Description of Employment Cost Index

‘The Employment Cost Index is designed to measure changes in the rate of com

pensation of a standardized mix of labcr services, much like the fixed weight market
vasket of the Consumer Price Index. The Employment Cost Index is a measure of
change in the price of labor. It is not intended as a measure of the level of well-
being of workers.

The scope of the measure will be expanded to tctal compensation, covering
employee benefits as well as wages and salaries, and to broader industrial coverage,

resulting in an index of changes in all compensation. Publicaticn of ecmpensation

statistics including employee benefits is expected to begin in about a year, followed

by statistics for the total civilian economy in subsequent years. A Jong-

objective is to increase the amount of industry, occupation, and area detail ané the
frequency of publication. Seasonally adjusted statistics will become available as
socn as sufficient experience is accumulated to compute adjustment factors.

The Fmployment Cost Index statistics are now computed from occupational ware
and salary data collected quarterly from approximately 2,000 respondents representing,
with certain exclusions, the occupational employment composition of the private ron-
farm economy. . Respondents in the quarterly survey are establishments or eroups of
establishments composing a reporting unit. Establishments of all sizes are within
the sccpe of the survey. The major exclusions are the self-employed, unpaid family
workers, private household employees, and workers in Alaska and Hawaii. Except ror
the self-employed and unpaid family workers, these exclusions are temporary. It is
intended that agricultural employees will also eventually be within the scope of the
survey.

&traight-time hourly earnings are used in the Employment Cost Index es a proxy

for a measure of wage and salary rates. All cccupational wage and salary data are

collected as, or converted into, straight-time hourly earnings for the survey s+



he

Rate of wage and salary changes in Employment Cost Index,
September 1975 through September 1976

(In percent)
Series 3 months ending .
December March June September 12 months ending
1975 1976 1976 1976 in September 1976
All private nonfarm workers .........+ 1.8 1.9 1.7 1.5 7.2
Workers, by occupational grou
Professional, technical, and kindred workers. 1.7 1.4 1.1 1.7 6.1
Managers and administrators, except farm 1.3 1.3 2.1 1.0 5.8
Clerical and kindred workers . 1.8 2.2 1.3 2.0 Th
Craft and kindred workers ......-.- 1.8 1.9 2.0 2.0 re)
Operatives, except transport .. 2.2 2.8 0.8 2.0 8.0
fransport equipment operatives ..........006. 1.7 1.2 4S 0.6 8.3
Laborers, except farm .......seeeeeeeeee 2.4 2.1 1.9 1.2 7.8
Service workers, except private household ... 3.3 1.9 3.3 0.4 9.2
Workers, by industry division
Construction . - - 3.1 2.6 -
Manufacturing see eeeeeeeee 2.1 1.9 1.5 1.8 Th
Transportation and public utilities . 2.6 1.9 2.8 1.3 8.9
Wholesale and retail trade - 1.8 2.2 2.2 0.9 7.3
Services ......seseseeeee 1.8 1.5 1.5 1.7 6.6
Workers, by regi
7 2.4 0.9 14 2.5 6.3 no
1.5 2.4 1.3 1-7 7.0
Forth Central 2.3 1.5 1.6 1.5 T.2
West ...----.5-- 2.2 3.3 2.3 0.5 8.6
Workers bargein: status
Occupations covered by collective bargaining
BBLEEMENTS 62... e eee e cece eee ceceeeceeecee eh 1.6 1.8 2.4 8.5
Occupations not covered by collective bar-
gaining agreements ........-..cescceecceees 106 2.0 1.6 1.2 6.5
Workers, by srea :
Metropolitan areas ........... - 1.9 1.9 1.5 1.7 Te1
Other areas ........+.+0-00- eecesceesees 166 2.2 2.4 0.9 TL

Hote: ‘The statistics are percent changes in straight-time average hourly earnings over the period indicated. For

example, the 1.7 percent change for the "all private nonfarm worker" series in the second quarter 1976 is the
actual percent change in straight-time average hourly earnings from the pay period including the 12th of the
survey month of March to the comparable period in June. ‘The statistics are not annualized, nor are they
adjusted for seasonal influences. .

‘The computation of percent changes spanning more than one survey period is accomplished by c
successive changes for individual quarters. In actual practice, the compounding calculations are made to the
fifth decimal place. .

Dashes in the table indicate that the data collected were insufficient to meet statistical criteria for
Publication during the periods indicated.


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tions. Straight-time earnings are total earnings before deductions, excluding
premium payments for overtime and-for work on weekends and holidays and shift dif-
ferentials. Production bonuses and cost-of-living allowances are included in
straight-time earnings. Data pertain to the pay period including the l2th of the
survey months of March, June, September, and December.

The Index occupations conform to the Bureau of the Census occupational classifi-
cation system, which consists of 441 occupations grouped into 12 broad occupational
categories. Nine of these groups are now in the scope of the survey. Farmers and
farm managers, farm laborers and foremen, and private household workers are currently
excluded.

The published industry and occupational statistics do not pertain to mutually
exclusive groups of employees. Workers from all industry divisions may be repre-
sented in a major occupational group; conversely workers from all occupational groups
may be represented in a major industry division. For example, statistics for the
industry "Services" are based on occupational pay data for professionals, managers,
clerical workers, service workers, etc. Similarly, statistics for the group "Service
workers, except private household", covers such workers as janitors, waiters,
practical nurses, flight attendants, and guards; these may be found in real estate,
retail’ trade, transportation, and other industries, as well as services.

The Employment Cost Index statistics, although computed from levels of occupa-
tional pay, are measures of change. The pay level data collected from sample

reporting units are weighted into occupational ay

rages, by industry, using weights
essentially derived from a 1974 occupational employment survey. These industry pay
averages are aggregated for index computation using fixed weights obtained from the
1970 decennial census. Average pay levels for the overall measure and its components
are net evplicitly calculated as part of the computational process. Although pay

levels can be obtained by dividing the wage and salary aggregates by tne fixed index


cf

iR United States
News ==
‘ of Labor

Bureau of Labor Statistics Washington, D.C. 20212

BUREAU OF LABOR STATISTICS USDL-76-1453

A. Sackley (202) 523-1165 FOR RELEASE: 11:00 A.M. (EST)

K. D. Hoyle (202) 523-1913 Tuesday, November 30, 1976
Home: 333-1384

EMPLOYMENT COST INDEX--September 1976

Wage and salary rates measured by the Employment Cost Index rose 1.5 percent
for the 3 months ending in September 1976, it was reported today by the Bureau of
Labor Statistics of the U.S. Department of Labor. This increase was down from the
1.7 percent reported for the preceding March-to-June quarter and was the smallest
3-month increase since September 1975, when initial data for the index were collected.
Wage and salary rates have gone up 7.2 percent in the 12 months ending in September
1976. (See table.)

June to September 1976

Higher rates of pay in manufacturing and services were the exceptions to the
smaller percentage increases in wages and salaries reported for employees in other
industries from June to September. Collective bargaining settlements in rubber,
paper, and electrical machinery manufacturing and deferred increases in basic steel
contributed to the higher rate of wage change for workers in manufacturing. The
effect of these increases, together with the impact of the typically larger number
of construction agreements implemented in the summer, pushed the rate of pay increase
among workers in occupations covered by collective bargaining agreements to the
highest level since the 3-month period ending in December 1975. This jump in pay for
unionized workers was reflected in an accelerated increase for operatives, except
transport. In addition, cost-of-living and deferred increases in communications were
factors influencing accelerated pay gains for clerical workers. Salary increeses for
professionals contributed to the larger pay rise in the services industry.

Higher rates of pay increase were reported in the 3-month period for only three
of the eight occupational groups for which statistics are published. Pay for

professional, technical, and kindred workers rose 1.7 percent, up from 1.1 percent in


a

weights, these data do not correspond to actual average pay levels at any point in
time. However, because of interest expressed in the statistical design of this new
series, average pay levels have been computed for the overall and component published
series for September 1975, and these are available upon request.

In addition to the occupational groups and industries shown in the table,

published statistics cover sales workers, mining, and finance, insurance, and real

estate, but insufficient data preclude seperate publication cf these

iets

mentation is now underway to enable publication of statistics for sales workers.
Series for which statistics are published comprise over 90 percent of the total
sample. The relative importance of the industrial and other component submeasures,
as of September 1975, and estimates of relative sampling errors are also available
on request.

The regional coverage is as follows: ° Northeast--Connecticut, Maine, Mass-
achusetts, New Hampshire, New Jersey, New York, Pennsylvania, Phode Island, and
Vermont ; South--Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia,
Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina,
Tennessee, Texas, Virginia, and West Virginia; North Central--Illinois, Indiana,
Towa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South
Dakota, and Wisconsin; and West--Arizona, California, Colorado, Idaho, Montana,
Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.

A description of the survey design is provided in the chapter on the Employment

Cost Index in the BLS Handbook of Methods, BLS Bulletin 1910.

Future releases are scheduled for February, May, August, and November--2 months

after each quarter.


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the previous 3-month period; for clerical workers, the increase was 2.0 percent, up
from 1.3 percent; and the rise for operatives, except transport, was 2.0 percent, up
from 0.8 percent. The rate of wage increase for craft workers--2.0 percent--was
unchanged from the pricr quarter. Lower percentage pay gains were reported for
managers and administrators, down from 2.1 to 1.0 percent; for transport equipment
operatives, down from 4.5 to 0.6 percent; for nonfarm laborers, down from 1.9 to

1.2 percent; and for service workers, except private household, down from 3.3 to 0.4
percent. The size of the increase for transport equipment operatives was affected by
the Large number of these workers covered by trucking settlements that occurred in
the prior 3-month period.

With respect to industries, the rate of increase in pay for workers in manufac-
curing rose at a faster rate, 1.8 percent, than in the preceding survey period. Pay
rates for employees in services also went up 1.7 percent, following wage gains of
1.5 percent in the two previous survey periods. On the other hand, pay gains in
wholesale and retail trade slowed to 0.9 percent, after advances of 2.2 percent in
both the March and June quarters. Pay increases for workers in transportation and
public utilities declined from 2.8 to 1.3 percent in the absence of the major trucking
settlements noted above. The pay increase for the construction industry of 2.6 per-
cent, although down from the 3.1 percent of the June survey period, ranked highest
among all industry divisions.

Among regions, wage gains were highest in the Northeast--2.5 percent, up from
1.4 in the prior 3-month period--and lowest in the West--0.5 percent, down from
2.3 percent--reversing the pattern over the prior 9 months. The higher pay changes
in the Northeast were due in part to more collective bargaining activity covering
workers in the region. Pay gains for workers in the South and the North Central

regions were 1.7 and 1.5 percent, respectively.


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Pay of workers in occupations covered by collective bargaining egreements advanced
2.4 percent compared with 1.1 percent for other workers. Wage and salary rate gains
for workers in metropolitan areas rose to 1.7 percent in the third quarter from 1.5
percent in the second quarter; the rate of advance for workers outside of metropolitan
areas dropped from 2.4 to 0.9 percent.

September 1975 to September 1976

+ Over the 12 months since September 1975, increases in the rate of pay for the
higher salaried professional and managerial groups have been smaller than percentage
increases for clerical, blue-collar and service workers. The rates of pay increase
for workers in services, in the Northeast, and in occupations not covered by collec-
tive bargaining agreements have also been well below the overall measure of change.
On the other hand, blue-collar and service workers and those employed in transportation
and public utilities, in the West, and in occupations covered by collective bargaining

agreements received percentage pay increases well above the overall average.