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Census. Within an establishment, specific job categories are selected to repre~
sent 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 owership--State,
local, 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 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.

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 June 1983 (table 3) is the actual percent change in straight-time average
hourly earnings from the pay period including the 12th day of March 1983 to the
comparable pay period in June 1983.

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 Inde~: a measure of change in the 'price ot 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
are available upon request.


United States

Department &

News =:

Bureau of Labor Statistics Washington, D.C. 20212

Technical, historical contact: USDL: 83-326
(202) 523-1165
Media contact: (202) 523-1913

FOR RELEASE: 10:00 A.M. E.D.T.
Thursday, August 4, 1983

EMPLOYMENT COST INDEX - JUNE 1983

The Employment Cost Index (ECI) increased 1.1 percent in the 3 months ended
in June 1983, the U.S. Department of Labor's Bureau of Labor Statistics reported
today. The Index stood at 114.5 for compensation costs (wages, salaries, and
employer costs for employee benefits), based on June 1981=100 (see table 1). The
ECI covers private industry and State and local government workers. It is not
seasonally adjusted.

The 1.1 percent increase was the same as the rise recorded in the March-
June period a year ago. Compensation cost increases for private industry (1.2
percent) and State and local government workers (0.5 percent) were also similar
to those of last year. Wages and salaries alone increased at the same pace as
compensation costs in the March-June 1983 period.

For all private industry workers, the 1.2 percent wage and salary increase
in March-June 1983 was similar to the 1.1 percent rise for the same period in
1982. Bots union and nonunion workers posted 1.2 percent wage and salary in-
creases in the March-June 1983 period. While the rate of increase in wages and
salaries for nonunion workers was up from 0.9 percent last year, that for union
workers was down from 1.5 percent.

The slowdown in wage and salary changes for union workers was more
Pronounced in manufacturing. Their wages and salaries increased 0.8 percent in
March-June 1983, down from 1.3 percent for the same period in 1982. In contrast,
wages and salaries for nonunion workers in manufacturing rose 1.0 percent, up
from 0.8 percent last year.

The 12-month wage and salary rise (June 1982-83) for union workers in
manufacturing was 4.7 percent, about the same as the 4.8 percent increase for
nonunion workers in that sector. Corresponding changes last year (June 1981-82)
were 7.3 percent and 6.7 percent (see table 5).

The slower rate of increase in wages and salaries for union workers reflected
recent developments in heavily unionized manufacturing industries, e.g., pay cuts
negotiated in collective bargaining contracts in the steel industry. Over the
longer term, however, wages and salaries for union workers advanced at faster
rates than those for nonunion workers. Since the union/nonunion manufacturing
series began in September 1976, wages and salaries for union workers have
increased 71.5 percent contrasted to 60.9 percent for nonunion workers.


-g-

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 straight-time average hourly earnings. Straight-time
earnings are total earnings before payroll deductions, excluding premium pay for
overtime, work on weekends and holidays, and shift differentials. Production
bonuses, incentive earnings, commission payments, and cost-of-living adjustments
are included in straight-time earnings, whereas nonproduction bonuses (such as
Christmas or year-end bonuses) are excluded. Also excluded are such items as
payments-in-kind, free room and board, and tips.

The compensation series includes employer costs for employee benefits as
well as wages and salaries. Benefits covered by the ECI include:

Hours related benefits - Premium pay for overtime

and work on weekends and holidays, paid vacations,
paid holidays, paid sick leave, and other paid leave;

Supplemental pay — Shift differentials, nonproduction
bonuses. severance pay, and supplemental unemployment
plans;

Insurance benefits - Life, health, and sickness and
accident insurance;

Retirement and savings benefits - Pension and other
retirement plans and savings and thrift plans;

aa

Legally required benefits - Social security, rail- ne
road retirement and supplemental retirement, railroad bn
unemployment insurance, Federal and State unemployment ,
insurance, workers' compensation, and other legally
required benefits such as State temporary disability
insurance; and

a

Other benefits - Merchandise discounts in department 1
stores.

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 earnings 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 establishments in State and local
governments.

Occupations were classified according to definitions used in the 1970


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Over the year ended in June 1983, compensation costs rose 6.5 percent for
all civilian workers, down from 7.5 percent a year earlier. Compensation cost
increases dropped more for State and local government workers (7.1 percent from

9.3 percent last year) than for private industry workers (6.3 percent from
7.2 percent).

The drop’ in compensation cost increases for State and local government
workers occurred in both the wage and benefit cost components.

dustry workers, on the other hand, the slowdown was caused only
and salary increases.

For private in-
by dampened wage