23 Payroll Statistics in USA to Know: Key Trends & Insights

Payroll statistics provide valuable insights into how businesses can improve their existing payroll management practices.

These statistics encompass different industries and business sizes, highlighting all the relevant aspects of managing payroll, such as employee salaries, benefits, taxes, and voluntary contributions.

If you’re keen on uncovering the most relevant payroll statistics that will help you improve employee retention and ensure you adequately meet your workers’ needs, this article will serve as your trusty guide.

Key Takeaways

• Payroll statistics are crucial in helping business owners determine how to enhance their payroll practices and ensure they comply with existing paycheck and labor requirements.
• Using payroll software, HR automation tools, or outsourcing payroll services reduces common payroll mistakes and significantly improves business efficiency.
• Mistakes in employees’ paychecks consequently increase a company’s turnover rates.

5 General Payroll Statistics

In general, some of the most striking payroll statistics reports have to do with comparing the different payroll practices between different businesses and comparing how the current inflation rate has impacted the wages of US workers from the previous years up to the present.

Let’s go over these statistical data one by one:

#1. Businesses in the US Prefer to Use Biweekly Payroll

The Current Employment Statistics (CES) survey by the US Bureau of Labor Statistics, which was conducted in February 2023, shows that 43.0% of businesses use a biweekly payroll cycle, making it the most preferred pay frequency by most industries.

Employees also prefer getting paid biweekly because they find the pay structure more flexible and suitable to their financial needs.

While a semi-monthly payroll enables companies to pay their workers twice, it usually follows a fixed schedule, meaning employers release salaries every 15th and 30th of the month.

Also, unlike in a semi-monthly pay cycle, where the pay dates can possibly fall on a holiday or a weekend, biweekly payouts usually fall on a business day.

Meanwhile, weekly pay frequencies are more common in construction, manufacturing, and other blue-collar industries. This pay frequency is used by 27% of establishments in general.

#2. Businesses Spend $2,000 to $8,000 on Payroll Services

Another key finding from the most recent USA payroll statistics by G2, one of the largest software marketplaces, details business owners' average expenditures when setting up payroll.

On average, businesses spend $2,000 to $8,000 on payroll services, with the estimated costs taking into account the following key factors:

• Number of employees in a company
• Payroll cycle used by the business
• Payroll service provider
• Additional services requested by the organization or business

Whether employers outsource their payroll operations or use in-house payroll software and staff, it can be costly to implement a solid payroll processing method that adheres to their business’ and employees’ needs.

#3. The Purchasing Power of Median US Workers is Steadily Increasing

According to the Statista Research Department, the 2.5% inflation rate increase in August 2024 has also led to a 4.6% increase in wages. Previously, the rise in wage value did not necessarily mean a boost in the purchasing power of US workers.

In the same report, Statista also cited the wage statistics from 2022 that showed a 6.7% wage growth, with the average annual earnings reaching $77,643 and the average hourly wages at $11.11.

Sadly, that did not change the reality that over half of the average US household earned less than $75,000 annually. Also, workers in the education and healthcare sectors only earned hourly wages or took home less than the required minimum wage.

At present, the US Department of the Treasury explained that since there has been a 0.8% adjustment in the median weekly real earnings, the purchasing power of American workers is expected to improve.

The median weekly real earnings refer to the wages or income adjusted according to the changing inflation rates.

The US Department of the Treasury also found that by the end of 2024’s second quarter, the median US worker had an extra $1,400 to spare from their earnings.

As of 2024, the minimum wage in the US is $7.25, although the rates may vary per state. The District of Columbia currently has the highest minimum wage rate of $17.50 per hour, while Wyoming and Georgia have the lowest, at $5.15 per hour.

#4. Millennials and Gen Z Weighing in On Work and Pay Expectations

Millennials and Gen Z workers are gradually dominating various industries and work environments.

According to getAbstract, 93% of millennial and Gen Z employees anticipate learning opportunities from their employers.

Flexible work hours, on-demand pay, workplace diversity and inclusion, health insurance, and mental health support are among the employment perks and fringe benefits that appeal to Gen Z and millennials.

#5. More Than 95% of Workers in the US Are Paid Via Direct Deposit

Most employers create direct deposit pay stubs and electronically send funds directly into each of their employees’ bank accounts. Direct deposit is secure and efficient and ensures workers receive their paychecks on time.

Interestingly, a survey by Onbe, a fintech company specializing in customizable and modernized payment solutions for businesses, indicated that 70% of hourly employees would choose same-day payment if offered by their employer.

5 Insightful Payroll Automation Statistics

The payroll automation statistics are a testament to the gradually increasing developments in the world of payroll processing. Here are some of the most notable payroll statistics about automation:

#1. Payroll Software as a Practical Solution

More and more business owners are recognizing the importance of being adaptable to technology to streamline how they process their workers’ compensation.

For instance, G2 cites that 31% of businesses that use payroll software have observed significantly fewer mistakes in calculating employee wages and updating their employment records.

Also, using user-friendly tools such as Paystub.org’s paystub generator is a simple yet effective way for startups to save time and maximize their resources while ensuring they prepare and send their worker’s pay stubs on time.

#2. Payroll Automation Helped Boost Employee Convenience & Reduce Payroll Costs

In a 2022 survey by the American Payroll Association called Getting Paid in America, 83% of respondents said they can instantly access information about their earnings and benefits.

The feedback was a response to the survey question about whether their employer provided them with an employee self-service portal that enabled them to view or access their salary details online.

In 2022, the average monthly payroll processing costs for small businesses were $150, while companies and organizations with 10 to 20 employees had to spend roughly $250 to $350 monthly to manage their payroll duties.

Additionally, employers who automate their HR practices claim to have saved approximately $2,342 in hiring costs, particularly in highly skill-based HR roles.

#3. Payroll Software for Boosting Efficiency & Transparency

Since 47% of payroll automation focuses on streamlining how to manage employee benefits and direct compensation, HR and payroll staff can automate administrative tasks and be more efficient with their time.

A trusty payroll software or employee portal enables big and small businesses to secure their employees’ pay information and enforce transparency at all times.

The 2022 Talent Survey from Eightfold AI also highlighted how 77% of business owners in the US have incorporated AI automation in their payroll processing systems.

Specifically, the organizations that included the use of Artificial Intelligence in payroll mainly used AI to improve their existing benefits and payroll administration practices.

#4. Integrating Payroll Processes with HR Systems

One of the steadily growing payroll management trends that has to do with automation is the integration of payroll with a business’ HR systems.

According to a 2023 report by the HR Research Institute, around 52% of the organizations surveyed claimed that payroll’s projected growth and development can be attributed to the integration of payroll, attendance, and HR systems and processes.

Calculating wages, bonuses, and payroll deductions is easily reflected in a worker’s employment history. The innovation allows HR staff to easily segment employees eligible for a promotion or a pay increase from newly hired or probationary workers.

#5. Expansion and Growth of the Payroll Software Market

Despite the -0.7% decline in the HR and payroll software market in 2023, experts still forecast that the market will reach up to $18.9 billion by 2024.

The steadily increasing demand for flexible payroll solutions, cloud management, automated updates on employee data, and mobile accessibility are critical factors in the payroll software market’s steady growth.

4 Eye-Opening Payroll Errors Statistics

The latest payroll statistics also show that the most common payroll errors employees encounter include underpayment, incorrect employee classification, and miscalculated work hours.

#1. Payroll Errors Are Costly

Payroll statistics show that making payroll errors can be costly for business owners. A single error or mistake can cost up to $291, not including the possible penalties for failing to comply with existing labor and paystub requirements.

Some of the payroll error costs that some employers have to deal with involve filing taxes. Specifically, employers may be charged late filing penalties if they file W-2 forms past the deadline or file incorrect Wage and Tax Statements.

According to the IRS General Instructions for W-2 and W-3 (2024), the penalties can range from $60 to $330 per form, and the amount can add up depending on the business size and number of forms that were filed late.

That said, small businesses may be subject to paying $232,500 to $1,329,000 in fines if they fail to address the mistakes in their employees’ Form W-2.

In some instances, a business could potentially face regulatory fines, settlements, and legal action from their employees, depending on the severity of the payroll errors committed.

#2. Repetitive Payroll Mistakes Cause Higher Turnover Rates

The latest payroll statistics cite that 34% of employees find it difficult to ignore how even the slightest paycheck mistakes significantly affect their satisfaction at work.

Remote’s 2024 Global Payroll Report cites that payroll errors such as late payments or inputting the wrong values on an employee’s take-home pay cause financial distress. At the same time, paycheck mistakes often push employees to form negative opinions about their employer.

Additionally, 7 out of 10 workers say their job satisfaction significantly decreases after finding errors in calculating their benefits and wages. Up to 49% of workers also admit that encountering up to two errors on their paychecks pushes them to look for other jobs.

Conversely, nearly 45% of Americans claim they would feel more involved in their job role if their employers took the time to explain how their income taxes and deductions affect their earnings.

Meanwhile, around 15% of US workers admit they wouldn’t be able to identify or recognize errors in their tax forms or any possible W-2 form corrections. The reason is that they hardly understand the details of their tax documents.

#3. Payroll Tax Errors Comprised Over 5 Million of IRS Penalties

The Internal Revenue Service Data Book reveals that the IRS has assessed up to $2.8 billion in delinquent returns, $25.6 billion in tax returns filed past the deadline, and $104.1 billion in unpaid assessments.

Employers who fail to furnish their employees’ W-2 forms or file information returns late may face W-2 and 1099 late filing penalties.

Alarmingly, around 30% of business owners attempt to reduce the taxes they owe by deliberately misclassifying their workers as independent contractors.

Not only is this illegal, but it is also technically a mechanism for employers to commit tax fraud.

#4. Payroll Errors Leave a Financial Dent on Employees

The most recent payroll statistics also helped create awareness of the impact of paycheck mistakes on employees’ personal finances.

Based on the payroll statistics presented by Morning Consult’s Paycheck Impact Study, 1 in 5 American workers last year dealt with severe financial repercussions following an error in their paycheck.

Of the financial struggles that US adults had to face due to their miscalculated earnings, 62% involved being unable to afford groceries, 73% included missed bill payment due dates, and 51% had to do with late mortgage or rent payments.

For Americans who live paycheck-to-paycheck, 82% said they would not be able to pay their bills on time or in full if over $500 was missing from their paycheck.

On a different note, around 90% of companies have stressed that their employees' financial wellness is their priority in 2024.

5 Promising Payroll Statistics by Industry

The following payroll statistics provide an in-depth look into the different payroll processing trends per industry.

These trends include the sectors with the highest and lowest median salaries and the relevant changes that industry leaders are looking into to boost their payroll operations:

#1. The Highest-Paid Industries Include the Utilities, Healthcare, and IT Sectors

The latest payroll data names the utility sector as the industry with some of the fastest-growing hourly wages.

On average, workers in the said field, such as field service technicians, utility operators, and plant operators, earn up to $51.08/hour.

Dentists, surgeons, and physicians are still at the top, with an average of $170,000 to $240,000, while occupations in the IT industry have been found to generate well above $100,000 in annual salaries.

Journalists, paramedics, and teachers are found to be among the workers with the lowest median salaries in the US in 2023. Journalists earn $57,320 annually, paramedics earn approximately $49,399, and teachers take home $59,029 yearly.

#2. Payroll Industry Adapting to the Gig Economy

The thriving gig economy compels more businesses to consider the cost-effective benefits of hiring freelancers or independent contractors.

In truth, one of the biggest concerns of gig workers or individuals who take on independent contractor jobs is the possibility of not getting paid correctly. Not to mention, around 20% of freelancers have reported late compensation.

Consequently, more and more payroll industry experts are recognizing the need for existing payroll systems to accommodate a wider variety of employment types.

Examples of payroll administration changes that may work for the freelance industry include flexible payment options and developing all-in-one payroll processing platforms.

#3. Employment Projection Trends

The payroll statistics from the US Bureau of Labor Statistics show that the employment projection for self-employed workers reached 9,708,900 in 2023 and is projected to reach 9,828,800 by 2033.

Meanwhile, the agriculture, fishing, hunting, and forestry sectors collectively reached an employment projection of 1,461,800 in the previous year, while the non-agriculture sectors had a projection rate of 156,679,100.

Employment projections refer to estimated changes and developments in employment rates and trends over a set period. Job applicants and policymakers use employment projections to assess the range of available occupations in a specific industry.

#4. Expansion of the Global Payroll Market

In 2023, the global payroll market value was assessed at $98.5 billion and is predicted to increase to $133.69 billion.

This is not surprising given that payroll services such as bookkeeping, accounting, and tax preparation are essential for all business sizes and a broad range of industries.

The surge in remote work setups and the continuous inclusion of mobile devices and internet use across different businesses also push the development of more payroll service apps.

#5. Increase in Nonfarm Payroll

Nonfarm payroll estimates the total number of US workers that comprise the country’s GDP (gross domestic product). It does not include the farming industry, active military proprietors and staff, private household services, and non-profit sectors.

According to The Economics Daily, employment rates in the nonfarm payroll industry significantly increased by 175,000 in 2024.

Of the 175,000, 56,000 jobs were contributed by the healthcare sector, 31,000 by social assistance, 22,000 by warehousing and transportation, and 20,000 by the retail industry.

4 Impressive Payroll Outsourcing Statistics

Given the promising future of the payroll market, it is not surprising that more businesses and organizations are looking to outsource their existing payroll management operations.

The statistics on payroll outsourcing below underscore the benefits of hiring experts and payroll service providers to handle complex accounting and HR processes:

#1. Payroll Outsourcing is Becoming More Popular Among Employers

A global payroll survey conducted by ADP shows that 69% of employers are considering outsourcing most, if not all, of their payroll processes. By 2027, payroll outsourcing is projected to have expanded by up to 6%.

Assigning repetitive payroll and administrative tasks to third-party payroll service providers lets businesses allot more time to train their in-house payroll workers and improve their existing knowledge and skills.

#2. Outsourced Payroll Processes Incur Fewer Mistakes

Surprisingly, the most recent payroll statistics by 360Connect also reveal that errors in payroll processing are more common when done in-house than when outsourced.

A probable explanation for this is that organizations specializing in payroll software and services are more adept and familiar with the nitty-gritty details of bookkeeping, accounting, managing employee compensation, creating accurate payroll reports, and adhering to payroll laws.

#3. Outsourcing Payroll Operations is Cost-effective

Thanks to the cost-effective advantages of payroll outsourcing, 61% of small business owners now prefer to delegate their payroll operations to third-party service providers.

Other notable reasons why more and more companies choose payroll outsourcing include:

• Reducing the possible risks in payroll compliance
• Boosting employee data security
• Regulating the costs of HR operations by 50%
• Reducing tax penalties and improving compliance with federal, state, and local tax regulations
• Improving employee satisfaction

#4. Some Companies Remain Skeptical About Payroll Outsourcing

Despite the increasing preference to outsource payroll processes, around 34% of business owners feel that hiring an external organization to fulfill their payroll operations is more costly.

Other business owners are also doubtful about entrusting the security of their financial information and employee data to a third-party payroll provider.

As such, 80% of organizations use insourced payroll software and continue handling their payroll operations in-house.

Final Thoughts

The payroll statistics discussed in this article highlighted some of the most pressing payroll management issues that business owners must address.

Conversely, some of the payroll data we’ve mentioned also underscored the payroll industry's promising future, such as the steady expansion of the global payroll market and a projected increase in payroll outsourcing.

While not all of these statistics and numbers may resonate with you, you may find some of them helpful when you want to boost your payroll practices, adhere to your employees’ demands, or invest in your business’s long-term growth.