Percent changes for

Rate of wage and salary chenges in Employment Cost Index

Table 2.

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two-digit Standard Industrial Classification (SIC), as defined by the U.S. Office of Management
and Budget. Base-period sample weights are applied to the occupational data in the sample
establishments to calculate weighted averages on earnings, benefit costs, and compensation for
each occupation by industry.

Multiplying these averages by occupational employment weights from the 1970 Census produces
total wage and compensation bills for the occupations by two-digit SIC. The bills are summed
over industry/occupation components to produce levels of aggregation used in the ECI series
(e.g., occupational groups, industry divisions).

Dividing current quarter wage and compensation bills by those in the previous quarter
provides the quarter-to-quarter percent’ changes published for the ECI.

Data are collected for the pay period encompassing the 12th day of the survey months of
March, June, September, and Decembér. ECI statistics are neither annualized nor adjusted for
seasonal influences. For example, the 2.2 percent change in wage and salary rates for "all
private nonfarm workers" in the third quarter of 1980 (table 1) is the actual percent change
in straight-time average hourly earnings from the pay period including the 12th day of June
1980 to the comparable pay period in September 1980.

ECI wage and salary data are also published by region and metropolitan areas (based on the
location of the sample establishment) and for "union" and "nonunion" series (based on whether the
sample occupations are covered by collective bargaining agreements).

Publication of quarterly changes in compensation is limited to six major ECI series.

(See table 1.) These series are part of the ECI's basic occupation and industry estimating
structure and, with one exception, represent at least 3,000 occupations surveyed at an estab-
lishment level. Service workers' data Tepresent about 900 establishment/occupations. Compen-
sation data for other ECI series will be published after assessment of sample sizes and the
quarter-to-quarter changes in benefit costs.

More detailed information on the ECI is available in several articles and publications.
These include a chapter in the BLS Handbook of Methods (Bulletin 1910), "The Employment Cost
Index." Two articles also appeared in the Monthly Labor Review: "Employment Cost Index: a
measure of change in the ‘price of labor'," July 1975; and "How benefits will be incorporated
into the Employment Cost Index," January 1978. Reprints of these articles plus several other

descriptive pieces are available upon request.


Table 1. Rate of compensation and wage and salary changes in the Employment
Cost Index

Percent changes for 3 months ended in -

Series
March | June {September |March | June (September
1980 | 1980 |” 1980 1980 |1980 1980
Wages and
Compensation Salaries
All private nonfarm 2.7 2.3 2.3 2.4 2.1 2.2
workers 1/
White-collar workers —- 2.8 2.3 2.0 2.4 1.9 2.1
Blue-collar workers ~--- 2.4 2.5 2.7 2.3 2.5 2.4
Service workers -=---~-----~-- 4.3 1.1 2.1 3.5 1.1 1.7
Manufacturing industries 2.8 2.0 2.3 2.8 2.0 2.0
Nonmanufacturing industries ------- 2.7 2.5 2.3 2.2 2.1 2.3

1/ Excludes private household workers.


ECI cumulative quarterly percent changes,

Wages and salaries,
September 1975-September 1980 .

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1980

1979

1978

1977

1976

1975



United States
Department &
of Labor

Bureau of Labor Statistics Washingion, D.C. 20212.

USDL: 80-733

Beth Levin (202) 523-1165 FOR RELEASE: Immediate
D. Larson (202) 523-1220 Friday, November 28, 1980
Kathryn Hoyle (202) 523-1913

EMPLOYMENT COST INDEX - 3rd QUARTER 1980

Employee compensation rates measured by the Employment Cost Index (KCI) increased 2.3 percent
for the 3 months ended in September 1980, the U.S. Department of Labor's Bureau 9f Labor Statis-
tics reported today. Compensation includes wages, salaries, and employer costs for employee
benefits. Wage and salary rates alone were up 2.2 percent in the third quarter of 1980, compared
with 2.1 percent in the same period a year ago. In the 12 nohths ended in September 1980, wages
and salaries advanced 9.4 percent. The ECI, a relatively new statistical series, is not
seasonally adjusted. Compensation data were introduced in the first quarter of 1980, therefore

comparisons with the same quarter a year ago are not possible.

Compensation changes, June 1980 ~ September 1980

Both the manufacturing and nonmanufacturing industries posted compensation gains identical
to the 2.3 percent overall change. Among major occupational groups, however, blue-collar workers
outpaced all others with a 2.7 percent increase in compensation. Service workers’ gains were 2.1
percent, while white-collar workers averaged 2.0 percent.

Compensation for all private nonfarm workers was up slightly more than wages, 2.3 percent
compared with 2.2 percent. Nonmanufacturing showed the same gain for compensation and wages (2.3
percent) but for manufacturing, compensation (2.3 percent) rose more rapidly than wages (2.0
percent).

Blue-collar workers had larger increases in compensation (2.7 percent) than in wages (2.4
percent) as did service workers (2.1 percent and 1.7 percent). For white-collar workers, on
the other hand, wages increased slightly more than compensation--2.1 percent compared with

2.0 percent.


Explanatory Note

The Employment Cost Index (ECI) is a quarterly measure of the change in the rate of employee
compensation, free from the influence of employment shifts among occupations and industries with
different wage and compensation levels. Compensation is made up of two major components: Wage
and salary rates and employer costs for employee benefits.

Since 1975, the ECI has provided quarterly measures on changes in wage and salary rates,
defined as straight-time average hourly earnings. Straight-time earnings are total earnings
before payroll deductions, excluding premium pay for overtime, work on weekends and holidays,
and shift differentials. Production bonuses, incentive earnings, commission payments, and
cost-of-living adjustments are included in straight-time earnings, whereas nonproduction bonuses
(such as Christmas or year-end bonuses) are excluded. Also excluded are such items as payments—
in-kind, free room and board, and tips.

With the addition of employee benefit costs, the ECI measures quarterly changes in compen—
sation along with changes in wage and salary rates. Benefits covered by the ECI include:

Hours related benefits ~ Premium pay for overtime and work on weekends and holidays, paid
holidays, paid vacations, paid sick leave, and other paid leave;

Supplemental pay ~ Shift differentials, nonproduction bonuses, severance pay, and supple-
mental unemployment plans;

Insurance benefits ~ Life, health, and sickness and accident insurance;

Retirement and savings benefits - Pension and other retirement plans and savings and thrift
plans;

Legally required benefits - Social Security, railroad retirement and supplemental retirement,

railroad unemployment insurance, Federal and State unemployment insurance, workers' compen-

sation, and other legally required benefits such as State temporary disability insurance;

and

Other benefits - Merchandise discounts in department stores.

Each quarter, straight-time average hourly earnings and benefit cost data (cents-per-hour-
worked) are collected from a probability sample of about 10,000 occupations within 2,000 sample

establishments. Occupations were defined to correspond to 417 occupational categories used in

the 1970 Census.

The sample establishments were classified in 62 industry groups based on a


=2-

Wage gains--along with their impact on wage-related benefits such as paid
holidays, paid vacations, and employer contributions to Social Security--accounted
for about four-fifths of the compensation increase.

Wage and salary changes, June 1980-September 1980

The 2.2 percent average wage and salary gain for private nonfarm workers was
paced by a 2.3 percent rise in the nonmanufacturing sector. Within nonmanufacturing,
transportation and public utilities posted the largest rise (3.2 percent). This
advance reflected a deferred increase and cost-of-living adjustment under collective
bargaining covering a large number of workers in the railroad industry. Wage gains
were also high in construction (2.9 percent) where collective bargaining patterns
concentrate settlements in the spring and summer, Increases were lowest in wholesale
trade, averaging 0.9 percent.

Workers in manufacturing received pay advances averaging 2.0 percent, varying
widely between durables (2.5 percent) and nondurables (1.2 percent).

Pay advances for blue-collar workers (2.4 percent) were above those for white-
collar workers (2.1 percent). Service workers lagged behind both groups with a 1.7
percent rise. Blue-collar gains ranged from 2.8 percent for craft and kindred workers
to 1.4 percent for transport equipment operatives. Professional and technical workers
(2.7 percent) led all other white-collar occupations, while managers and administrators
had the lowest increase (1.6 percent).

Union workers' pay gains (2.9 percent) outpaced those of nonunion workers (1.8
percent) in the quarter. Workers covered by collective bargaining agreements had
similar increases in the manufacturing (2.8 percent) and nonmanufacturing (3.0 percent)
sectors. For nonunion workers, the pay advance was larger in nonmanufacturing (2.0
percent) than in manufacturing (1.2 percent).

Workers in the West received higher average pay increases, 3.4 percent, than those
in other regions of the Nation. The Northeast, South, and North Central regions each
registered a 1.9 percent pay gain. Wage increases in metropolitan areas (2.3 percent)

were larger than in other areas (1.5 percent).


Wage and salary changes, Septenber 1979-September 1980

The 9.4 percent change over the 12 months ended in September 1980 for all private
nonfarm workers continued the relatively high increases of recent quarters. Within
industries, advances in manufacturing (10.2 percent) outpaced those in nonmanufacturing
(8.9 percent) over the year. The increase for durable goods was 10.8 percent, compared
to 9.2 percent for nondurables. Nonmanufacturing gains were highest in transportation
and public utilities (10.4 percent) and lowest in retail trade (6.9 percent).

Blue-collar workers posted larger increases (10.0 percent) than white-collar
(9.1 percent) from September 1979 to September 1980. Service workers (8.4 percent)
trailed both of these groups. Within white-collar occupations, professional and
technical workers received the highest increase (11.1 percent) and managers and admin-
istrators showed the smallest gains (7.3 percent). Within the blue-collar group, the
largest increases were received by operatives except transport (11.3 percent), and the
smallest by transport equipment operatives (8.8 percent).

Union workers registered a 10.9 percent wage increase during the year. The in-
crease for these workers was 12.0 percent in manufacturing and 9.9 percent in nonmanu-
facturing. In comparison, nonunion advances were 8.6 percent for the year with both
manufacturing and nonmanufacturing showing identical changes.

Wage gains among regions were the largest in the West, averaging 10.6 percent.
Workers in the Northeast experienced the smallest rise, 8.9 percent. Metropolitan

area increases were higher (9.5 percent) than other areas’ (8.9 percent).