Recent data from the Bureau of Labor Statistics' "Employer Costs for Employee Compensation" (ECEC) survey can shed light on this issue. According to the ECEC data, workers' inflation-adjusted average total compensation per hour increased by 1.3 percent per year from 2000 to 2009 (from $26.23 per hour to $29.39 per hour in 2009 dollars)1  However, the annual growth rate of average wages and salaries during this period was much lower. More specifically, if one subtracts out the employee share of health insurance premiums2, workers' average hourly wage and salary compensation increased by just 0.7 percent per year from 2000 to 2009. As shown in the following figure, the corresponding growth rate in ESI premiums (including both the employer and employee share) was much higher at 5.1 percent per year.

As a result of these very different growth rates, the fraction of workers' total compensation going to employer-sponsored health insurance premiums increased from 7.4 percent in 2000 to 10.3 percent in 2009. If the growth rates in both workers' average total compensation and in employer-sponsored health insurance premiums remain at their recent rates, this share will increase to 15.0 percent by 2019 and will continue to increase thereafter. Thus in the absence of reform that slows the growth rate of costs, a steadily increasing share of workers' total compensation will be eaten up by health insurance premiums.

The increase from 2000 to 2009 in the average share of workers' total compensation going to ESI premiums is even more striking when one considers that a steadily declining share of workers and their dependents are covered by ESI. More specifically, according to the most recent data from the U.S. Census Bureau, the share of non-elderly adults and children covered by ESI fell from 68 percent in 2000 to 62 percent by 2008. This decline was to a large extent driven by a decline in the fraction of firms offering ESI to their workers, which fell from 69 percent in 2000 to 60 percent in 2009.3 Thus if one focused only on those firms that offered ESI during this period, the trends outlined above would be even more striking.

These trends, along with recent empirical research4 on this issue, make clear that increasing health care costs are reducing the wage growth of American workers below what it otherwise would be. The President's Proposal for health insurance reform would genuinely slow this growth in costs, allowing workers to enjoy more of the benefits of their productivity increases in the form of higher take-home wages.

Christina Romer is Chair of the Council of Economic Advisers
Mark Duggan is a Senior Economist at the Council of Economic Advisers who focuses on Health

The Final March for Reform is going strong -- yesterday, OFA supporters made the phones ring off the hook in Congressional offices on Capitol Hill and across the country. But for every member of Congress, there are eight anti-reform lobbyists swarming Capitol Hill -- and the upcoming vote is still too close to call.

So in these crucial, final days, we must make sure the voices of constituents break through the lobbyist attacks. And here's the plan to make it happen:

As the next step in the Final March for Reform, OFA supporters like you will be gathering at volunteer phone banks across the country. We'll be calling supportive voters in critical districts nationwide, asking them to reach out to their representatives and express their strong support for reform. A local OFA organizer will be on hand at every event, and no experience is required.

Here's how to join in: First, find and RSVP for an event near you. Before you go, make sure to invite friends to come with you, or help them find an event in their area on our website. Then join with local supporters at your event and reach out to as many voters as you can -- each call makes a vital difference.

Click here to get started.

As we speak, insurance-industry lobbyists are deploying from their emergency base at the D.C. Ritz-Carlton, banging down the door of every Congressional office on Capitol Hill to derail reform and preserve their ability to jack up premiums and deny care to those in need.

In the old Washington, that would have been an unstoppable barrage.

But thanks to your unprecedented organizing, the lobbyists have finally met their match: the American people.

So let's get out there, and make sure the people's voice is heard.

Please sign up to join the Final March for Reform event in your area:

http://my.barackobama.com/FinalMarchRSVP

Let's finish this,

Jeremy

Jeremy Bird
Deputy Director
Organizing for America

Laura Klitzka of Wisconsin is no stranger to the burden of crippling health care costs.  In September, we had a chance to visit with her at her home in Green Bay.  Here’s her story:

Click here to see the video.

With comprehensive health insurance reform, we can finally control rising health care costs and bring relief to Laura and her family and the many other American families struggling to keep up with their bills.  According to these leading economists, “the health care reforms passed by the House and Senate – with recent modifications proposed by President Obama – include serious measures that will slow the growth of health care spending.”  If reform fails, they add, “the chances of reducing growth of health care spending in the future will be greatly reduced.”

Today’s number, 41, is the latest in ‘Health Reform by the Numbers,’ our online campaign to raise awareness about why the time is now for health insurance reform.  You can follow the campaign on Whitehouse.gov and social networks like Facebook, Twitter, MySpace and LinkedIn.

If you’d like to help spread the word, share this blog post with your family, friends and online networks using the ‘Share/Bookmark’ feature below.

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