A Look at the Numbers – National versus Regional Costs – How Do You Stack Up?
In the war for talent it is important to understand what hourly wages and medical insurance benefits other manufacturers offer in order to give your company a hiring advantage.
Here’s a quick glance at what manufacturing companies spend on medical insurance benefits nationally and regionally (Midwest) according to a Bureau of Labor Statistics report from March 2018:
U.S. manufacturers employing 100 – 499 workers paid on average a total of $36.79 an hour in wages, salaries, and benefits ($76,523 annually), broken down in the following areas:
$24.41/hour was paid as wages and salaries ($50,773);
$12.38/hour was paid as total employee benefits (i.e. vacation pay, retirement, life and disability insurance, and health insurance premiums) ($25,750); and,
Health insurance premiums (a subset of employee benefits) cost manufacturers $3.45/hour ($7,176).
Midwest manufacturers employing 100 – 499 workers paid on average a total of $31.14 an hour in wages, salaries, and benefits ($64,771 annually), broken down in the following areas:
$21.50/hour was paid as wages and salaries ($44,720);
$9.64/hour was paid as total employee benefits (i.e. vacation pay, retirement, life and disability insurance, and health insurance premiums) ($20,051); and,
Health insurance premiums (a subset of employee benefits) cost manufacturers $2.62/hour ($5,450).
FREE Ebook: Attract Top Talent & Retain Existing Staff
How Do You Stack Up?
Two things help you stand out in the eyes of your employees (and prospective new hires): paying higher wages and offering comprehensive medical insurance benefits. The wages and salaries you pay are dictated primarily by the marketplace. You know what your competitors up the road are paying, so for you, it becomes a question of how much at or above their wage rate you are willing to offer to recruit and retain a quality workforce?
Medical insurance benefits can be much more difficult to benchmark against your competition. How does your current employer contribution toward medical insurance benefits compare to the regional and national benchmarks above? It is also important to acknowledge that what you pay in premiums must be considered relative to how the workforce perceives the benefit. What an employee pays out of their check may not be perceived as a benefit if their liability in deductibles, coinsurance, etc. is $5,000, essentially leaving them with insurance that they can’t afford to use (functionally uninsured).
Doing the Right Thing Better for Manufacturing Employees
The National Association of Manufacturers points out in its 2016 report, “Competing to Win: Healthcare in Focus,” that, “Manufacturing businesses recognize that providing healthcare coverage is a necessity to remain competitive in attracting talent and maintaining a healthy, stable workforce, as well as doing what is right for employees.”
Employees recognize that often times employers give a merit increase only to have it wiped out by an increase in their medical insurance benefits payroll contribution. They’re also wise to the opposite strategy of not offering a merit increase but keeping the payroll deductions for benefits the same.
What’s Your Plan?
The truth is that if you take control of the healthcare supply chain it’s not only possible, but necessary to offer increased benefits at a lower cost. By optimizing an expense that’s become an entitlement to employees and a financial burden to your competition you can use the savings to invest more in your workforce. Instead of choosing the least bad option on your current broker’s spreadsheet you’ll be choosing between increasing wages or expanding benefits (or both) to make employees more productive and your company more profitable.
For more on how your manufacturing firm can compete for qualified and skilled workers in a tight labor market, download your free copy of DCW Group’s Ebook, Attract Top Talent & Retain Existing Staff: 10 Effective Methods Premier Manufacturers are Adopting.