Private-Industry Health Benefit Costs Grew More Than Twice as Fast as Wages

Private-industry health-benefit costs climbed at more than double the pace of wages through September, widening the gap between employer spending on coverage and cash compensation for U.S. workers.

The Bureau of Labor Statistics (BLS) released the September Employment Cost Index (ECI) at 8:30 a.m. ET Friday, Oct. 30. Over the 12 months ending in September, private-industry wages and salaries rose 3.1%, while health-benefit costs grew 6.4%. Benefits overall increased 3.9%, and total compensation advanced 3.4%.

Economist Guy Berger estimated that wage growth would have been 0.2 to 0.3 percentage points higher if employer health contributions had grown 3% year over year, with overall compensation-cost growth held at its recorded rate. Berger described 3% as the pace from a few years earlier and wrote that the result would mean “slightly faster wage growth right now by about 0.2-0.3 percentage points.”

That is a counterfactual, or what-if estimate, rather than a measured effect in the index. The ECI adjusts for changes in the mix of occupations and industries; it tracks labor costs rather than household take-home pay or an individual worker’s premium bill.

Employer coverage costs also rose in dollars. Average annual family premiums reached $28,303 in 2026, up 5% from the previous year, while workers’ average annual contribution increased to $7,471 from $6,850. Workers paid about 27% of family premiums, similar to 2025. Eighteen percent of firms said they raised the share employees paid in response to higher projected costs; among large firms, 44% did.

Employer-sponsored health insurance covers nearly 157 million people under age 65. In the separate Affordable Care Act marketplace, the average monthly benchmark premium for a 40-year-old is $704 for 2027, up 12.6% from $625 in 2026. The benchmark uses the second-lowest-cost silver plan, making it a separate measure from employer family premiums.

The ECI also showed civilian compensation costs rising 0.8% from July through September, compared with a 0.9% gain in April through June. Wage growth over those three-month periods eased to 0.7% from 0.9%, as detailed in the quarterly ECI breakdown.