Understanding Payroll Benchmarks
How to read Census Bureau payroll data, what it includes and excludes, and how to benchmark your business compensation against 1,000+ industries.
Key Takeaway
Payroll per employee from Census data is the most accessible benchmark for whether your compensation is competitive, but it underestimates total compensation cost by 20-40% because it excludes benefits and employer taxes. Use it as a starting point for comparison, not as a complete picture of what it costs to employ someone.
What Payroll Per Employee Measures
Census Bureau County Business Patterns reports total annual payroll and mid-March employment for every NAICS industry code. PlainBizBench divides the two to produce a payroll-per-employee benchmark for each industry. This figure represents the average annual pay — wages, salaries, commissions, and bonuses — across all employees in that industry nationally or within a specific state.
Browse industry benchmarks on the sectors page or search for your specific NAICS code to see where your industry falls in the national compensation landscape.
Interpreting the Numbers
What it tells you: Payroll per employee reveals the compensation level typical for your industry. If your business is significantly below the benchmark, you may face retention challenges. If significantly above, you may be overcompensating relative to peers — or you may be in a higher-cost market or employing more skilled workers than the industry average.
What it doesn't tell you: The Census figure is an average that blends entry-level wages with executive compensation, part-time with full-time, and varies dramatically by geography. A restaurant chain's payroll per employee includes both the CEO's salary and the line cook's wages. Also, the figure excludes benefits, employer taxes, and contract labor costs — which can add 20-40% to the true cost of employment.
How to use it: Compare your industry's payroll benchmark on PlainBizBench to your own payroll-per-employee. If possible, compare at the state level rather than nationally, since geographic wage variation is significant. Use the benchmark as one input alongside local salary surveys and competitive intelligence.
Geographic Variation in Payroll
What it tells you: Census CBP data is available at the national, state, and county level. PlainBizBench shows state-level breakdowns that reveal how the same industry pays very differently across states. Professional services in New York may show payroll per employee twice the figure for the same industry in Mississippi — reflecting cost of living, talent pool, and market differences.
What it doesn't tell you: State averages still mask significant within-state variation. Payroll in rural Montana is very different from payroll in Billings. County-level data from the Census provides finer geographic resolution but is often suppressed for privacy when few establishments exist.
How to use it: Browse state pages on PlainBizBench to see your industry's payroll benchmark in your state. Compare to the national figure to understand whether your market pays above or below the national norm.
What This Means for Your Business
Step 1 — Find your industry benchmark. Search for your NAICS code or industry name on PlainBizBench. Note the national payroll per employee.
Step 2 — Compare to your own payroll. Divide your total annual payroll by your employee count. How does it compare to the benchmark?
Step 3 — Adjust for geography. Check the state-level benchmark. A business in San Francisco should expect to be above the national average; one in a rural area may reasonably be below.
Step 4 — Add benefits for total cost. To estimate your true compensation cost, add 25-35% to the payroll benchmark for benefits and employer taxes. This gives a more complete picture for budgeting and comparison.
Frequently Asked Questions
What is a payroll benchmark?
A payroll benchmark is the average annual payroll cost per employee for a specific industry, calculated from Census Bureau County Business Patterns data. It is computed as total annual payroll divided by total employment for each NAICS code. This metric helps business owners understand whether their compensation levels are competitive with industry norms.
How is payroll per employee calculated?
PlainBizBench calculates payroll per employee using Census Bureau CBP data: total annual payroll for an industry (in a given geography) divided by mid-March employment for that industry. This produces an average annual compensation figure that includes wages, salaries, commissions, and bonuses but does not include benefits, employer taxes, or contract labor costs.
Why does payroll per employee vary so much by industry?
Payroll per employee varies by factors including skill requirements, education levels, geographic concentration, union presence, and labor market competition. Knowledge-intensive industries (finance, technology, professional services) have payroll per employee of $80,000-$150,000+, while labor-intensive industries (retail, food service, agriculture) may be $25,000-$40,000. PlainBizBench shows these benchmarks for 1,000+ industries.
Does payroll per employee include benefits?
No. The Census Bureau CBP payroll figure includes wages, salaries, commissions, tips, and bonuses paid during the year, but does not include employer-paid benefits (health insurance, retirement contributions), payroll taxes (employer FICA, unemployment insurance), or payments to contract/temporary workers. Total compensation cost per employee is typically 20-40% higher than the payroll benchmark.
