Everyone knows wages are stagnant. That’s been one of the dominant (and most frustrating) economic stories of recent years. And now as the job market is limping its way back to health, we’re all waiting for wages to pick up, which should be a sign that labor market slack is tightening.
You may have been getting a raise for years. It’s just not going to your bank account.
But many workers really have been getting more from their bosses without realizing it. Data released earlier this month from the Bureau of Labor Statistics shows that while wages have been flat, benefits have grown quickly over the last decade.
Over the last 10 years, employer spending on inflation-adjusted wages and salaries has held steady, slipping slightly from $22.45 per hour in 2004 to $22.13 in 2014. But the hourly cost of benefits has gone up by nearly 9 percent. One big component of that is employer health insurance payments, which has increased from $2.30 to $2.75 per hour — a nearly 20-percent jump.
Wages do make up the biggest part of compensation, of course — wages and salaries make up $22.13 of the total $32.20 in hourly compensation that employees earn. But wages and salaries as a percentage of the total compensation that employees earn has slowly slid as benefits have taken up a bigger and bigger share. Today, wages and salaries make up 68.7 percent of workers’ total compensation, compared to 70.8 a decade ago, as benefits have taken up an ever-growing share.
Of course, it’s not that employers are deciding to buy more or better plans for their workers. Health insurance premiums have grown at more than four times the rate of inflation since 2000, as the Wall Street Journal’s Anna Wilde Mathews wrote earlier this year, and workers’ contributions to those premiums have grown even faster. Meanwhile, the share of employers offering those benefits has fallen off over that same period. Healthcare just has had some out-of-control cost growth.
But there’s some good news: the speed at which those costs are growing has slowed to historically low levels, as Sarah Kliff wrote earlier this month, and per-person Medicare spending has even started to fall in the last few years. And there are signs that this slower growth could be a permanent change. Obamacare is a factor, but so is offering narrower plans. Slower cost growth in health care might mean employers will be able to spend more on workers’ wages in the near future.
