According to a recent report by the U.S. Bureau of Labor Statistics (BLS), the amount that employers spend on civilian employees (which includes private industry and state and local government) averaged $41.86 per hour worked in September 2022. Wages and salaries cost employers $28.88 (69 percent of total costs), while benefits cost $12.98 or 31 percent of total costs.
When you break the numbers down by category, compensation for state and local government averaged $57.02 per hour. Wages and salaries averaged $35.29 per hour (61.9 percent) and benefits costs averaged $21.73 per hour. For private industry workers, the average compensation was $39.61 per hour worked. Wage and salary costs averaged $27.93 per hour and benefit costs were $11.68 per hour (29.5 percent).
18 benefit costs were included in the BLS report:
- Paid leave – vacation, holiday, sick, and personal leave
- Supplemental pay – overtime and premium, shift differentials, and nonproduction bonuses
- Insurance – life, health, short-term and long-term disability
- Retirement and savings – defined benefit and defined contribution
- Legally required benefits – Social Security (refers to Old-Age, Survivors, and Disability Insurance (OASDI) program), Medicare, federal and state unemployment insurance, and workers’ compensation.
What is missing from these numbers?
If you are an employer looking at these numbers, you quickly realize that the BLS numbers are not the total costs that companies spend on employees. Beyond the base salary and benefits, corporations need to consider additional costs such as:
- Rent and Utilities – The costs associated with physical work locations
- Overhead – This includes costs such as travel, utilities, support staff (i.e. HR, training, finance, IT, sales, marketing, legal) and support services (i.e. costs for IT equipment, cell phone and telecom equipment, subscriptions, data services)
- Compliance or Compulsory Costs – This may include items such as insurance, certification, pension plan costs and more.
Don’t forget about hiring costs
Companies often forget to include the costs of hiring employees in their employee spend calculations. These costs may include:
- Internal Personnel Costs: Hiring requires time from HR employees to review and screen resumes, interview candidates and negotiate compensation. For this reason, the length of the hiring process (paid labor) should be considered.
- Advertising costs: Posting vacancies on popular job boards often requires a subscription. Add the costs of social media advertising and the costs of advertising your open positions can increase substantially.
- Background checks: Don’t forget about the costs to perform background checks, which are often legally required for some positions.
- External Agency Costs: If your company relies on an external agency to source, screen and hire employees, don’t forget about their fees.
What about training, retraining and upskilling costs?
Training budgets can be a notable line item in corporate budgets. According to the 2022 survey by Training magazine on the U.S. training industry, companies spent over $100 billion on training, retraining and upskilling.
While the shift to eLearning has reduced some training costs, companies are investing even more in training to reduce employee turnover. According to a recent article in Forbes magazine, 70 percent of employees would consider leaving their current job for another organization that would invest in their development and training. The same source stated that 86 percent of millennials would stay at their current job if their employer offered training and development.
Retaining employees not only means less hiring expenses, it also means less disruption to your business.
Investing in internal training
Online courses are an excellent way to amplify your internal training and development program to keep employees engaged. They can be easy to distribute and adapt to a changing workforce.
Online course creation is significantly easier with the tools and technology that have been developed to accelerate the creation process. For example, LEAi is an AI-enabled tool that helps teams to create content for training fast.
You don’t have to be a L&D (learning and development) specialist to use LEAi, which means even if you are a small/mid-sized company or a department that doesn’t have its own education services, you can still get the benefits of having internal enablement for your team. The tool is so easy to use that everyone from HR to sales enablement can convert existing documents and presentations into content for eLearning courses, instructor-led training (ILT), microlearning and videos.
If you want the benefits of enablement, but don’t have time to kick-start your learning program, learning specialists like those at LearnExperts can help you analyze your needs and implement a program that is aligned with your broader goals and set up for strategic success.
To learn more about how you can use training to keep employee costs down, contact us!