According to the US Department of Labor's Bureau of Labor Statistics' (BLS) calculations for September 2004, employers spend an average of $7.40 per hour per employee on benefits alone. That amount includes benefits employers are required to pay and voluntary benefits that range from paid days off to employer contributions toward health insurance and retirement income.

Of the average $7.40 per hour that employers paid for benefits, about 28 percent of benefits (or 8 percent of compensation) was associated with legally required payments for Social Security taxes, unemployment insurance, and worker’s compensation. Employers' contributions toward health insurance accounted for a quarter of benefits costs (7 percent of compensation), paid leave accounted for about 23 percent of total benefits (over 6 percent of compensation), and employers' voluntary contributions toward retirement and savings plans accounted for about 14 percent of benefits (4 percent of compensation).

Benefits, of course, aren't the only added costs. In addition to benefits, employers have general overhead expenses to account for such as the cost of office space, equipment and supplies.

For more information on the cost of employee benefits in big and small businesses see http://www.sba.gov/advo/research/rs262tot.pdf