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10

Occupations were classified according to definitions used in the 1970
Census. Within an establishment, specific job categories are selected to repre-
sent broader occupational definitions. ‘The sample establishments were classified
in industry categories based on the 1972 Standard Industrial Classification (SIC),
as defined by the U.S. Office of Management and Budget. Within the private sector
sample, establishments are designated by a 2-digit SIC, while in State and local
governments, industrial categories vary from a more specific 3-digit SIC such as
elementary and secondary schools to a broader major industry division such as
public administration. Each establishment is also classified by ownership—-State
government, local government, or private.

Fixed employment weights from the 1970 Census are used each quarter to
calculate the most aggregate indexes—civilian, private, and State and local
governments. ‘These fixed weights are also used to derive all of the industry and
occupation series indexes. For the series based on bargaining status, region, or
area size, however, employment data are not available from the Census. The 1970
employment weights are reallocated within these series each quarter based on the
current sample. The indexes for these series, consequently, are not strictly
comparable to those for the aggregate, industry, and occupation series. A fuller
explanation of the calculation of index numbers appears in an article, "Estimation
Procedures for the Employment Cost Index," in the May 1982 issue of the Monthly
Tabor Review. The June 1985 issue of the Monthly Labor Review contains an article
“Introducing new weights for the Employment Cost Index," that describes how 1980
weights will be used in calculating the HCI beginning in June 1986.

Data are collected for the pay period including the 12th day of the survey
months of March, June, September, and December. HCI statistics are neither
annualized nor adjusted for seasonal influences. For example, the 1.0 percent
change in wage and salary rates for "private industry workers" in the 3 months
ended March 1986 (table 4) is the actual percent change in straight-time
average hourly wage and salary rates fram the pay period including the 12th day
of December 1985 to the comparable Pay period in March 1986.

More detailed information on the ECI is available in several articles and
publications. These include a chapter in the BLS Handbook of Methods (Bulletin
2134-1), "The Employment Cost Index." ‘wo 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
and a historical listing of HCI data are available upon request. A historical
listing of ECI data also appears in the May issue of Current Wage Developments.



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9

EXPLANATORY NOTE

The Employment Cost Index (ECI) is a quarterly measure of the change in the
price of labor, free fram the influence of employment shifts among occupations
and industries. The BCI wage and salary series is limited to changes in wage and
salary rates, defined as the hourly straight-time wage rate or, for workers not
paid on an hourly basis, earnings divided by the corresponding hours. Straight-
time wage and salary rates 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 wage and salary rates.

: The compensation series includes employer costs for employee benefits as
well as wages and salaries. Benefits covered by the BCI include:

Paid leave - Paid vacations, paid holidays, paid sick leave,
and other paid leave;

Supplemental pay - Premium pay for overtime and work on week-
ends and holidays, shift differentials, and nonproduction
bonuses;

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

Other benefits - Severance pay, supplemental unemployment plans,
and merchandise discounts in department stores.

Excluded from both wages and salaries and employee benefits are such items
as payments-in-kind, free room and board, and tips.

The ECI collects data for both the private and public sectors, which are
published separately and also combined as the total civilian economy. The private
sector includes the total private econamy, excluding farms and households. The -
public sector covers State and local governments, but excludes the Federal
government.

Fach quarter, straight-time average hourly wage and salary rates and benefit
cost data (cents-per-hour-worked) are collected fran a probability sample of about
13,000 occupations within 2,200 sample establishments in the private sector and
about 3,500 occupations within 700 sample establishments in State and local
governments.


United States
. Department }
of Labor

‘ Bureau of Labor Statistics Washington, D.C. 20212

Technical, historical contact: USDL: 86-171
(202) 523-1165
Media contact: (202) 523-1913 FOR RELEASE: 10:00 A.M. E.D.T.

Tuesday, April 29, 1986

EMPLOYMENT COST INDEX - MARCH 1986

The Employment Cost Index (ECI) increased 1.1 percent in the 3 months ended in
March 1986, the U.S. Department of Labor's Bureau of Labor Statistics reported
today. ‘The December 1985-March 1986 increase was below the 1.3 percent gain in
the same period a year ago. For the year ended March 1986, the ECI rose 4.1 per-
cent, down from 4.8 percent for the year ended March 1985. ‘he ECI measures
changes in compensation costs, which include wages, salaries, and employer costs
for employee benefits. .

Wages and salaries alone rose 4.2 percent over the year ended March 1986. The
increase was higher for State and local government workers (5.5 percent) than
for private industry workers (3.9 percent), who make up a great majority of
employees covered by the RCI.

Over-the-year wage and salary increases in private industry were higher for
white-collar workers (4.5 percent) than for blue-collar or service workers (both
3.4 percent). Among white-collar workers, pay gains ranged from 3.9 percent for
professional and technical and clerical workers to 5.4 percent for managers and
administrators. Blue-collar pay increases ranged from 2.8 percent for nonfarm
laborers to 3.7 percent for craft workers. (See table 4.)

HRIKK HR KIK RRR RIRER RE RIIIK IIIA RRR III RI II IOI RII IIR III II I

* This release presents, for the first time, estimates of
canpensation cost change for the following occupational
categories: professional and technical workers, managers
and administrators, clerical workers, craft workers,
operatives, and nonfam laborers. Also shown for the
first time are measures of compensation cost change for
workers in durable and nondurable manufacturing, con-
struction, and retail trade.

Beginning with the June 1986 news release, ECI estimates
will be based on fixed employment counts from the 1980
Census of Population rather than from the 1970 Census,
as in the past. The updating of BCI weights is de-
scribed in an article, "Introducing new weights for the
* Employment Cost Index," in the June 1985 issue of the

* Monthly Labor Review.

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2

March 1985-86 pay increases in private. industry also were higher for workers in
service-producing industries (4.5 percent) than for those in goods-producing
industries (3.3 percent). Among goods-producing industries, increases ranged
from 2.4 percent in construction to 3.7 percent in nondurable goods manufacturing.
Pay gains in service-producing industries ranged fram 3.3 percent in health ser-
vices to 4.9 percent in wholesale trade.

Pay increases for nonunion workers (4.3 percent) exceeded those of union workers
(3.2 percent) during the March 1985-86 period. ‘This relationship held in goods-
producing industries (3.6 percent compared with 2.8 percent), as well as in ser-
vice-producing industries (4.7 and 3.9 percent, respectively). (See table 6.)
Since the year ended December 1983, over-the-year pay gains for nonunion workers
have consistently outpaced those of union workers.

The March 1986 ECI level stood at 130.6 for compensation costs, based on June
1981=100. The ECI covers private industry workers (excluding farms and house-
holds) and State and local government workers. It is not seasonally adjusted.

ECI data for June 1986 will be released on Tuesday, July 29, 1986, at 10:00 a.m.
E.D.T.