Labor is the heart of an organization. This makes labor cost, performance, and productivity essential topics especially when the goal is to run a highly efficient organization.
As an HR or Finance professional, chances are you’ve been asked to compare your labor cost and output to other companies before. In order to make an accurate assessment, you’ll need the most recent benchmarks for various relevant topics such as labor costs, productivity, remote work, contingent labor, and more.
For that, you’ll need these 52 benchmarks to help you create an optimal workforce strategy for your business objectives.
Table of Contents
Labor Cost Benchmarks
Besides wages and salaries, labor costs also include benefits, payroll tax, training, HR operating costs, contingent workforce budget, and more. HCMI recommends organizations use the Total Cost of Workforce metric to measure and track the organization’s total workforce spending.
These benchmarks will help you build out your workforce strategy for maximum performance with the lowest cost.
1. From 2016 to 2019, global wages grew between 1.6% and 2.2%. (Source: ILO)
2. 43% of companies suspended salary increases in 2020 because of the pandemic. (Source: Robert Half)
3. The average benefit-cost for private industry workers accounts for 29.8% of total employer compensation costs. (Source: BLS)
4. 65% of companies are planning to reevaluate benefits in 2021. (Source: Paycor)
5. The average benefits per employee as of Q4 2020 is $12.07/hour. (Source: BLS)
6. The average wages and salaries expense per employee per hour as of Q4 2020 is $26.53/hour. (Source: BLS)
7. Compensation costs for private employees increased 0.7% while wages and salaries increased 0.9% and benefit costs increased 0.6% from September 2020. (Source: BLS)
8. Over 40% of workers in the U.S. are engaged in some form of alternative work arrangements. (Source: Global Payroll Management Institute)
10. The average raise for a performance-based promotion in 2020 is 3.0%. (Source: BLS)
11. Labor costs in the nonfarm business sector increased at an annual rate of 6.0% in the last quarter of 2020. (Source: BLS)
12. Wages grew in 2020 largely because more than 80% of the 9.6 million net jobs lost were jobs held by wage earners in the bottom 25% of the wage distribution. (source: Economic Policy Institute)
13. The median hourly wages of workers grew 12% between 1979 and 2018 while wages toward the top rose 34%. Toward the bottom, wages have only grown 4%. (Source: Brookings)
14. Since 2004, output per hour worked has grown 1.4% annually. (Source: Brookings)
15. Companies spent on average $1,308 per employee for direct learning in 2019 versus $1,299 in 2018. (Source: ATD)
Workforce Productivity Benchmarks
At a time when many companies are starved for margin and growth, workforce productivity is a topic that HR can’t ignore. We strongly recommend HR use the Human Capital ROI Ratio metric to measure, track and benchmark their workforce productivity and impact on the business results.
Below are benchmarks that encompass many aspects of workforce productivity.
16. 79% of companies say they’re under pressure to improve workforce productivity and 67% are under pressure to reduce labor costs. (Source: Fast capital)
17. From 1979 to 2018, net workforce productivity rose 69.6%, while hourly pay only increased by 11.6% during the same period. (Source: Economic Policy Institute)
18. Labor productivity has grown 6.0 times more than pay. (Source: Economic Policy Institute)
19. The average productivity of employees when working from home compared to when they’re in their workplaces is 68.3%. (Source: World Economic Forum)
20. High performers are up to 8 times more productive than average employees. (Source: McKinsey)
21. The average productivity of employees when working from home compared to in their workplaces is 68.3%. (Source: VoxEU)
22. 90.4% of surveyed employees reported that they are accomplishing at least as many tasks per hour while working from home as they did at offices. (Source: Statistics Canada)
23. During the pandemic, the number of meetings increased by 12.9% and the number of attendees per meeting grew by 13.5%. (Source: NBER)
24. Nonfarm labor productivity decreased 4.2% in the last quarter of 2020. (Source: BLS)
Remote Work Benchmarks
Remote work or working from home is becoming an increasingly common practice. In the United States, the proportion of employees who primarily work from home has risen significantly during the COVID 19 pandemic. The below benchmarks let you quickly compare the size, scope, and impact of your flexible work programs with others.
25. Results of a recent study show that working from home increased productivity by 13%. (Source: BBC)
26. 41.8% of the U.S. workforce remains fully remote while 15% is partially remote and 43% is not involved in any form of alternative work arrangements. (Source: Upwork)
27. 70% report that the reduction of non-essential meetings has worked better than expected, and 44% report fewer distractions at the office. (Source: Upwork)
28. Workers are spending 12% less time is drawn into large meetings and 9% more time interacting with customers and external partners. (Source: HBR)
29. 44% of employers now have official flexible working policies in place. (Source: ADP)
30. 83% of companies are planning to maintain and implement more flexible work policies after the COVID-19 health crisis has passed. (Source: SHRM)
31. 60% of employers are letting parents adjust their work schedules, with 22% saying they're letting parents temporarily shift to part-time status if needed. (Source: SHRM)
Contingent Labor Benchmarks
The use of contingent labor in everyday operations has been growing and became an indispensable element of many organizations’ workforce strategy. The below benchmarks will help you build out your optimal contingent labor strategy.
32. According to a 2017 report by the Bureau of Labor Statistics, 3.8% of the U.S. workers or 5.9 million persons held contingent jobs. (Source: BLS)
33. In 2020, it’s estimated that approximately 25 to 30% of the U.S. workforce is contingent (Source: Intuit)
34. More than 80% of large corporations plan to increase the use of contingent workers in the coming years (Source: Intuit)
35. 49% of companies said they decided to hire contingent labor because of the need for external expertise. (Source: Brandon Hall)
36. 42% of organizations plan to use contingent workers as a part of their future talent strategy (Source: Aon)
37. 83% of executives are planning to increase the use of contingent workers – both seasonally and on a continuing basis. (Source: Oxford Economics)
38. 3 in 10 U.S. adults engaged in at least one gig activity and 1 in 10 adults spent 20 hours or more per month on informal work. (Source: Federal Reserve)
39. 62% of executives say their contingent workforce is important or extremely important in meeting business needs. (Source: Business Wire)
40. Companies reported using independent contractors (51%), followed by paid interns (47%), part-timers (36%), and tempt workers from an agency or staffing firm (34%) most likely. (Source: Brandon Hall)
41. The average contingent labor budget makes up around 42% of workforce spend. (Source: SAP)
42. 90% of companies currently using contingent labor are expected to increase their contingent labor budget. (Source: Brandon Hall)
43. The average spend on contingent labor is nearly 28% of total workforce spend (Source: MBO)
44. Contingent labor spend is less than one-fifth of the total workforce budget in 76% of organizations, and one-tenth or less of the total workforce budget in 52% of organizations. (Source: Brandon Hall)
45. Among businesses that hire freelancers, 52.1% are offering remote work policies compared to 38% for those that don’t. (Source: Upwork)
46. 59 million Americans did freelance work in the past 12 months, representing 36% of the U.S. labor force. (Source: Upwork)
47. 36% of freelancers work full time. (Source: Upwork)
Labor Shortage Benchmarks
The world is facing serious skill shortages that could hinder future growth. Many organizations are already taking early steps to address their skills gap and maintain a high-quality workforce. Whether or not your company already has a plan in place, keep these benchmarks in mind.
48. 69% of U.S. companies reported having trouble filling vacated positions in 2019. (Source: ManpowerGroup)
49. 68% of HR leaders say that building critical skills and competencies is among their priorities. (Source: Gartner)
50. 74% of companies froze their hiring in response to COVID-19. (Source: Gartner)
51. Only 27% of small companies and 29% of large companies believe they have the right talent for digital transformation. (Source: World Economic Forum)
52. Skill shortages increased from 30% in 2009 to 45% in 2018. (Source: N Dawson)
Our workforce analytics framework focuses on optimizing labor costs and their impact on business results. We even developed a set of human capital reports modeled after the traditional approach of financial accounting called Human Capital Financial Statements.
If you’re interested in learning more about how our framework can help you optimize your labor cost, performance and productivity, contact us.