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Occupations were classified according to definitions used in the 1970
Census. Within an establishment, specific job categories are selected to
represent broader occupational definitions. The sample establishments were 4
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 aggre-
gate, industry, and occupation series. A fuller explanation of the calcu-
‘lation of index numbers appears in an article, "Estimation procedures for
the Employment Cost Index," in the May 1982 issue of the Monthly Labor
Reviw.

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
1.2 percent change in wage and salary rates for "private industry workers"
in the 3 months ended March 1985 (table 3} is the actual percent change in
straight-time average hourly wage and salary rates from the Pay period
including the 12th day of December 1984 to the comparable pay period in’
March 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." Two 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 3 historical listing of ECI data
are available upon request.

The ECI news release for the June 1985 quarter will be issued on
July 30.


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United States
News Department SY
of Labor

Bureau of Labor Statistics Washington, D.C. 20212

Technical, historical contact: USDL: 85-177
(202) 523-1165
Media contact: (202) 523-1913 FOR RELEASE: 10:00 A.M. E.D.T.

Tuesday, April 30, 1985

EMPLOYMENT COST INDEX - MARCH 1985

The Employment Cost Index (ECI) increased 1.3 percent in the 3 months ended in
March 1985, the U.S. Department of Labor's Bureau of Labor Statistics reported
today. For the year ended in March 1985, the increase was 4.8 percent--down from
5.8 percent for the year ended in March 1984. ‘The BCI measures changes in compen-
sation costs, which include wages, salaries, and employer costs for employee
benefits.

Wages and salaries alone rose 4.4 percent over the year ended in March 1985. The
increases were higher for State and local government workers (5.6 percent) than
for private industry workers (4.1 percent), who make up a great majority of
employees covered by the ECI.

Nonunion workers in private industry had wage and salary increases of 4.6 percent
compared with 3.0 percent for union workers, the lowest over-the-year pay gain re-
corded for union workers since this ECI series began in 1976. Other record low
wage and salary increases covered workers in:

* the South (3.7 percent) and Midwest (3.5 percent) regions’
* retail trade (3.6 percent)

* operative occupations, except transport (3.5 percent)

* service occupations (3.3 percent)

* transportation and public utilities (2.7 percent)

* unions in nonmanufacturing (2.2 percent)

Wage and salary increases for sales workers--one of the most volatile ECI series--
averaged 5.5 percent for the year ended in March 1985. The advance reflects in-
creases in sales commissions, particularly for stock and bond brokers. The
increases helped push the over-the-year pay gain for workers in finance, insurance,
and real estate to 5.1 percent.

Compensation costs increased 6.3 percent for State and local government workers
during the year ended in March 1985--about the same as the 6.4 percent rise a
year ago. Compensation increases for State and local government workers have
been heavily influenced by pay and benefit adjustments for employees in elementary
and secondary schools, whose compensation costs advanced 7.2 percent for the year
ended in March 1985.

The March 1985 ECI level stood at 125.5 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.


7

EXPLANATORY NOTE

The Employment Cost Index CECI) is a quarterly measure of the change
in the price of labor, frea 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 earn-
ings before payroll deductions, excluding premium pay for overtime, work on
weekends and holidays, and shift differentials. Production bonuses, incen-
tive 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;

2 - Premium pay for overtime and work on week-
ends and holidays, shift differentials, and nonproduction
bonuses;

Insurance benefits - Life, health, and sickness and accident
insurances

i i ~ 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! compen-
sation, and other legally required benefits such as State tempor—
ary 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 room 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 10,000 occupations within 2,000 sample establishments in
the private sector and about 3,700 occupations within 750 sample estab- |
lishments in State and local governments.


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