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8

EXPLANATORY NOTE

The Employment Cost Index (ECI) is a quarterly 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 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 ay - 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;

Retireme ns avi benefi - 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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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
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
Review.

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
0.8 percent change in wage and salary rates for "private industry workers”
in the 3 months ended September 1984 (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 June 1984 to the comparable pay period in
September 1984,

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 a historical listing of ECI data
are available upon request.


U.S. Department of Labor
Bureau of Labor Statistics &
Washington, D.C. 20212 2

_
Technical, historical contact: USDL: 84-452

(202) 523-1165
Media contact: (202) 523-1913 FOR RELEASE: 10:00 A.M. E.S.T.

Tuesday, October 30, 1984

EMPLOYMENT COST INDEX - SEPTEMBER 1984

The Employment Cost Index (ECI) increased 1.3 percent in the 3 months ended in
September 1984, the U.S. Department of Labor's Bureau of Labor Statistics reported
today. For the year ended in September 1984, the increase was 5.1 percent--down
from 5.8 percent for the year ended in September 1983.

The September 1984 index level stood at 122.4 for compensation costs (including
wages, salaries, and employer costs for employee benefits), based on June 1981=100
(table 1). The ECI covers private industry (excluding farms and households) and
State and local government workers. It is not seasonally adjusted.

The 1.3 percent increase in compensation costs was below the 1.7 percent rise in
the June-September period a year ago. This slowdown resulted from smaller compen-
sation increases for private industry workers (0.8 percent, down from 1.5 percent).
State and local government workers, on the other hand, registered a 3.5 percent
increase in June-September 1984, compared with 3.2 percent a year earlier. Com-
pensation cost changes for State and local government workers are heavily concen-
trated in the June-September quarter whereas those for private industry workers
are more widely dispersed throughout the year.

Wages amd salaries for private industry workers rose 0.8 percent in June-September
1984~-down from 1.4 percent a year ago. This decrease was greater for white-
collar workers (0.8 percent, down from 2.0 percent) than for blue-collar workers
(0.7 and 0.9 percent). Wage and salary increases for State and local government
workers were slightly higher in the third quarter of 1984 (3.4 percent) than in
the same quarter of 1983 (3.0 percent). The higher percent increase mainly re-
sulted from wage increases for school employees, which averaged a 4.5 percent in-
crease in June-September 1984 compared with a 3.9 percent increase a year earlier.

For the year ended September 1984, compensation cost increases (5.1 percent) were
below gains a year ago (5.8 percent). A slowdown was registered for private in-
dustry workers (4.8 percent, down from 5.8 percent), but not for State and local
government workers (6.6 percent, up from 5.7 percent).

Over-the-year increases in wages and salaries for private industry workers showed
the same pattern as compensation gains. The slowdown in wage and salary increases
resulted in several worker groups recording their lowest 12-month increases since
these ECI series began in 1976 or 1977, including:

* Clerical workers (4.5 percent)
* Professional and technical workers (4.4 percent)

Centennial
of Labor
Statistics


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Union workers (3.3 percent)

Craft and kindred workers (3.2 percent)

Workers in the West region (3.0 percent)

Union workers in nonmmanufacturing (2.5 percent)


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