14

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 bo gue
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.

The costs per hour worked of compensation components, based on March 1938
data from the ECI, are published in-a separate news release titled "Employer —
Costs for Employee Compensation--March 1988." 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 witt
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 a chapter in the BLS Handbook of Methods (Bulletin 2285), "The, . :
Employment Cost Index," and several articles published in the Monthly Labor
Review. Reprints of these articles plus other descriptive pieces and a...
Comptete historical listing are available upon request. ECI historical
are also available on data diskettes formatted for use with. Lotus 1-2-



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United States
Department >
of Labor

Bureau of Labor Statistics Washington, D.C. 20212

Technical, historical contact: USOL: 88-527

Felicia Nathan (202) 523-1165

Media contact: FOR RELEASE: 10:00 A.M. E.0.T.
Kathryn Hoyle (202) 523-1913 Tuesday, October 25, 1988

EMPLOYMENT COST INDEX - SEPTEMBER 1988

The Employment Cost Index (ECI) rose 1.3 percent in the 3 months ended in
September 1988 to a level of 144.0 (June 1981=100), the U.S. Department of Labor's
Bureau of Labor Statistics reported today. For the year ended in September, the
increase was 4.7 percent. The ECI measures changes in compensation costs--wages,
salaries, and employer costs for employee benefits. It is not seasonally adjusted.

The 1.3 percent increase in compensation costs in the June-September 1988 period
was about the same as the 1.2 percent gain in the same period a year ago. The
increase for private industry workers (1.0 percent) matched the gain a year ago. The
increase for state and local government workers (2.7 percent), on the other hand, was
above the 2.3 percent gain for June-September 1987. Compensation cost changes for
state and local government workers are heavily concentrated in the June-September
period, whereas those for private industry workers are spread throughout the year.

The 4.7 percent increase in compensation costs for the year ended in September
1988 was higher than the 3.4 percent increase a year ago. This relationship held for
both state and local government workers (5.4 percent, up from 4.2 percent) and for
private industry workers (4.5 percent, up from 3.3 percent). The table below shows
over-the-year changes in private industry since March of 1986.

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

12-months Compensation Wages and Benefit
ended costs salaries costs
1986 March 3.8 3.9 : 3.2
dune 3.8 3.7 3.5
Sept. 3.2 3.1 3.3
Dec. 3.2 3.1 3.4
1987 March 3.1 3.2 2.9
: dune 3.0 3.0 3.3
Sept. 3.3 3.3 3.1
Dec. 3.3 3.3 3.5
1988 March 3.9 3.3 5.8
June 4.5 3.7 6.4
Sept. 4.5 3.7 6.7



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3

ECI data for December 1988 will be released on Tuesday, January 24, 1989, at
10:00 a.m. E.S.T.

ECI news releases for 1989 will be published on the following schedule:

Reference Month Release Date
March 1989 April 25, 1989
dune 1989 duly 25, 1989
September 1989 October 31, 1989

Changes in wages and salaries and benefit costs, private industry, 1980-88

12-month percent change

16

14, -

12 -

10 -

Benefit costs

4b Wages and salaries

° Pt Tt tt tt

1980 | 1981 | 1982 | 1983 | 1964 | 1985 | 1966 | 1987 | 1988



2

Private industry increases for the year ended in September 1988, when compared
with a year ago, were less pronounced for wages and salaries (3.7 percent, up from
3.3 percent) than for benefit costs (6.7 percent, up from 3.1 percent). The over-
the-year increases in benefit costs resulted primarily from a rise in the employer's
social security tax rate from 7.15 to 7.51 percent, which occurred in the first
quarter of 1988, and higher health insurance costs in the first, second, and third
quarters of 1988.

Compensation cost increases in private industry for the year ended in September
1988 were about the same in goods-producing and service-producing industries (4.5
percent and 4.4 percent, respectively); the relationship was not the same, however,
for wages and salaries and benefit costs. Wage and salary gains were Tower in goods-
producing industries (3.3 percent) than in service-producing industries (3.9
percent). (See table 4.) In contrast, benefit cost increases were higher in goods-
producing (7.2 percent) than in service-producing industries (6.1 percent).

The larger benefit cost increases in goods-producing industries were
concentrated in manufacturing which registered an 8.0 percent increase in benefit
costs. (See table 5.) Higher health insurance costs and nonproduction bonuses
(including lump-sum payments) contributed to the benefit cost increases in
manufacturing.

September 1987-88 wage and salary advances for nonunion workers in private
industry (3.9 percent) exceeded those for union workers (2.9.percent), as they have
since 1983-84. This pattern held when the. comparison was limited to blue-collar
workers (3.5 percent, compared with 2.9 percent), but reversed when limited to blue-
collar workers in manufacturing--3.2 percent for union workers compared with 2.8
percent for nonunion workers. (See table 7.)

With benefits included, employer compensation cost increases for union and
nonunion workers were the same (4.5 percent). Compensation cost increases for union
workers, however, were higher than those for nonunion workers in manufacturing
industries and blue-collar occupations. (See table 6.)

For state and local government workers, pay gains for the year ended in
September 1988 (4.7 percent) were higher than those a year ago (4.1 percent). The
September 1987-88 gains were highest in schools, averaging 5.1 percent. (See
table 2.)

PIII IIIS IIIA III ARIA IRIS III NASI SII SSK ISS IA ISI IIIA IIE III IKI ISI III III ISIS.

* This release includes first-time estimates of quarterly changes in *
* compensation costs and in wages and salaries for workers in general *-:
* merchandise stores. (See tables 3 and 4.) The addition of these *
; series is part of the Federal. government's effort to improve statis- *
*
* a

tical programs for -service-producing industries.
HRI AKI EE IKII IISA III III IISA III IAI AIDS III III IIIA ISN I III AISA KAKI


13
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 compen-
sation. :

‘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 dbout 18,000 occupations within 3,600 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

nf luences.

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 Employrent Cost Index," in the June 1985
issue of the Monthly Labor Review. .