60+ Payroll Statistics & Facts You Need To Know [2024]

March 29, 2024 0 Comments

Are you still using spreadsheets to manage payroll?

More than 34% of business owners still use spreadsheets to manage their payroll manually.

Manual management can be time-consuming and lead to errors, right?

Nearly $7 billion in penalties are collected from the company for payroll errors.

Payroll errors are costly!

What’s the alternative?

Payroll statistics suggest that 80% of payroll processing costs can be reduced by automation.

62% of companies were using cloud payroll systems in 2023.

61% of companies outsource their payroll-related work from experts. 

Curious about the trends shaping payroll in 2024? Let’s delve into illuminating payroll statistics and understand how people are managing their payrolls.

Top Payroll Statistics: Editor’s Pick

Payroll taxes statistics
  1. Nearly twice as many workers prefer higher wages over better health benefits. [3]
  2. 63% of employees confirmed that they live paycheck to paycheck. [3]
  3. 1 in 4 US workers live in a pay transparency state. [2]
  4. 90% of workers confirmed they received their paychecks on time. [3]
  5. Only 25% of workers have updated their W-4. [4]
  6. 22% of Europeans are paid incorrectly. [9]
  7. 20% of gig workers complain that they have been paid too late and 20% have been paid too little. [10]
  8. Combining automated timekeeping and payroll helps to reduce error rates by nearly 67%. [12]
  9. 34% of companies reported that they do not outsource because they do not trust another company with money matters and outsourcing is costly. [20]

General Payroll Statistics & Facts

Wondering why you should care about payroll statistics?

Because for 59% of employees, payroll is the main factor determining job satisfaction. [27]

According to the US Bureau of Labor Statistics, typical pay frequencies are

Time PeriodPayroll Frequency
Weekly52 payroll weeks
Biweekly26 payroll periods
Semi-monthly24 payroll periods
Monthly12 payroll periods
Source: WTW

Biweekly payroll is the most common payroll in the US. [30]

Women earn 17% less than men on average. [5]

How much should a company expand on payrolls?

Payroll expenses between 15 to 30% of gross revenue is the safest for most of the companies. [28]

70% of small business owners reported payroll taxes are a burden for them. [8]

It is shocking to note that 25% of small businesses still use pen and paper for tracking finances. And 45% don’t even have an in-house accountant or bookkeeper. [29]

Businesses can easily save 20-30% annually by hiring freelancers over in-house employees. [29]

1 in 4 US workers live in a pay transparency state. [2]

Employee Payroll Statistics

What do employees think about the payroll systems of their employers?

Are they satisfied? Are you satisfied with your pay?

About 4 million workers changed jobs monthly in the first quarter of 2022 for more pay. [1]

This resulted in an average turnover rate of 30%. [1] 

63% of employees confirmed that they live paycheck to paycheck. [2]

According to the American Payroll Association, 93% of employees are paid through direct deposit. [3]

90% of workers confirmed they received their paychecks on time. [3]

Only 25% of workers have updated their W-4. [4] 

Are you one of those who haven’t updated yet?

Update your W-4 as it saves you from paying inaccurate taxes. Make a note!

Nearly twice as many workers prefer higher wages over better health benefits. [3] 

Payroll statistics- higher pay vs health benefits

Source: American Payroll Association

Payroll Statistics for Small Businesses

Let’s go through payroll statistics for small businesses in detail as small businesses employ 60.6 million US workers, which is about 47.1% of the private-sector workforce. [7]

93% of employees working in small businesses confirmed that their paychecks were on time. [5] 

Only 60% of employees said, they are ‘very certain’ that their paycheck deductions and net pay are accurate, while 27% said they are ‘somewhat certain’. [5]

According to JPMorgan Chase, more than 60% of small businesses experience fluctuating payroll cash outflows due to changes in employment. [6]

Only half of small businesses have enough cash to continue operating for more than 15 days if revenue is disrupted. [6]

Companies with irregular cash flows are more than twice as likely to be forced to shut down permanently. [6]

Over 61% of small companies suffer dynamic payroll cash outflows due to shifts in employment. [6]

Payroll Outsourcing Statistics

Companies outsource experts to handle their payrolls so that they can smoothly handle their work.

  • 61% of companies outsource their payroll-related work. [22]
  • Over half of small businesses outsource individuals or firms to handle their payrolls. [21]
  • 15% of organizations with less than 2,500 employees confirmed that they fully outsource payroll. [23]
  • 34% of companies reported that they do not outsource because they do not trust another company with money matters and outsourcing is costly. [20]
  • 80% of organizations have one insourced payroll technology installed. [19]
  • 20% of companies have more than one payroll technology for outsourcing. [19]

Payroll Errors & Challenges

US payroll errors statistics

Can ignoring small payroll errors cause big losses? Absolutely yes!

Nearly $7 billion in penalties are collected from the company for payroll errors. [13] 

One wrong digit in payroll calculation results in inaccurate paychecks and potential tax errors. [8]

Up to 30% of companies misclassify employees as independent contractors to save on taxes. But if caught or sued, these companies face back taxes, missed overtime pay, and fines. [8]

Organizations may take up to 10 days to resolve a payroll error. [11]

Combining automated timekeeping and payroll helps to reduce error rates by nearly 67%. [12] 

22% of Europeans are paid incorrectly. [9]

About 80% of employees who are paid incorrectly identify the problems by themselves. [9]

44% of employees might consider leaving their jobs if paid incorrectly. [9]

49% of employees might start looking for a new job after experiencing only 2 problems with their paychecks. [9]

Automation in Payroll Technology Statistics

So, it’s crucial to avoid payroll errors. How do we do that?

Streamlining HR & payroll processes with bookkeeping and tracking file systems is the widely accepted solution. [14]

But filling spreadsheets manually is boring, right?

Automation can reduce time-consuming and repetitive tasks in HR & payroll departments. [15]

The HR software market is expected to reach 33.57 billion by 2028. [16]

Growth in automation by department

Source: Workato

Let’s look at Payroll Automation Statistics.

  1. More than 34% of business owners still use spreadsheets to manage their payroll manually. [17]
  2. Only 34.8% of companies used cloud payroll systems in 2019. [17]
  3. 62% of companies will use cloud payroll systems in 2023. [17]
  4. 80% of payroll processing costs can be reduced by automation. [3]
  5. 29% of businesses admitted to using a payroll system that is 10 years old or older. [18]
  6. Around 83% of employers confirmed that they give their employees online access to a self-service portal with pay and benefits information. [3]
  7. Automation around direct compensation confirmed making up to 47% of all benefits and payroll benefits automation. [16]
HR software market growth statistics

Impacts of Gig Economy And Remote Work

There are 57.3 million gig economy workers today. [26]

Remote work and the gig economy are immensely increasing in the present times and changing the landscape of the job market. 

What about the payroll of gig and remote workers?

20% of gig workers complain that they have been paid too late and 20% have been paid too little. [10]

62% of employees worked from home during the pandemic. After the pandemic is over, employees do not want to return to work. [21]

58% of employees have the opportunity to work at home at least once a week, and 35% have the opportunity to work all week. [24]

40% of gig workers are independent contractors and consultants who earn over $100k every year. [25]

Agile cloud technologies have risen from 34.8% in 2019 to 62% in 2023. [22]

Latest Labor Market And Salary Statistics

  1. The labor market has 3.5 million fewer jobs compared to the projected number in 2022. [27]
  2. 62.2% of candidates are attracted to a job opportunity due to the salary aspect.
  3. The number of companies struggling to hire talent due to inflation has tripled (now 75%) since 2020. [30]
  4. 48% of US employers are consistently increasing their budgets for salaries every year. [30]
  5. To tackle the labor market problems 46% of companies are planning to improve the employee experience to address inflationary pressures and drive retention. [30]
  6. 57% of employers have hired candidates higher in the relevant salary range. [30]
  7. 90% of organizations considering salary increase adjustments are making 2 adjustments per year. [30]
  8. The salary increase budgets in the US rose to an average of 4.1%  in 2022, a 20-year high. [27]

FAQs 

What is the most common pay frequency in the US?

50% of US employers offer biweekly payroll, making it the most common pay frequency in the US.

How many companies do not have payroll?

Companies that do not have employees have no payroll. According to the US Small Business Administration Office of Advocacy, 81% of companies (about 26 million) have no payroll.

What is the percentage of payroll tax?

There are three payroll taxes in the US. 

  • Social security taxes. Paid by 6.2% of the employers
  • Social security taxes. Paid by 62% of the employees.
  • Medicare taxes. 2.9% and split evenly between both employer and employee

What is the average percentage of payroll expenses?

The average business payroll expenses should be between 15 to 30% of gross revenue. This is considered the safe zone for most types of businesses.

Conclusion 

As payroll is an essential part of every business, it is crucial to manage it efficiently. The traditional methods can be tedious, time-consuming, and costly. Understanding payrolls, taxes, and deductions helps employers to comprehend their payrolls. 

Payroll errors can be costly. One wrong digit in payroll calculation results in inaccurate paychecks and potential tax errors. Nearly $7 billion in penalties are collected from the company for payroll errors. 

It is necessary to be aware of common payroll mistakes and avoid them. 80% of payroll processing costs can be reduced by automation. Organizations are increasing the use of automation and outsourcing in payroll.

Sources

  1. Pew. Majority of U.S. Workers Changing Jobs Are Seeing Real Wage Gains
  2. CNBC. 63% of Americans are living paycheck to paycheck
  3. American Payroll Association. What’s more important to you, better health benefits or higher wages?
  4. Association of International Certified Professional Accountants. 45% of American Taxpayers Have No Idea When They Last Updated Their Withholding
  5. American Payroll Association: Getting Paid In America Survey
  6. JPMorgan Chase & Co.: A Cash Flow Perspective on the Small Business Sector
  7. Economic Innovation Group: Small Business Share of Employment by Industry
  8. National Employment Law Project. Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries 
  9. Sdworx. The Risks of Poor Payroll for Businesses
  10. Workforce Institute. The Workforce Institute
  11. Eddy. Payroll statistics 
  12. Zety. 2024 HR Statistics: Job Search, Hiring, Recruiting & Interview
  13. IRS. Collections, Activities, Penalties, and Appeals
  14. Symmetrical.ai. Modern HR technology
  15. Symmetrical.ai. Automation can reduce time-consuming and repetitive tasks in HR & payroll departments
  16. Workato. 18 HR automation statistics that stand out in 2023
  17. Zoomshift. 38 Interesting Payroll Facts and Statistics You Should Know
  18. Forbes. Why US Talent Shortages Are At A 10-Year High
  19. Deloitte. Global payroll benchmarking survey report
  20. Bloomberg Tax. Survey: Small-Business Owners Misjudge Time to Prep Payroll
  21. Oracle.  Small Business Payroll Statistics: Numbers You Need to Know
  22. GPMI. Why Payroll Automation Is Critical to 2022 Business Growth Strategy
  23. Business DIT. 9 Startling Statistics About Payroll Outsourcing: The Latest Insight
  24. McKinsey. Americans are embracing flexible work—and they want more of it 
  25. CloudPay. Gig Economy Index
  26. Thrive my way. Impressive gig economy stats 2023
  27. SHRM. 2023 Salary Budgets Projected to Stay at 20-Year High but Trail Inflation
  28. Chron. How Much of Gross Revenue Should Go to Payroll?
  29. Clutch. 25% of Small Businesses Still Record Finances On Paper, Risking Errors and Security BreachesBLS
  30. WTW. U.S. pay increases to hit 4.6% in 2023