Employee compensation in the United States

Employer compensation in the United States refers to the cash compensation and benefits that an employee receives in exchange for the service they perform for their employer. Approximately 93% of the working population in the United States are employees earning a salary or wage.

Typically, cash compensation consists of a wage or salary, and may include commissions or bonuses. Benefits consist of retirement plans, health insurance, life insurance, disability insurance, vacation, employee stock ownership plans, etc.

Compensation can be fixed and/or variable, and is often both. Variable pay is based on the performance of the employee. Commissions, incentives, and bonuses are forms of variable pay.

Benefits can also be divided into company-paid and employee-paid. Some, such as holiday pay, vacation pay, etc., are usually paid for by the firm. Others are often paid, at least in part, by employees—a notable example is medical insurance.

Compensation in the US (as in all countries) is shaped by law, tax policy, and history. Health insurance is a common employee benefit because there is no government-sponsored national health insurance in the United States, and premiums are deductible on personal income tax. 401(k) accounts are a common employer organized program for retirement savings because of their tax benefits.