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Hospital Labor Costs Ratchet Up; Wage Growth Still Slow

 |  By John Commins  
   January 28, 2011

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.

Compensation costs for state and local government workers fell from 2.3% in 2009, to 1.8% in 2010, owing largely to salary and wage reductions. Benefits costs increased 2.9% for the year, ECI shows.

Despite the trend of slowing growth in total compensation, hospitals continue to be job creation machines. Hospitals created 50,100 jobs in 2010, nearly double the rate of job creation from 2009, and the entire healthcare sector - everything from allergists to X-ray technicians -- created 265,800 jobs in 2010, Bureau of Labor Statistics preliminary data shows.

ECI data for the December report were collected from 63,000 occupational observations selected from 12,900 private sector businesses, and 11,500 occupations from 1,800 establishments in state and local governments. The full report may be viewed here.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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