Hospital Labor Costs Ratchet Up; Wage Growth Still Slow

Total compensation costs – wages, salaries, and benefits – for hospital employees rose 2.1% in 2010, just above the 2% rise in total compensation costs for all workers in the larger economy, the Bureau of Labor Statistics' Employment Cost Index shows.

Wages and salaries for the hospital sector—which generally make up about 70% of total compensation costs—increased 1.6% in 2010. The ECI does not provide a separate estimate on hospital benefits costs. In 2009, hospital total compensation costs rose 2%, including a 2.1% increase in wages and salaries costs. In 2008, hospital total compensation rose 3.2%, and wages and salaries rose 3.6%, ECI shows.

Over the last decade, the growth in total compensation in the hospital sector has slowed each year, from 6.3% in 2001, to 2.1% in 2010. In that time, hospital wages and salary growth has steadily declined from 5.9% in 2001, to 1.6% in 2010, ECI data show.

In the larger economy, compensation costs for all civilian workers increased 2% in 2010, as compared with a 1.4% increase in 2009. Wages and salaries increased 1.6% in 2010 and 1.5% in 2009, while benefit costs grew by 2.9% in 2010, compared with 1.5% increase in 2009. BLS attributed the near doubling of the rate of increase to retirement costs.

A further breakdown of the civilian workforce showed that private sector overall compensation grew by 2.1% in 2010, compared with 1.2% in 2009. Private sector wages and salaries grew 1.8%, up from a 1.3% increase in 2009, while benefits costs grew 2.9% in 2010, compared with a 0.9% increase in 2009. Employer costs for health benefits grew 5% in 2010, compared with 4.3% in 2009, ECI shows.