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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 Month]:
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. CI statistics are neither
annualized nor adjusted for seasonal influences. For example, the 1.3 percent
change in wage and salary rates for "private industry workers" in the 3 months
ended September 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 June 1985 to the comparable pay period in September 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.

ECI news releases in 1986 will be published on the following schedule:

Reference Month Release Date’
December 1985 January 28, 1986
March 1986 April 29, 1986
June 1986 July 29, 1986

September 1986 : October 28, 1986


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SAIaVIVS ONY S39VM


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 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 ECI 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;

11 uired benefits - Social security, railroad retirement
and supplemental retirement, railroad uremployment 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 BCI 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 fran 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


© g

United States
: . Department é>
of Labor

Bureau of Labor Statistics Washington, D.C. 20212

Technical, historical contact: USDL: 85-460
(202) 523-1165
Media contact: (202) 523-1913 FOR RELEASE: 10:00 A.M. E.S.T.

Tuesday, October 29, 1985

EMPLOYMENT COST INDEX - SEPTEMBER 1985

The Employment Cost Index (ECI) increased 1.6 percent in the 3 months ended in
September 1985, the U.S. Department of Labor's Bureau of Labor Statistics re-
ported today. For the year ended in September 1985, the ECI rose 4.9 percent,
down from 5.1 percent for the year ended in September 1984. ‘The ECI measures
changes in compensation costs, which include wages, salaries, and employer costs
for employee benefits.

The 1.6 percent increase in compensation costs in the June-September period was
above the 1.3 percent gain in the same period a year ago. The higher rate of
change resulted from larger compensation increases for private industry workers
(1.3 percent, up from 0.8 percent). State and local government workers, on the
other hand, registered a 3.4 percent increase in June-September 1985, about the
same as the 3.5 percent gain a year earlier. Compensation cost changes for State
and local government workers are heavily concentrated in the June-September quar-
ter, whereas those for private industry workers are more widely dispersed
throughout the year.

For the year ended in September 1985, compensation cost increases (4.9 percent)
were below gains a year ago (5.1 percent). The slowdown was registered primarily
for State and local government workers (6.0 percent, down from 6.6 percent). For
private industry workers, compensation costs increased at about the same rate as
a year earlier (4.7 percent and 4.8 percent, respectively).

ERRRREKRRRERERE EKER ERIK EIR EAI KERIKERI RIK IAR AIEEE IARIII AISI.

* This release provides for the first time, estimates of

* quarterly change in compensation costs, and in wages and
salaries only, for workers in health services. Data are
provided for workers in private industry, in State and
local governments, and in the two sectors combined.

These new series are part of the Federal government's
effort to improve statistical programs for service-produc-
ing industries, i.e., transportation and public utilities;
trade; finance, insurance, and real estate; service indus-
tries; and governments. As part of the effort, this
release also presents for the first time, series for the
service-producing sector as a whole as well as for goods-
producing industries (mining, construction, and
manufacturing) combined.

RRREKRREKRRERERRERRRERRRERERERER ERE III RII RE RII RIE R ERR RIERA.

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2

In contrast to the slight decline in the rate of compensation cost increases,
over-the-year wage and salary gains (5.0 percent) were substantially higher than
those a year ago (4.3 percent). A higher rate of wage and salary increase was
found for private industry workers (4.8 percent, up from 4.1 percent), but not for
State and local government workers (5.6 percent, down from 5.8 percent).

Over-the-year wage and salary increases for nonunion workers in private industry
continued to outstrip those of union workers, as has been the case for the past
2 years. For the year ended in September 1985, nonunion pay gains averaged

5.4 percent, compared with 3.6 percent for union workers.

Wage and salary advances in private industry also varied by occupation and indus-
try group over the September 1984-85 period. Among white-collar workers, pay
gains ranged from 4.2 percent for clerical workers to 8.0 percent for sales
workers (the most volatile ECI series, heavily influenced by commission earnings).
The range for blue-collar workers was from 3.4 percent for nonfarm laborers to
4.8 percent for craft and kindred workers. The variation in average pay gains by
industry group in the year ended in September 1985 was from 2.6 percent for con-
struction to 7.6 percent for finance, insurance, and real estate (also strongly
influenced by commission earnings).

The September 1985 ECI level stood at 128.4, based on June 1981=100. ‘The ECT
covers private industry (excluding farms and households) and State and local
government workers. It is not seasonally adjusted.