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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), y
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
. @xplanation 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
Labor 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 ECI 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. ECI statistics are neither
annualized nor adjusted for seasonal influences. For example, the 1.1 percent
change in wage and salary rates for "private industry workers" in the 3 months
ended June 1985 (table 4) is the actual percent change in straight-time
average hourly wage and salary rates from the pay period including the 12th day
of March 1985 to the comparable pay period in June 1985.

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 ECI data are available upon request. A historical
listing of ECI data also appears in the May issue of Current Wage Developments.

The ECI news release for the September 1985 quarter will be issued
October 29. .


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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 ECI 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 vided 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 ECI include:

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

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

Insurance benefits - Life, health, and sickness and accident
“Tnsurance;

7

Retirenent and savings benefits = Pension and other retirement
plans and savings thrift plans;

ilewiy required benefits - Social security, railroad retirement
Supp. retirement, railroad unemployment insurance,
Federal and State unemployment insurance, workers' compensation,

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 roam 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 economy, excluding farms and households. The
public sector covers State and local governments, but excludes the Federal
government.

Each quarter, straight-time average hourly wage and salary rates and benefit
cost. data (cents-per-hour-worked) are collected from a probability sample of about
12,000 occupations within 2,200 sample establishments in the private sector and
about 3,600 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: 85-300
(202) 523-1165

Media contact: (202) 523-1913 FOR RELEASE: 10:00 A.M. E.D.T.
. Tuesday, July 30, 1985

EMPLOYMENT COST INDEX - JUNE 1985

The Employment Cost Index (ECI) increased 0.7 percent in the 3 months ended in
dune 1985, the U.S. Department of Labor's Bureau of Labor Statistics reported
today. ‘The March-June 1985 increase was about the same as the 0.8 percent ad-
vance in the same period a year ago. For the year ended June 1985, the ECI rose
4.6 percent, down from 5.5 percent for the year ended in June 1984. The ECI
measures changes in compensation costs, which include wages, salaries, and
employer costs for employee benefits.

Wages and salaries alone rose 4.5 percent over the year ended in-June 1985. The
increase was higher for State and local government workers (5.5 percent) than
for private industry workers (4.3 percent).

Nonunion workers in private industry had wage and salary increases averaging 4.8

over the June 1984-85 period, campared with 3.4 percent for union workers.
This is the seventh consecutive quarter the over-the-year pay gains for nonunion
wotkers outpaced those of union workers.

Wage and salary advances in private industry also varied by occupation and indus-
try group during the June 1984-85 period. Among white-collar workers, pay gains
ranged from 4.0 percent for professional and technical workers to 6.1 percent for

HRAEERREREREREKEREERERE RE EERERERERERERAEEREREEREEREREREREREREREER
This release provides first-time estimates of quarterly
compensation change for workers in the following industry
groups (table 3):
Transportation and Public Utilities
Transportation
Public Utilities
Wholesale and Retail Trade
Finance, Insurance, and Real Estate
Services
The release also provides initial estimates of quarterly
wage and salary change for transportation industries and
for public utilities (table 4). These new ECI series are
part of the Federal Goverrment's effort to’ improve
statistical programs for service-producing industries,
i.e., transportation and public utilities; trade; finance,

insurance, and real estate; service industries; and

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2
managers and administrators (table 4). ‘The range for blue-collar groups was from
2.7 percent for transport equipment operators to 4.0 percent for craft and kindred
workers

. The variation in average pay gains by industry group in the year ended
June 1985 was from 2.3 percent in construction to 5.7 perce-t in wholesale trade.

For the year ended June 1985, compensation cost increases (4.6 percent) were
below gains a year ago (5.5 percent). The slowdown occurred mainly for private
industry workers (4.2 percent, down from-5.4 percent). For State and local
government workers, compensation costs increased at about the same rate as a year
earlier (6.1 percent and 6.2 percent, respectively). .

The June 1985 ECI level stood at 126.4 for compensation costs, based on June
1981=100. The ECI covers private industry (excluding farms and households) and
State and local government workers. It is not seasonally adjusted.