Labor Cost Revenue Percent
2022 National Average Value
22
%
What is Labor Cost Revenue Percent?
Labor Cost Revenue Percent is a benchmark that measures the total employee compensation and benefit costs as a percentage of the organization's revenue.
What is the average value of Labor Cost Revenue Percent?
According to the Saratoga Workforce Index, the national average Labor Cost Revenue Percent in 2022 was 22%.
Where can I get Labor Cost Revenue Percent benchmarks?
The annual Saratoga HR and Workforce Benchmarking Study releases the Labor Cost Revenue Percent benchmark for over 20 different industries each year. The national average is released as part of the annual Saratoga Workforce Index.
How is Labor Cost Revenue Percent calculated?
Labor Cost Revenue Percent is calculated by dividing the total employee compensation and benefit costs by the organization's revenue and then multiplying by 100 to get the percentage. Compensation costs include regular pay, overtime, pay premiums, commissions, cash performance related bonuses, sign on and referral bonuses, profit sharing, payments for time not worked, and severance pay and exclude any stock, ESPP payouts, or deferred compensation. Benefit costs include legally required payments, retirement and savings plan payments, life insurance and death benefit payments, healthcare benefit payments, and miscellaneous benefits.
What does a low Labor Cost Revenue Percent mean?
A low Labor Cost Revenue Percent may indicate a higher efficiency in terms of labor cost. However, lower values may also be due to significant outsourcing of major business functions or just be a function of the particular business.
What does a high Labor Cost Revenue Percent mean?
A high Labor Cost Revenue Percent indicates that the organization is spending a large portion of its revenue on labor costs. This could be a sign of inefficiency, but it could also be due to factors like high wages, generous benefits, or a highly skilled workforce.
What other benchmarks are relevant to Labor Cost Revenue Percent?
About the Saratoga Workforce Index
The Saratoga Workforce Index is an indispensable reference of national averages of 30 commonly requested HR metrics. Based on PwC Saratoga’s annual workforce benchmarking study of over 1000 metrics spanning hundreds of companies and over 20 industries, the Saratoga Workforce Index is your “quick start” guide to workforce benchmarks.
Download the guide to see the national averages for all of these:
- 90 Day Total Turnover Rate
- Average Number of Direct Reports
- Cost per Hire
- Director Headcount Ratio
- Executive Headcount Ratio
- Finance FTE Ratio
- First Year of Service Turnover Rate
- General & Administrative Function Voluntary Separation Rate
- Hire Rate
- HR FTE Ratio
- Information Technology FTE Ratio
- Labor Cost Revenue Percent
- Layers
- Learning & Development Investment per Employee
- Legal FTE Ratio
- Management Headcount Ratio
- Manager Headcount Ratio
- Offer Acceptance Rate
- One to Three Years of Service Voluntary Separation Rate
- Promotion Rate
- Racial/Ethnic Minority Headcount Percent
- Racial/Ethnic Minority Promotion Rate
- Racial/Ethnic Minority Voluntary Separation Rate
- Revenue per FTE
- Time to Accept
- Time to Start
- Turnover Rate
- Vacancy Rate
- Voluntary Separation Rate
- Women Executive Headcount Percent
- Women Headcount Percent
- Women Promotion Rate
- Women Voluntary Separation Rate
Need industry-specific benchmarks?
We provide these values as a reference point for discussions. However, given the high variance across industries, sizes and revenue, these national averages should NOT be used to make important business decisions or used in any formal reporting.
If you intend to use benchmarks for business decisions, please join Saratoga as a full member so you can have access to more specific comparison groups for each industry, revenue, size, profit/non-profit status and more. With a full membership, you’ll have access to over 1,000 metrics that are much more accurate and specific than a national average. The membership process is relatively simple, mostly automated and reasonably priced with a clear ROI.
Referencing Saratoga Workforce Index Data
If you choose to refer to these metrics in any of your materials, whether internally or externally, we ask that you include the following statement:
Excerpted from the Saratoga Workforce Index. © 2023 PricewaterhouseCoopers LLP, all rights reserved. Data is for discussion purposes only and cannot be used for investment decisions or financial evaluations.
You may include up to five metrics in any internal or external publication without any additional permissions. Contact us at saratoga@pwc.com if you want to use more than five or would like to reproduce the Saratoga Workforce Index in its entirety.
About Saratoga
Saratoga workforce and HR benchmarks provide reference points for executive-level discussions, context for people dashboards, and data to inform workforce and HR decisions. Hundreds of companies across over 20 industries trust Saratoga each year to supply over 1,000 validated workforce benchmarks around turnover, diversity, staffing, productivity, efficiency, fairness, and more.
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