WAGE RATES FOR ECONOMIC ANALYSES OF 

THE TOXICS RELEASE INVENTORY PROGRAM 

Cody Rice 

Analytical Support Branch 

Environmental Analysis Division 

Office of Environmental Idormation 

U.S. Enviromentd Protection Agency 

April 11,2882 

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The Office of Environmental Information administers the Toxics Release Inventory (TRI) 

program requires annual reporting from facilities in manufacturing and certain 

as well as federal facilities. Using readily available information and 

owner/operators are responsible for completing TRI reports on toxic 

management activities. 

The wage rates of personnel at reporting facilities are used to (quantifythe cost of the time 

gathering information, making estimates, and completing the T.EU reports. Base hourly 

ages for relevant personnel are loaded with factors for benefits and {overheadto 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 collection programs. 

CAIR-Based Method 

This section describes the CAIR-based method. 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 of Labor Statistics (BLS) for all goods-producing, 

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-vateindustries.I 

Managerial and technical level wage rates are constructed as c:ompositesof the BLS wage 

for several higher-level occupational categories and levels. Managerial labor is assumed to 

of plant or facility research managers, legal managers, and financial managers. 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 of Labor, Bureau of Labor Statistics. Occupational Compensation Survey, National Summary, Bulletin 

2 58, Tables D-1 and D-3. 

The method used for the origind CAIR analysis also used wage information for chemists in estimating the managerial and 

teihnical wage rates. A revised version of the method used engineer salary data in lieu of chemists because updated 

i ormation on wage levels for chemists was not available from BLS. The engineer salary information was expected to be 

ax to chemist salary information. 

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The additional cost of benefits, such as paid leave and insurance, is obtained from data for 

lite-collar occupations in private, 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 45percent 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 of this 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 from the description above 

that the composite wage rates reflect an extreme assumption that completion of TRI reporting 

heavily weighted toward 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 of Labor, Bureau of Labor Statistics. Employer Costsfor Employee Compensation. 

Heiden Associates,Final Report: A Study of Industry Compliance Costs Under the Final ComprehensiveAssessment 

rmation Rule, Preparedfor the Chemical ManufacturersAssociation,December 14, 1989. 

' Memorandumfrom J. Kames to Brian Muehling (EPNQTS) on Updating of Unit Laboa Costs to Reflect Inflation and 

ustry Comments for CAIR, Centaur Associates Inc. May 28, 1987. 
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her than the 90* percentile wages for the managerial and technical. labor categories, and close 

he 90fhpercentile wages for the clerical labor category. 

CAIR-based Cornmsitewanes vs. gofhPercentile ]BLS Wanes 

9QthPercentile 

$40.16 

$19.26 

Zse composite wage rates imply that only personnel who rank in the top 10 percent of the most 

hly paid workers in private industry complete TRI reports. While this may or may not have 

:n the case as industry first responded to TRI reporting requirements fifteen years ago, it seems 

ch less likely today. Over the years, TN reporting has become more routine as industry has 

ned experience with the regulatory requirements. EPA has eliminated many areas of 

:ertainty through the promulgation of additional regulatory notices 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 entirely by the 

ff at the highest compensation levels. A more representative mix of personnel is now more 

:ly to be responsible for TRI reporting. 

Another problem with the CAR-based method is the continued availability of updated 

ge data for the relevant occupational groups and levels. The OCS (datawere last available for 

26. BLS has replaced OCS with the National Compensation Survey (NCS). While NCS 

lresses many of the same topics, methodological changes have eliminated the specific OCS 

xpational levels that were previously used to generate the composite wages. As a result, since 

>6the compo'site annual salary estimates have 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 continuing to 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. Department of Labor, Bureau of Labor Statistics. Employment Cost Index, Historical Listing. 
vised Method 

Given the issues with the CAIR-based method, it is approprialte to 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 facility personnel and be easy to 

dicate. 

While personnel that contribute to TIPI reporting may fall into a number of different 

ciplines, they can still be classified into one ofthree broad labor categories: managerial, 

hnical, and clerical. Average wage data for these categories is available in the Employer Costs 

Employee Compensation (ECEC) report from the Bureau of Labor 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 salaries for the “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 of benefits, such as paid leave and insurance, is also derived from 

ormation provided in the ECEC report. Loading factors for benefits are calculated separately 

- managerial, technical, and clerical labor by dividing the benefits percentage of total 

npensation by 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‘17 percent 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 

~wnin the following table. 

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. Department of Labor, Bureau of Labor Statistics. The March 2001 values for these series 

listed in Table 11 of the Employer Costsfor Employee Compensation Summary, released June 29,2001. 

’U.S. EnvironmentalProtection Agency, EPA Air Poll&on Control Cost Manual, Sixth Edition, 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 simplified wage rate method described here, the BLS 

tes of hourly total compensation being proposed correspond well with limited anecdotal 

idence supplied by industry. 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 

IBusiness 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 $48.11 $32. a 4 $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 

ITransportationNVarehouse $22.12 $24.96 $19.51 $20.13 $21.68 $24.59 

$15.70 $22.38 $28.70 $13.22 $20.00 $22.69 

28.75 $33.82 $38.36 

For comparativepurposes, composites of the total compensation rates shown above are 

splayed below. The composites were constructed by grouping the compensation rates into 

anagement, technical, and clerical categories. As in the CAIR-based method, labor categories 

e constructed using a variety of overlapping disciplines. These may be compared to average 

tal compensation rates from BES (ic9wages multiplied by the benefits loading factor). Note 

at this particular comparison is fairly limited since the SOCMA fig,uresare from just four 

cilities in the specialty chemicals industry. 

lo Employment Cost 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. Department of Labor, Bureau of Labor 

atistics. The December 2001 value for this series was 153.6as listed in Table 6 (page loo), of the Employment Cost Index, 

storical Listing (June 1989 = POO), dated January 31,2002. 

I' SyntheticOrganic Chemical ManufacturersAssociation,Project Real Cost: Pilot Study Report, December 1998, pg. 6-19. 

)tal compensation inflated to March 2001 using the ECI for private industry workers, goods-producing industries, white collar 

cupations. 

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It vs. BLS Average 

Average Hourly 

$45.41 

$36.95 

$20.03 

Without the $12O/hour outlier in the business management discipline, the management 

erage would be within 10 percent of the BLS average. The SOCMA technical average is less 

M the BLS average. The SOCMA clerical average is also within 10 percent of the BLS 

erage. This comparison demonstratesthat a method based on BLS average wages yields results 

gt are consistent with a more disaggregative approach. Wage rates vary from industry to 

dustry and from discipline to discipline, but the revised method generates results that are within 

acceptable range 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 a result, the BLS data yields a reliable cross-industry average that is 

propriate for programs like TRI that span a broad 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 statistics that are readily available and updated by the Bureau of Labor 

atistics. This method should be generally applicable to any information collection activity that 

quires some mix of management, technical, and clerical time. 

l2 U.S. Department of Labor, Bureau of Labor Statistics. Employer Costsfor Employee Compensation,Explanatory Notes, 

eased June 29,2001. 

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