WAGE RATES FOR ECONOMIC ANALYSES OF 

### THE TOXICS RELEASE INVENTORY PROGRAM

Cody Rice Analytical SupportBranch Environmental Analysis Division Office of Environmental Idormation U.S. Enviromentd ProtectionAgency

April 11,2882 I. czs 6

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I The Office of Environmental Informationadministersthe Toxics Release Inventory (TRI) program requires annual reporting from facilities in manufacturing and certain as well as federal facilities. Using readily availableinformation and owner/operators are responsible for completingTRI reports on toxic management activities. The wage rates ofpersonnel at reporting facilities are used to (quantify the cost ofthe time gathering information, making estimates, and completing the T.EU reports. Base hourly ages for relevantpersonnel are loaded with factors for benefits and {overhead to derive a loaded rate. Historically,the derivation ofthese loaded hourly rates has been based on a method for EPA's Comprehensive Assessment Information Rule (CAIR) in the mid-1980s. This the following objectives: 1)to describe the CAIR-based method, 2) to discuss certain have emerged with this method, md 3) to develop a revised method for deriving wage rates appropriate for TM and other infomation collectionprograms. CAIR-Based Method This section describesthe CAIR-basedmethod. In this method, labor devoted to c mpleting the 

### TRI reporting forms is divided into three categories: managerial, technical, and c erical. Wage data for these categories are obtained from the Occupational Compensation S ey (OCS) conducted by the Bureau ofLabor Statistics (BLS) for all goods-producing, p

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-vateindustries.I Managerial and technical level wage rates are constructed as c:ompositesof the BLS wage for severalhigher-level occupational categoriesand levels. Managerial labor is assumed to ofplant or facility research managers, legal managers, and financialmanagers. The anagerial wage rate is derived as a weighted composite ofthe wage rates of Engineers (OCS Accountants (QCS levels V-VI), and Attorneys (QCS levels IV-VIII). Technical

to be composed of operational labor equivalent

### to head process or project labor, such as accountants. The technical wage rate is derived as a ighted composite of the wage rates of Engineers (OCS levels 111-VIII) and Accountants (OCS els 111-VI). The clerical wage rate is an average of all the clerical wage levels (OCS levels Icomposite wages is shown in the table below.

CAIR-based COIII~QS~~~ Wages

U.S. Department ofLabor, Bureau ofLabor Statistics. Occupational CompensationSurvey,National Summary, Bulletin 2 58, Tables D-1 and D-3. The method used for the origind CAIRanalysis alsoused wage informationfor chemistsin estimatingthe managerial and te 

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hnical wage rates. A revised version ofthe method used engineer salary data in lieu of chemistsbecauseupdated i ormation on wage levels for chemistswas not availablefromBLS. The engineer salary informationwas expectedto be ax to chemist salary information.

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The additional cost ofbenefits, such as paid leave and insurance, is obtained from data for lite-collar occupationsinprivate, goods-producing industries. A loading factor for benefits is lculated separately for managerial, technical, and clerical labor. These data are obtained from ;Employer Costs for Employee Compensation (ECEC) report by the BLS.3 In the past, this tding factor has been between 

### 40 and 

### 45 percent ofwages. 

### An additional loading factor of 17percent for general overhead is based on information ivided by the chemical industry and chemical industry trade associ,ations." This loading factor is ded to the benefits loading factor, then applied to the base wage (e.,q., $25/hr x [1 

## + (0.4 

## + 17)] = $39.25/hr). The results ofthis method updated to March 2001 dollars are shown in the lowing table.

Labor Category Amagerial Technical Clerical 1996 ECI Ratio 2001 Composite (Wages) Composite Wages 6/96:3/01 Wages $50.77 1.22 $61.94 1.574 $38.62 1.18 $45.57 1.599 $15.15 1.20 $18.18 1.605 One problem with this method that may not be readily apparent fromthe description above that the composite wage rates reflect an extreme assumption that completion of 

### TRI reporting heavily weightedtoward top-level persomeP.' As seen in the table below, the composite wage es constructed using the CAIR-based method result in hourly wage rates that are actually

~ 

### ' U.S.Department ofLabor, Bureau ofLabor Statistics. Employer Costsfor Employee Compensation. Heiden Associates,FinalReport:A StudyofIndustry Compliance Costs Underthe Final Comprehensive Assessment rmation Rule,Preparedfor the Chemical ManufacturersAssociation,December 14, 1989. 

### ' Memorandumfrom J. Kames to Brian Muehling (EPNQTS) on Updating ofUnit Laboa Costs to ReflectInflation and ustry Commentsfor CAIR, Centaur AssociatesInc. May 28, 1987.1 1 

### t r 

### E 1 C ( 1 S her than the 90* percentile wages for the managerial and technical.labor categories, and close he 90fh percentile wages 

### for the clerical labor category. CAIR-based Cornmsitewanes vs. gofh Percentile ]BLS Wanes 9Qth Percentile
$40.16 $19.26 Zse composite wage rates imply that only personnel who rank in the top 10percent ofthe most hly paid workers inprivate industry complete TRI reports. While this may or may not have :nthe case as industryfirst responded to TRI reporting requirements fifteen years ago, it seems ch less likely today. Over the years, TNreporting has become more routine as industryhas ned experiencewith the regulatory requirements. EPA has eliminated many areas of :ertainty through the promulgation 

### of additionalregulatorynotices and the development of ailed guidance documents. With years of experience, industry has developed standard methods Auding automated reporting systems) for obtaining relevant data and completing the forms. It mealistic to assume that routine reporting requirements continue to be handled entirelyby the ff at the highest compensation levels. A more representative mix ofpersonnel is now more :ly to be responsible for TRI reporting. Another problem with the CAR-based method is the continued availability ofupdated ge data for the relevant occupational groups and levels. The OCS (data were last available for 26. BLS has replaced OCS with the National Compensation Survey (NCS). While NCS lresses many ofthe sametopics, methodological changes have eliminated the specific OCS xpational levels that were previouslyused to generate the composite wages. As a result, since >6 the compo'site annual salary estimateshave been inflated using Ihe Employment Cost Index 21) for the relevant occupational categories 

### inprivate ind~stries.~ It would be preferable to re updated compensation rates for the relevant labor categories that reflect the latest BLS thods rather than continuingto inflate the results of a discontinued survey.

National Compensation Survey, NCS: Occupational Wages in the United States, 2000, Supplemental Tables, Table 2.1 vate Industry, all workers). Inflated to Mar 2001 using Employment Cost Index, Historkal Listing (Wages and Salaries y), Private Industry Workers. U.S. Departmentof Labor, Bureau of Labor Statistics. Employment CostIndex,Historical Listing.vised Method Given the issues with the CAIR-based method, it is approprialteto develop a revised thod to characterizethe cost of time that facilities expend to compllete the TRI reports. This thod should use loaded hourly labor rates for a broader mix of facilitypersonnel and be easy to dicate. While personnel that contributeto TIPI reporting may fall into a number of different ciplines, they can stillbe classified into one ofthree broad labor categories:managerial, hnical, and clerical. Average wage data for these categories is availablein the Employer Costs Employee Compensation (ECEC) report from the Bureau ofLabor Statistics (BLS) for all 3ds-producing, private industries.’ The managerial labor rate is defined as the average hourly ges and salaries for the “Executive, administrative, and managerially’ occupational category. e technical labor rate is defined as the average hourly wages and salariesforthe “Professional :cia& and technical” occupational category. The clerical labor rate is defined as the average urly wages and salaries for the “Administrative support, including lclerical” occupational egorye The additional cost ofbenefits, such as paid leave and insurance, is also derived from ormationprovided in the ECEC report. Loading factors for benefits are calculated separately



## - managerial, technical, and clerical labor by dividingthe benefits percentage of total npensationby the wage percentage of total compensation (e.g.,0.2!85 / 0.715 = 0.40). As in the CAR-based method, an additional loading factor of‘ 17percent is applied for neral overhead. This loading factor is added to the benefits loading factor, then applied to the ;e wage (e.g., $25/hr x [l 

### + (0.4 

## + 0.17)] = $39.25/hr). The total loading for indirect costs is thin the range of 50 to 70 percent suggested in EPA guidance.’ The results of this method are ~wn in the followingtable.

Managerial $32.3 1 1.574 Technical $25.85 1.599

Clerical $13.97 1.685 $22.42

The ECEC report is updated on annual basis, so wage rates arid benefits loading factors 

## ’ Employer Costs for Employee Compensation,Private industry workers, Goods-producingindustries, white-collar upations, as published by the US.Departmentof Labor, Bureau ofLabor Statistics.The March 2001 values forthese series listed in Table 11 of theEmployer Costsfor Employee CompensationSummary, released June 29,2001.


## ’ U.S. EnvironmentalProtection Agency, EPAAir Poll&on Control Cost Manual, SixthEdition, EPA-452-02-001, January 12, pg. 2-34.n be updated as needed. The ECEC is usually released each summer with a reference month of arch. If updating is required before the next ECEC is available, average wages can be updated ing the Employment Cost Index (ECI) for white-collar occupations,in goods-producing, private dustries. lo While the actual mix of disciplines and total compensation levels at any given reporting cility will be more complicated than the simplifiedwage rate method described here, the BLS tes of hourly total compensation being proposed correspond well with limited anecdotal idence supplied byindustry. The table below shows total compensation rates for relevant sciplines at 

### 4 facilities that reported to TRT. in 1997." Pilot Participants Av~. 1997 AVg. 2001 I Business Management $75.26 $66.18 $120.00 $166.11 $81.89 $92.89 2 Marketing & Sales $33.90 $52.36 $'42.07 $42.78 $48.52 3 Engineering $48.1 1 $32.

### a4 $41 .Q1 $31.52 $38.20 $43.33 4 Research and $45.02 $32.33 $42.15 $31.85 $37.84 $42.92

Development 5 information Services NA $36.30 NA NA $36.30 $41.18 6 EHS Mgt. And Staff $25.49 $34.22 $51.43 $30.65 $35.45 $40.21 $23.28 $41.22 $25.32 $26.58 $29.10 $33.01 8 Quality Assurance $26.37 $32.33 $30.51 $22.84 $28.01 $31.78 9 Purchasing/Financial $21.69 $24.96 $40.37 $20.60 $26.91 $30.52 $24.37 $24.96 $19.58 $25.04 $23.49 $26.64 I TransportationNVarehouse $22.12 $24.96 $1 9.51 $20.13 $21.68 $24.59 $15.70 $22.38 $28.70 $1 3.22 $20.00 $22.69 28.75 $33.82 $38.36 For comparativepurposes, composites ofthe total compensation rates shown above are splayed below. The compositeswere constructed by grouping the compensation rates into anagement, technical, and clerical categories. As in the CAIR-based method, labor categories e constructedusing a variety of overlapping disciplines. These may be compared to average tal compensation rates from BES (ic9 wages multiplied by the benefits loading factor). Note at this particular comparison is fairly limited sincethe SOCMA fig,uresare fromjust four cilities in the specialty chemicals industry.

lo EmploymentCost Index (ECI), Wages and salaries only, Private industry workers, Goods-producingindustries, whiteliar occupations,Not seasonally adjusted, (June 1989 = loo>,as published by the U.S. Departmentof Labor, Bureau of Labor atistics. The December 2001 value for this serieswas 153.6 as listed in Table 6 (page loo), oftheEmployment CostIndex, storical Listing (June 1989 = POO), dated January 31,2002.

I' SyntheticOrganic ChemicalManufacturersAssociation,Project Real Cost:Pilot StudyReport, December 1998, pg. 6-19. )talcompensationinflatedto March 2001 using the ECI forprivate industry workers, goods-producingindustries,white collar cupations. 

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a tl a tl ii a

V tl 

### P ii a

-

P ti V 

### I rl Itvs. BLS Average
Average Hourly $45.4 1 $36.95 $20.03
Without the $12O/hour outlier in the business management discipline,the management erage would be within 10percent ofthe BLS average. The 

### SOCMAtechnical average is less M the BLS average. The SOCMA clerical average is also within 10percent ofthe BLS erage. This comparison demonstratesthat a method based on BLS average wages yields results gt are consistentwith a more disaggregative approach. Wage rates vary from industryto dustry and from disciplineto discipline,but the revised method generates results that are within acceptablerange of variation. One advantage to using BLS average wages is that cross-industry and cross-discipline riation is captured inthe BES data. The BLS data are generated through statistical sampling of ousands of facilities in goods-producing private industry. The 200'1 ECEC report relied on a obability sample of about 32,200 occupations within approximately 7,500 sample establishments private industry.12 As aresult, the BLS data yields a reliable cross-industryaverage that is propriate for programs like TRI that span abroad spectrum of industries. mclusion The revised method produces a realistic cross-industry accounting of the wage rates of rsonnel whose efforts feed into the completion and submission of ai TRI report. At the same ne, the revised method is relatively easy to derive, replicate, and update. This method uses zge and benefit statisticsthat are readily available and updated by the Bureau of Labor atistics. This method should be generally applicableto any information collection activity that quires some mix ofmanagement, technical, and clerical time.

l2 U.S. Departmentof Labor, Bureau of Labor Statistics. Employer Costs forEmployee Compensation,ExplanatoryNotes, eased June 29,2001. 

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