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SHINVIVS GNV SHOWA


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 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 wage and salary rates, whereas nonpro-
duction 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:

Paid leave - Paid vacations, paid holidays, paid sick
leave, and other paid leave;

Supplemental pay - Premium pay for overtime and work
on weekends and holidays, shift differentials, and non-
production bonuses;

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

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

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

Other benefits - Severance pay, supplemental unemployment
plans, and merchandise discounts in department 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 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 establishments in State and local
governments.


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NOILVSNAdWOD


9

Occupations were classified according to definitions used in the 1970
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 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 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 0.9 percent
change in wage and salary rates for "private industry workers" in the 3 months
ended June 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 March 1984 to the comparable pay period in June 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.


ta e

i
U.S. Department of Labor
: Bureau of Labor Statistics Es
Washington, D.C. 20212 o>
Technical, historical contact: USDL: 84-327
(202) 523-1165
Media contact: (202) 523-1913 FOR RELEASE: 10:00 A.M. E.D.T.

Tuesday, July 31, 1984

EMPLOYMENT COST INDEX - JUNE 1984

The Employment Cost Index (ECI) increased 0.8 percent in the 3 months ended in
June 1984, the U.S. Department of Labor's Bureau of Labor Statistics reported
today. For the year ended in June 1984, the increase was 5.5 percent--down from
6.5 percent for the year ended in June 1983.

The June 1984 index level stood at 120.8 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 and is not seasonally adjusted.

The 0.8 percent increase in compensation costs was below the 1.1 percent rise in
the March-June period a year ago. Private industry workers recorded a similar

slowdown (0.9 percent, down from 1.2 percent), while State and local government
workers had about the same increase in both years (0.4 percent and 0.5 percent).

Wages and salaries for private industry workers rose 0.9 percent in March-June
1984--down from 1.2 percent a year ago. . This slowdown in wage and salary gains
was concentrated among blue-collar and service workers (table 2), as well as in
the construction industry, in transportation and public utilities, and in whole-
sale and retail trade (table 3).

The construction industry registered a 0.6 percent wage and salary gain in March-
June 1984--below the 1.5 percent increase in the same period last year and the
lowest second-quarter advance since the series began in 1976. The second quarter
typically reflects collective bargaining activities in construction which are
concentrated in spring and summer.

Wage and salary gains for white-collar workers (1.2 percent in March-June 1984)
were the same as last year, but there were marked differences among the
occupational groups. Pay gains slowed, for example, for managers and administra-
tors (1.0 percent, down from 1.8 percent) and clerical workers (0.8 percent, down
from 1.1 percent), while they rose for professional and technical workers

(1.3 percent, up from 1.0 percent).

For the year ended June 1984, compensation cost increases (5.5 percent) were be-
low gains a year ago (6.5 percent). A slowdown was also registered for State and
local government workers (6.2 percent compared with 7.1 percent a year ago) and
private industry workers (5.4 and 6.3 percent).

Centennial
of Labor
Statistics


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June 1983-84 wage and salary gains showed a similar slowing from the previous
year for civilian workers (4.8 percent contrasted to 5.7 percent), private in-
dustry workers (4.7 and 5.4 percent), and State and local government workers
(5.4 and 6.4 percent). The slowdown in wage and salary increases resulted in
several worker groups in private industry registering their lowest 12-month
increases since these ECI series began in 1976 or 1977, including:

All private industry workers (4.7 percent)
Managers and administrators (4.6 percent)

Union workers (4.2 percent)

Transportation and public utilities (4.0 percent)
Blue-collar workers (3.6 percent)

Craft and kindred workers (3.4 percent)
Transport equipment operatives (2.2 percent)
Workers in construction (1.7 percent)

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