Payroll statistics 2023 will help you minimize payroll expenses, avoid errors, and boost employee satisfaction. You will better understand payroll trends and the real impact of payroll on your company.

This article includes:

• Key payroll facts, stats, and trends, including charts and visuals
• Salary projections for 2023
• Stats related to payroll outsourcing, common payroll errors and challenges
• Automation and trends in payroll technology

The employment landscape is changing quickly. Thus, you must evolve with the times. What is NOT changing is the necessity to pay your employees, gig workers, and contractors: accurately and on time.

Get inspired with these payroll statistics, prepare in advance, and discover innovative payroll solutions!

Ready to take your payroll to the next level? Download our FREE guide to avoid costly payroll mistakes, assess your payroll, and identify areas for improvement!

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Click the links below to go directly to the payroll stats of your interest*:

General payroll statistics 2023
Salary projections
Payroll errors
Payroll technology & automation
Payroll outsourcing

*The information, data, and guidance provided in this article is for general information purposes only and does not constitute professional or legal advice.

General payroll statistics 2023

Let’s start with general payroll stats and facts.

Payroll has a huge impact on business profitability and employee retention. A company’s administrative and financial operations depend heavily on payroll.

But above all, your employees depend on payroll. If your employees’ (lack of) income affects their security, it will impact their productivity. They can even consider changing their job.

Thus, a solid and reliable payroll process is a must.

General payroll stats & facts

1. Payroll expenses falling between 15 to 30% of gross revenue is the safe zone for most types of companies (CHRON).
2. 40% of small business owners say taxes and bookkeeping are the worst and most time-consuming part of owning a business (SCORE).
3. 70% of small business owners say payroll taxes are a significant or moderate burden. 77% report income taxes create an extra burden (National Federation of Independent Business).
4. Over 61% of small companies suffer varying payroll cash outflows due to shifts in employment (JP Morgan Chase).
5. 25% of small businesses use pen and paper for tracking finances. 45% don’t even have an in-house accountant or bookkeeper (Clutch).
6. The most common pay frequency in the USA is biweekly (US Bureau of Labor Statistics).
7. There are twice as many payroll mistakes in homegrown payroll solutions (an average error rate of 11.4%) vs. third-party payroll solutions (6.1%) (Aptitude’s Payroll Index Report).
8. There are 59 million gig economy workers in the USA as of 2022 (Fortunly).
9. Businesses can save 20-30% annually by hiring freelancers vs. in-house employees (Hire).

54% of companies say there’s room for improvement in their current payroll policies and practices.

EY

Typical pay frequencies (US Bureau of Labor Statistics):

• Weekly: 52 payroll weeks
• Biweekly: 26 payroll periods
• Semi-monthly: 24 payroll periods
• Monthly: 12 payroll periods

Employee-related payroll statistics

1. 72% of US employees would experience financial difficulty if their paychecks were delayed by 1 week (American Payroll Association).
2. Almost 65% of employees live paycheck to paycheck (American Payroll Association).
3. 93% of workers in the USA get paid by direct deposit (American Payroll Association).
4. 84% of employees expect to get paid more every year they work for their company (Workforce Institute).
5. More than 65% of Americans prefer higher wages to better health benefits (American Payroll Association).
6. Women still earn 17% less than men (Harvard Business Review).

59% of employees say salary is the main factor that contributes to feeling fulfilled in their career.

SHRM

Improve employee retention in 2023 with this HR Planner!

HR Calendar 2023: Download Now

Payroll statistics 2023: salary projections

The current recession is challenging. Many companies are struggling to retain and engage their employees as inflation rises. 

According to a study by Willis Towers Watson (WTW), many organizations are considering price increases and layoffs to increase pay and retain top employees.

WTW’s study included 1,550 companies across different sectors in the USA. Around 28,000 sets of responses were received from companies across over 135 countries worldwide.

Key takeaways from WTW’s study:

• Salaries are forecast to increase by 4.6% in 2023, mainly due to high inflation and a tightening labor market.
• 77% of companies react to inflationary pressures.
• 75% of companies are struggling to attract or retain talent (even after hiring freezes and mass tech layoffs). This number has tripled since 2020.
• 70% of companies spent more than expected in the past 12 months.

US wages may climb 4.6% in 2023 (the fastest increase in 15 years). Employers catch up with accelerating inflation and try to retain their employees amid a tight labor market.

WTW

Other salary projections and data:

• In some industries, base salary increases may surpass 4.5% or even 5% (2022–2023 Salary Budget Survey).
• 48% of US employers are planning higher year-over-year salary increase budgets for 2023 (Salary.com's Annual National Salary Budget Survey).

Businesses are also trying to find ways to retain workers besides higher pay, such as providing workplace flexibility or improving employee experiences and engagement. This has to do with changing employee expectations.

Download our HR Calendar 2023 to boost your employee engagement every day!

Salary projections 2023: the competitive labor market

Many businesses’ salaries still need to catch up to the inflation rate. It’s essential in an increasingly competitive labor market.

Organizations of all kinds, from global multinationals to modest enterprises, plan salary increase budgets to maintain the workforces they need.

Sue Holloway, director of executive compensation strategy at WorldatWork

The reality is that labor demand is strong, and labor supply hasn’t returned to pre-pandemic projections.

• As of June 2022, the size of the labor force was roughly 3 to 3.5 million smaller than its projection before the pandemic began (Brookings).
• Salary increase budgets in the USA rose to an average of 4.1%  in 2022, a 20-year high (WorldatWork's Salary Budget Survey).

To tackle the competitive labor market (WTW):

1. 57% of respondents have hired candidates higher in the relevant salary range.
2. 90% of organizations making or considering salary increase adjustments are making 2 adjustments per year.
3. 67% of respondents have provided more workplace flexibility.
4. 61% have already put a broader emphasis on diversity, equity and inclusion (DEI).
5. 46% of companies are planning or considering improving the employee experience to address inflationary pressures and drive retention.

The key decision drivers in setting pay budgets for 2023 include:

• The labor market
• Inflation
• Hiring and retention pressures
• Economic pressures

Depending on the inflation rate in 2023, employers might be forced to raise their salary budget projections next year (assuming they have sufficient revenues). 

Some employers plan to revise salary structures (including pay ranges) upward to achieve pay goals. Some have to reduce their budget increases if the economy slows down significantly.

Download our Gig Economy Guide to get ready for the future of work and new employment trends. Cut down costs in the economic recession!

Gig Economy Guide: Download Now

Payroll statistics 2023: payroll errors

Payroll errors can cost businesses time, money, and legal consequences, e.g. due to confusing tax laws and complex employment laws.

Additionally, employees expect to get paid accurately and on time. Otherwise, no matter the rest of their experience with your company, they will get frustrated and disengaged. Payroll errors and delays can even motivate them to change their jobs.

Miscalculating pay can result in:

• Employee dissatisfaction and lost trust in the workplace
• Low employee engagement and retention
• Poor reputation: being perceived as a financially unstable employer with poor (payroll) management
• Difficulties in attracting new talent
• High costs

It can take only 1 wrong digit in payroll calculation to result in inaccurate paychecks and potential tax errors.

The bottom line: it’s worth avoiding costly payroll mistakes at all costs.

Payroll errors statistics

1. 10-30% of businesses misclassify their employees as independent contractors (NELP).
2. 54% of Americans have experienced pay problems (Workforce Institute).
3. Low-performing organizations often need about 5-10 days for resolving a payroll error (APQC).
4. Combining automated timekeeping and payroll helps to reduce error rates by nearly 67% (Zenefits).

Additionally, according to the survey by SD Worx:

1. 44% of 4,000 European workers surveyed had been paid late by their employers 
2. Almost half of those that had been paid late had also been paid incorrectly
3. Nearly 80% of employees that had been paid incorrectly identified the problem themselves
4. 44% of respondents would consider leaving their jobs after being paid incorrectly

49% of employees will start looking for a new job after experiencing only 2 problems with their paycheck.

The Workforce Institute, Kronos Incorporated

Avoid costly payroll errors, assess your payroll, and identify areas for improvement with our FREE payroll guide!

Payroll statistics 2023: payroll technology & automation

Today streamlined HR & payroll processes, and a consistent employee experience are essential. Detailed bookkeeping and file tracking systems are important, and modern HR technology makes it easier.

Using spreadsheets to manage payroll manually is outdated and inefficient. There’s also the risk of payroll errors. This is where automation comes to the rescue.

Automation can reduce time-consuming and repetitive tasks in HR & payroll departments to the barest minimum. It can also provide employees with convenient and flexible self-service solutions.

As a result, the HR software market is growing. It’s expected to reach 33.57 billion by 2028 (from 15.59 billion in 2020, a growth rate of 10%) (Verified Market Research).

Consider the top 4 HR service providers worldwide (rankings from HRoot):

• Randstad ($26.5 billion)
• The Adecco Group ($26.2 billion)
• Recruit Holdings (22 billion)
• ManpowerGroup ($20.8 billion)

Now consider the top 4 HR service providers for profitability (HRoot):

• Paychex (36.3% operational profit margin)
• Paycom Software (30.7%)
• ADP (21.3%)
• Paylocity (12.0%)

Many of those companies are payroll service companies.

Payroll technology & automation statistics

1. More than 34% of business owners still use spreadsheets to manage their payroll manually (QuickBooks).
2. 62% of companies use cloud payroll systems (an increase from 34.8% in 2019) (Alight).
3. Automation can reduce payroll processing costs by 80% (American Payroll Association).
4. Around 83% of employers give employees online access to a self-service portal with pay and benefit information (American Payroll Association).
5. Earned wage access (EWA) programs are currently used by 10% of businesses (The Clearing House).
6. 60% of employed Americans want companies to offer workers immediate access to daily earned wages (CPA Practice Advisor).

29% of businesses use a payroll system that is 10 years old or older.

Kronos, American Payroll Association

According to Workato’s payroll and benefits automation data:

1. Automations around direct compensation make up 47% of all benefits and payroll benefits automations.
2. Payroll processing has risen the most in automation adoption (YoY), growing by 3,700%.
3. Payroll automations make up 14% of all HR automations.

HR & payroll automation can help businesses of various sizes.

Today modern HR & payroll solutions can help:

• Small businesses compete with larger companies.
• Larger businesses manage widespread workforces and meet the demands of remote, flexible, and hybrid work.

Symmetrical offers easy, automated payroll services with the support of a dedicated team of payroll experts to help you reduce payroll mistakes and improve your payroll system.

Watch the video below about 11 HR trends for 2023 that will shape the future of HR, including combining automations with humans.

https://www.youtube.com/watch?v=qJYFRHgAs8Y

Payroll statistics 2023: payroll outsourcing

1. 60% of small businesses still handle payroll in-house (Software Advice).
2. 45% of small businesses outsource payroll (National Small Business Association). 
3. 61% of employers have outsourced all or some of their payroll operations (Alight).
4. Payroll errors happen twice as frequently with in-house payroll vs. outsourced payroll (Aptitude).
5. 62% of companies with 6 or more payroll providers incurred payroll-related fines within the last 5 years (Alight).
6. 30% of companies say they’d strongly consider moving to a new payroll provider for a better user experience (Zenefits).

Outsourcing payroll can save businesses 18% (vs. companies handling payroll themselves).

PWC

Payroll statistics 2023: conclusion

Paying your employees accurately and on time is the unchanging aspect of payroll & HR.

Still, you must be on top of payroll trends and the latest payroll-related data (and of course, laws and regulations). 

The latest payroll statistics can help you:

• Minimize payroll costs
• Maximize efficiency and profitability
• Attract and retain top talent
• Prepare for what’s ahead
• Evolve with the times and get creative

Ready to take your HR and payroll to the next level?

Symmetrical is a better way to run payroll and HR admin. We offer easy, automated services with the support of payroll experts to help you:

• Put an end to payroll and HR chaos by automating tedious tasks such as manual data entries or calculations 
• Hire and pay people in a cheaper, easier, and more automated way
• Connect all your HR-related systems and integrate them into one automated process
• Improve your payroll performance on unprecedented levels

Sources

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The Risks of Poor Payroll for Businesses
Employment Projections: 2021-2031 Summary
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U.S. pay increases to hit 4.6% in 2023
U.S. pay increases to hit 4.6% in 2023 (WTW)
U.S. Talent Shortages at Ten Year High
Salary Budget Survey
18 HR automation statistics that stand out in 2023
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