May 01, 2013

Public or Private: Which Type of Job to Opt for?

On average 29.14% of the total compensation cost is comprised of benefits for the entire workforce including government and private employees. From the graph above it is clear that part-time workers earn almost half of the wages of private employees, and one-third of the wages of state and local government employees.

Benefits Breakdown (Employer Costs per Hour)

Employer cost per hour

In terms of benefits, the major share of costs is for health insurance, which accounts for 8.5% of the total on average. This is followed closely by legally mandated benefits, including Social Security, Medicare, Workers’ Compensation and Unemployment Insurance, at 7.8%. Paid leave comprises another 7.0% of total costs; while the remainder is made up of retirement contributions and supplemental costs, such as overtime pay.

wage and salary

A large share of state and local government’s costs per employee goes towards benefits at 35%, compared with 31% for full-time private sector workers. The costs to the government are greater per worker at $41.94 with $27.24 in salaries. Meanwhile, private employers on average pay $33.63 overall per worker, with $23.22 in wages. The lowest cost is for part-time workers in private industry, with a total compensation cost of $15.22, where the large majority is towards wages with only $3.26 for benefits. The makeup of benefits expenses varies between private and government workers. Government benefit costs are higher for health and retirement contributions, while private employers pay more in bonuses and overtime.

Over the coming years this disparity may decrease, as new healthcare laws require more employers to offer insurance to workers. Similarly, public pressure and difficulties with local and state pension systems could have an impact on government’s contributions to retirement and saving plans.