Private sector workers cost employers an average of $45.38 per hour in March 2025, while government employees commanded significantly higher compensation at $64.00 per hour, according to new federal data released Friday.
The U.S. Bureau of Labor Statistics reported that total employer costs for civilian workers averaged $47.92 per hour worked in March, with wages and salaries accounting for $32.92 and benefits making up the remaining $15.00.
The data reveals a stark compensation gap between public and private sector employment. State and local government workers earned $39.42 per hour in wages and salaries compared to $31.89 for private industry employees.
Benefits consume larger share of government payrolls
Benefits represented a much larger portion of total compensation for government workers, accounting for 38.4 percent of employer costs versus 29.7 percent in private industry. Government employee benefit costs averaged $24.58 per hour compared to $13.49 for private sector workers.
The compensation disparity widens significantly at higher wage levels. At the 90th percentile, private industry workers cost employers $88.34 per hour while government employees reached $107.61 per hour.
Wage distribution shows economic inequality
The report highlighted substantial wage inequality across income levels. At the 10th percentile, private sector wages averaged just $14.28 per hour, while workers at the 90th percentile earned $59.25 per hour.
Government workers showed similar but less extreme wage distribution, with 10th percentile earners making $17.53 per hour and 90th percentile workers earning $66.86 per hour.
Insurance and retirement drive benefit costs
Health insurance represented the largest benefit expense for employers across all sectors. Private industry health insurance costs averaged $2.89 per hour at the median wage level, while government employers paid $7.67 per hour.
Retirement and savings benefits showed the most dramatic difference between sectors. Government employers contributed an average of $8.19 per hour for median workers’ retirement benefits compared to just $0.75 per hour in private industry.
Historical context shows wage growth
Comparing current data to March 2015 figures reveals significant wage growth over the decade. Private sector median wages rose from $16.13 to $23.18 per hour in nominal terms, representing a 44 percent increase.
When adjusted for inflation, the real wage growth was more modest. The 2015 median wage of $16.13 equaled $21.84 in constant dollars, making the real wage increase approximately 6 percent over 10 years.
The Bureau of Labor Statistics plans to release June 2025 employer compensation data on September 12, 2025.
