Wages and Total Compensation

Posted on February 24, 2010

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A story on NPR today notes that, in the view of many economists, not only is the U.S. economy in for an extended period of relatively high unemployment, but potentially an even longer period of little to no growth in wages. While the story discusses several factors that are contributing to wages remaining flat, one in particular caught my eye (emphasis is mine):

There are several forces at work. Global competition, the decline of private-sector unions, slow growth in the minimum wage and the move of more workers from manufacturing into service jobs all have played their part in depressing wages. (The effects of immigration in this regard are open to much debate among economists.)

One other important factor: the ever-escalating cost of health care. Employers, after all, have to concern themselves with total compensation packages – not just wages.

As [James] Sherk points out, employer-sponsored health insurance adds real value to workers’ standards of living, “but it doesn’t show up in your pay stub.”

Yet another reminder that a significant portion of employees’ overall compensation is not always readily visible to employees. Employers need to make communicating total compensation information a priority in order to maximize the return on the investment being made in wages and benefits.