Regional variation in hourly labor costs (pay & benefits)

Jennifer Christian

Let’s build our awareness of the economic pressures that employers face – especially the well-meaning ones who want to do “the right thing”.   


See data below from the Bureau of Labor Statistics for current hourly labor costs by region of the country.  No wonder companies are eager for AI and automation!  And whoa, baby! Look at the drop in cost per labor hour if you move your New England company to the East South Central region.  


If there are any business people on RETAINers, please correct me if I’ve got this wrong:    It only makes sense to employ people in operations – making things, providing services – if they produce substantially more revenue / save more money for the company than what they cost the company. That’s the “margin” idea.  The margin is used to (a) pay for the administrative costs of being in business including the leadership / management structure – and (b) create the profits.   If the prices the company can charge for its goods / services drop (due to market competition), and the labor costs can’t, the margin disappears.

Therefore, it is reasonable for employers to be uninterested in retaining workers who are less productive than others.   If we want to persuade employers to keep people employed despite a newly acquired impairment (whether temporary or long-lasting) that has altered their ability to perform their regular job tasks in their usual fashion  -- we gotta emphasize these distinctions:

--  There is a big difference between making "temporary adjustments" to a job as an aid to recovery, and making "reasonable accommodation"  under the ADAAA.   Ideally, either technique will make those impairments IRRELEVANT and permit full productivity.  That's what the ADAAA requires.  But it often makes sense for employers to voluntarily go beyond the requirements of the ADAAA when the impairment is likely to be short-lived.  
In many cases, especially common everyday musculoskeletal and mental health conditions,  allowing someone to return to work doing tasks or on a schedule that TEMPORARILY reduces performance expectations (tasks, hours worked, etc.) IS NECESSARY (strongly recommended) to speed healing and promote the fullest possible recovery -- and/or avoid over-reliance on or abuse of a benefits program.  

Employers may need help to see that it is usually better from an economic perspective -- and for employee morale -- to have someone who is on the payroll at work and being productive -- contributing SOMETHING -- rather than sitting home getting paid for doing nothing while recuperating.   All but the very smallest employers are driving up the cost of their benefits programs for coming years by using them unnecessarily this year.

When talking about "transitional work" or "modified duty" that DOES reduce productivity, we should always remember to put the word TEMPORARY, and provide an anticipated end date or review date.  Many employers set a limit of 90 days, which can be extended for a clear and reasonable cause.   


Jennifer Christian, MD, MPH

Chair, ACOEM Work Fitness & Disability Section (ACOEM members only)
Moderator, Work Fitness & Disability Roundtable (multi-stakeholder/multi-disciplinary)

Office:  508-358-5218 (preferred)

Mobile:  617-803-9835

Email: jennifer.christian@...








From: Bureau of Labor Statistics <service@...>
Sent: Monday, January 28, 2019 11:28 AM
To: jhchristian@...
Subject: The Economics Daily


Bureau of Labor Statistics


The latest Economics Daily article is available here: Highlights are below.

Private employer costs for pay and benefits were $42.06 in New England in September 2018


Employer costs for employee compensation for private industry workers averaged $34.53 per hour worked in September 2018. Employer costs were highest in New England ($42.06), the Middle Atlantic states ($41.95), and the Pacific states ($39.42).