employment
Cost Trends program (specifically the Employer Costs for Employee
Compensation series). Additional information is reported in the bulletin, Employer
Costs for Employee Compensation, 1986-97, Bulletin 2505, August 1998. A summary
of compensation costs trends from 1981 to 1997 based on Employment Cost Indexes is
available from "Total
compensation costs double from 1981 to 1997," The Editor's Desk.
Of interest
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