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United States
: 5 of Labor

Bureau of Labor Statistics Washington, D.C. 20212

Technical, historical contact: USDL: 87-315.
Felicia Nathan (202) 523-1165
Media contact: (202) 523-1913 FOR RELEASE: 10:00 A.M. E.D.T.

Tuesday, July 28, 1987

EMPLOYMENT COST INDEX - JUNE 1987

The Employment Cost Index (ECI) increased 0.7 percent in the 3 months
ended in June 1987, the U.S. Department of Labor's Bureau of Labor Statistics
reported today. For the year ended in June 1987, the increase was 3.3 .
percent. The June 1987 ECI level stood at 135.9, based on June 1981=100. The
ECI measures changes in compensation costs--wages, salaries, and employer
costs for employee benefits. It is not seasonally adjusted.

The 3.3 percent compensation cost increase for the year ended in June
1987 was below the 4.0 percent gain a year ago. A similar pattern was
recorded for wages and salaries alone (3.2 percent, down from 4.1 percent) --
indicating the slowdown occurred for both wages and salaries and benefit
costs. The deceleration of benefit cost increases reflected decreases in
pension costs that were partially offset by higher insurance costs.

The June 1986-87 slowdown in wage and salary increases held for both
state and local government workers (5.0 percent, down from 5.7 percent) and
private industry workers (3.0 percent, down from 3.7 percent). The 3.0 percent
increase for private industry workers was the lowest over-the-year pay gain
recorded in the 11-year history of the series. Other record-low private
industry wage and salary increases covered workers in:

White-collar occupations (3.3 percent)

Executive and managerial occupations (3.3 percent)
Nonunion occupations (3.3 percent)

Manufacturing (2.4 percent)

Goods-producing industries (2.3 percent)

The West region (1.7 percent)

+ ee ee

Over-the-year pay gains of 3.4 percent for private sector workers in
service-producing industries as a whole exceeded the record-low 2.3 percent
pay gain for those in goods-producing industries. There was considerable
variation among the service-producing industries, with wage and salary
increases ranging from 1.8 percent in transportation to 5.1 percent in health
services. (See table 6.)


1970 Census Category

12
1980 Census Category

Managers and administrators
Professional and technical
workers

“Sales workers

Clerical workers

Craft and kindred
workers

Operatives, except
transport

Transport equipment
operatives

Nonfarm laborers

Service workers

Executive, administrative, and
managerial occupations

Professional .speciaity and
technical occupations

Sales occupations
Administrative support ©
occupations, including
clerical

Precision production, craft,
and repair occupations

Machine operators, assemblers,
and inspectors

Transportation and material
moving occupations

Handlers, equipment cleaners,
helpers, and laborers

Service occupations

Fixed employment weights 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, employment
data are not available from the Census. The 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 Labor
Review.

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.” Two articles also appeared in
the Monthly Labor Review: "Employment Cost Index: a measure of change in the
‘price of TaborTM,” 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 complete historical listing of ECI data are
available upon request.


il
EXPLANATORY NOTE

The Employment Cost Index (ECI) is a measure of the change in the price of
labor, free from 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 and for 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 are: Paid leave
(vacations, holidays, sick leave, and other leave); supplemental pay (premium
pay for overtime, shift differentials, and nonproduction bonuses); insurance
benefits (life, health, and sickness and accident); 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! compensation, and other legally required
benefits such as state temporary disabi lity); and other benefits (severance
pay, supplemental unemployment plans, and merchandise discounts in department
stores).

The ECI provides data for both the private and public sectors, which are
published spearately 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 16,000 occupations within 3,000 sample establishments in private
industry and about 3,500 occupations within 700 sample establishments in state
and local governments. 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.

The sample establishments are classified in industry categories based on the
1972 Standard Industrial Classification (SIC), as defined by the U.S. Office
of Management and Budget.

Within an establishment, specific job categories are selected to represent
broader occupational definitions. Beginning in June 1986, the jobs are
classified according to definitions used in the 1980 Census. Prior to June
1986, they were classified according to the 1970 Census. The titles of the
published 1970 and 1980 occupation groups are listed below for comparison.
Differences between the two classification systems are slight, as indicated in
the article "Introducing new weights for the Employment Cost Index," in the
June 1985 issue of the Monthly Labor Review.


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SAIUVIVS ONY S39VM


The private industry slowdown in pay gains was more pronounced for
white-collar workers (3.3 percent, down from 4.5 percent) than for blue-collar
workers (2.3 percent, down from 2.8 percent). When sales occupations are
excluded from the white-collar series, the white-callar slowdown (3.5 percent,
down from 4.2 percent) was similar to that of blue-collar workers. (Sales
worker pay is heavily influenced by volatile commission earnings.)

In contrast to the slowdown for white-collar and blue-collar workers,
pay gains for private industry service workers for the year ended in June 1987
(3.0 percent) were similar to those a year ago (2.9 percent). (See table 4.)

Although over-the-year pay gains for nonunion workers averaged a record-
low 3.3 percent, they outpaced the 1.7 percent increase for union workers.
This relationship held in goods-producing industries (2.8 percent compared
with 1.4 percent) and service-producing industries (3.6 percent compared with
2.2 percent). (See table 8.)

FI III IIIA IIK II III IIIA III ISIS IAI IIR IIIS IIIA III INIA IIIA TE

* The Bureau of Labor Statistics plans to publish a new measure
* of employer costs for employee compensation in the October 1987
* issue of the Monthly Labor Review (MLR). The new cost levels,
* based on data from the March 1987 ECI, cover private industry
* workers, with detail for major occupational groups and industry
* divisions. These new cost levels are calculated with March 1987
* employment weights, rather than the fixed 1980 Census weights

* used in computing the ECI.

*

* The cost levels will not be included in the ECI news release.

* Reprints of the MLR article that presents the data will be

* available upon request after the October MLR is published in

* late October.
IIR AIK IK IKK IK IIE IKK IK IK IKE KEKE ESI IBERIA IAAI KIER REIAERIEI AI KI

ee ee ee ad

ECI data for September 1987 will be released on Tuesday, October 27, at |
10:00 a.m. E.S.T.