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6


United States

Department CS

News ::

Bureau of Labor Statistics Washington, D.C. 20212

Technical, historical contact: USDL: 90-379

Wayne Shelly (202) 523-1165

Media contact: TRANSMISSION OF MATERIAL IN
Kathryn Hoyle (202) 523-1913 THIS RELEASE IS EMBARGOED

UNTIL 8:30 A.M. (EDT),
TUESDAY, JULY 24, 1990

EMPLOYMENT COST INDEX - JUNE 1990

The Employment Cost Index (ECI) increased 5.4 percent in the year ended in June
1990, the U.S. Department of Labor's Bureau of Labor Statistics reported today. The
June 1990 index was 105.4, based on June 1989=100. For the 3 months ended in June
1990, the index rose 1.1 percent. The ECI measures changes in compensation costs--
wages, Salaries, and employer costs for employee benefits. The index is not
seasonally adjusted.

The 5.4 percent compensation increase for the year ended in June 1990 was higher
than the 4.8 percent gain in the same period a year ago. This pattern held for both
state and local government workers (6.5 percent, up from 5.8 percent a year ago) and
private industry workers (5.2 percent, up from 4.5 percent).

Both major components of compensation costs (wages and salaries and benefits)
rose more rapidly during June 1989-90 than in the preceding year. Wages and salaries
for private industry workers, for example, increased 4.5 percent for the year ended
in June 1990, up from 4.1 percent a year ago; the corresponding rise for benefit
costs was 6.9 percent, up from 5.6 percent. While the acceleration in wage and
salary gains reflects the April 1, 1990, increase in the Federal minimum wage (from
$3.35 an hour to $3.80), the impact of that increase on overall wage and salary gains
appears to be small. The following table shows over-the-year changes in private
industry compensation costs since March 1988.

12-month percent changes in the ECI, private industry workers

12-months Compensation Wages and Benefit
ended costs salaries costs
1988 March 3.8 3.3 5.9
June 4.5 3.8 6.4
Sept. 4.4 3.7 6.8
Dec. 4.8 4.1 6.9
1989 = March 4.6 4.2 5.4
June 4.5 4.1 5.6
Sept. 4.8 4.3 6.0
Dec. 4.8 4.1 6.1
1990 March 5.2 4.2 7.2
June 5.2 4.5 6.9



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15
EXPLANATORY NOTE

The Employment Cost Index (ECI) is a measure of the change in the cost of
labor, free from the influence of employment shifts among occupations and
industries. The compensation series includes changes in wages and salaries and
employer costs for employee benefits. The wage and salary series and the benefit
cost series” provide the change for the two components of compensation.

Wages and salaries are defined as the hourly straight-time wage rate or, for
workers not paid on an hourly basis, straight-time 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, shift differentials, and nonproduction bonuses such as
lump-sum payments provided in lieu of wage increases. Production bonuses,
incentive earnings, commission payments, and cost-of-living adjustments are
included in straight-time wage and salary rates.

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 such as lump-sum payments provided in
lieu of wage increases); 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 disability); and other benefits
(severance pay and supplemental unemployment plans).

The ECI provides data for the civilian economy, which includes the total
private economy, excluding farms and households, and the public sector, excluding
the Federal government. The private industry series and the state and local
government series provide data for the two sectors separately.

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
nearly 23,000 occupations within 4,400 sample establishments in private industry
and about 6,000 occupations within 1,000 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.

—

1 The benefit cost indexes provide the change in the cost of benefits to a fixed
labor force. They are not price indexes for a fixed market basket of benefits.
Therefore, the indexes will change as a result of either a change in the price of
benefits provided (for example, higher pay for holidays) or a change in the
benefits (for example, an additional holiday).


Changes in wages and salaries and benefit costs, private industry, 1980-1990

percent change percent change
15 15
14 - 4°14
13 - 4 13
12 - 4 12
aa fF 3 441
10 F : 4 10
a+ 3 49
Bt Benefit costs 418
7h : 47
6+ 46
Bab 45
ak ‘Wages and salaries 4a
3a} 43
25 42
1- 1

mob

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990



2

Wage and salary increases in private industry for the year ended in June 1990
were higher for white-collar occupations (4.9 percent) than for blue-collar
occupations (3.8 percent). Pay gains for white-collar occupational groups ranged
from 4.7 percent for clerical workers to 5.3 percent for sales workers. The range of
increases for blue-collar workers was from 3.1 percent for transportation and
material moving occupations to 4.4 percent for laborers.

Over-the-year pay gains were higher for workers in service-producing industries
than in goods-producing industries (4.6 percent compared with 4.2 percent). Within
the service-producing industries, wage and salary increases ranged from 2.3 percent
in transportation to 6.3 percent in health services. Pay gains among the goods-
producing industries ranged from 2.9 percent in construction to 4.8 percent in
nondurables manufacturing.

Wage and salary increases for nonunion workers (4.8 percent) exceeded those for
union workers (3.3 percent) for the year ended in June 1990, as they have since March
1983-84. This pattern held in both goods-producing and service-producing industries.
(See table 7.)

III IIR IRR III I KIER EIT II III IIS ISI TI IIIS SSSI SII III SII IIS III IIIA

* This release includes, for the first time, indexes and percent

* changes in wages and salaries and in compensation costs for three

* major occupational groups in state and local governments and the

* civilian economy: Professional specialty and technical; executive,
* administrative, and managerial; and administrative support including
* clerical. This release also introduces measures of change in

* benefit costs for state and local government and civilian workers.

* These new series complete additions stemming from an ECI sample

* expansion that began in 1985, as part of a Bureau of Labor Statis-
* tics effort to improve information on the service-producing

*

industries in the economy.
HK IKI III IKKE IAI AAAI AK IIIA III IKI IIIA KIKI AAAI SIAR AK,

OF Ob OF OF OF OF OO OOF

ECI data for September 1990 will be released on Thursday, October 25, 1990, at
8:30 A.M. E.D.T.


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16

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. Since June 1986, the jobs have been classified
according to definitions used in the 1980 Census. Prior to June 1986, they were
classified according to the 1970 Census. 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. ——

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. Since June 1986, employment counts from the 1980 Census have been used
as weights. Prior to June 1986, employment counts from the 1970 Census were
used.

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 ECI 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.

Beginning with the March 1990 ECI release, indexes were rebased to June
1989=100. A description of the rebasing is included in the article "Employment
Cost Index Rebased to June 1989," in the April 1990 issue of the Monthly Labor
Review.

The costs per hour worked of compensation components, based on March 1990
data from the ECI, are published in a separate news release titled “Employer
Costs for Employee Compensation - March 1990." A description of the cost levels
is provided in the article “Analyzing employers' costs for wages, salaries, and
benefits" in the October 1987 issue of the Monthly Labor Review. The cost
levels, which are published annually in mid-June, are calculated with current
employment weights, rather than the fixed 1980 Census weights used in computing
the ECI. Therefore, year-to-year changes in the cost levels will usually differ
from those in the ECI.

More detailed information on the ECI is available in several sources. These
include an annual bulletin, Employment Cost Indexes and Levels, 1975-89,
(Bulletin 2339); a chapter in the BLS Handbook of Methods (Bulletin 2285), "The
Employment Cost Index;" and several articles published in the Monthly Labor
Review. The annual bulletin is available from the Superintendent of Documents,
U.S. Government Printing Office, Washington, D.C. 20402, or Bureau of Labor
Statistics, Publications Sales Center, P.0. Box 2145, Chicago, Illinois 60690.
Reprints of the articles plus other descriptive pieces and a complete historical
listing are available upon request. ECI historical data are also available on
data diskettes formatted for use with Lotus 1-2-3.