What percentage of an average U.S. business' revenue goes to pay wages and salaries? Or employer-provided health insurance benefits? How much goes to pay debt? How much gross business income is retained on average to be invested in new capital?
You can spend a lot of time searching the web to try to answer basic questions like these and still fall short of filling in much of the whole picture, or you can take advantage of our already having done that for you! Our chart below presents our results graphically:
Here's how we came up with that visual breakdown. Starting with 100% of all revenue, or income, taken in by a business, we first find that through the end of 2013, the share of that amount that goes to compensate labor is 61%, with the remaining 39% being accounted for by capital.
Breaking down the labor side of the accounting, we find that 69% of that portion of total business revenue goes to actually pay wages and salaries, and 31% goes to provide employee benefits.
Continuing to drill down, we found that 30.4% of all benefits is represented by paid leave and supplemental pay, which covers things like vacations, holidays, overtime, bonuses and shift differentials. Employer provided health insurance accounts for 27.5% of all employee benefits, with employer provided life insurance adding an extra 1.5%. Pension and retirement benefits represent 15.6% of all money spent on employee benefits. Finally, mandated benefits for compensating labor, which includes the portions of Social Security and Medicare paid by employers as well as unemployment insurance and workers compensation, makes up the remaining 25% of money spent on employee benefits in the U.S.
Looking at the capital side of the ledger, we find that money here is split into three main categories: payments to debtholders (40% of capital), payments to business owners or shareholders (31.6% of capital) and money that stays with the business to support new capital investments (28.4% of capital).
That's how each of these major categories break down as either a percentage of labor or of capital. Our table below goes one step further and reveals the percentage share of each of these major categories consume of the total income generated in the U.S. going into 2014:
| Percentage Share of Component of Labor or Capital of Total Business Income, 2014 | ||
|---|---|---|
| Category | Component of Labor or Capital | Share of Total Revenue (or Income) |
| Labor | Wages & Salaries | 42.1% |
| Paid Leave & Supplemental Pay | 5.7% | |
| Employer Provided Health Insurance | 5.2% | |
| Pension & Retirement Benefits | 2.9% | |
| Mandated Benefits | 4.7% | |
| Employer Provided Life Insurance | 0.3% | |
| Capital | Payments to Debtholders | 15.6% |
| Payments to Shareholders | 12.3% | |
| Retained Earnings | 11.1% | |
If you want to drill down even deeper on your own, our data sources are presented below....
References
U.S. Bureau of Economic Analysis. National Income and Product Accounts Tables. Table 1.12. National Income by Type of Income. [Online Database]. Accessed 10 May 2014.
U.S. Bureau of Labor Statistics. Employer Costs for Employee Compensation - December 2013. [PDF Document]. 12 March 2014.
Bolton, Patrick, Mehran, Hamid and Shapiro, Joel. Executive Compensation and Risk Taking. Federal Reserve Bank of New York Staff Reports. Staff Report No. 456. [PDF Document]. June 2010. Revised November 2011.
Ameta, Michael. Factset Dividend Quarterly. [PDF Document]. 24 March 2014.