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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.

Beginning with the March 1990 ECI release, indexes were rebased to June 1989=100. A
description of the rebasing is included in the article "Employment Cost Index Rebased to June
1989," in the April 1990 issue of the Monthly Labor Review.

Beginning with the December 1990 ECI release, seasonally adjusted data are available for
selected ECI series. Seasonal adjustment removes the effects of events that follow a more or less
regular pattern each year. These adjustments make nonseasonal patterns easier to spot.

The costs per hour worked of compensation components, based on March 1993 data from
the ECI, are published in a separate news release titled "Employer Costs for Employee
Compensation - March 1993." 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 with 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 an

annual bulletin, Employment Cost Indexes and Levels, 1975-93, (Bulletin 2434); a chapter in the
f Gulletin 2414), "The Employment Cost Index;" and several articles

published in the Monthly Labor Review. The annual bulletin is available from the Superintendent
of Documents, U.S. Government Printing Office, Washington, D.C. 20402, or Bureau of Labor
Statistics, Publications Sales Center, P.O. Box 2145, Chicago, Ilinois 60690. Reprints of the
articles plus other descriptive pieces and a complete historical listing are available upon request.
ECTI historical data are also available on data diskettes.

Information in this release will be made available to sensory impaired individuals upon
request. Voice phone: 202-606-7828, Telecommunications Device for the Deaf (TDD) phone: 202-
606-5897, TDD Message Referral Phone Number: 1-800-326-2577.


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. United States Es
- Department SY
of Labor

Bureau of Labor Statistics Washington, D.C. 20212

Technical, historical contact: USDL: 93-452
Wayne Shelly (202) 606-6199
TRANSMISSION OF MATERIAL IN
Media contact: THIS RELEASE IS EMBARGOED UNTIL
Kathyrn Hoyle (202) 606-5902 8:30 A.M. (EDT), TUESDAY, OCTOBER 26, 1993

EMPLOYMENT COST INDEX -- SEPTEMBER 1993

The Employment Cost Index (ECI) increased 1.0 percent before seasonal adjustment in the 3
months ended in September 1993, the U.S. Department of Labor's Bureau of Labor Statistics reported
today. The September 1993 ECI level of 119.5 (June 1989=100) was 3.6 percent higher than the index in
September 1992. The ECI measures changes in compensation costs, including wages, salaries, and
employer costs for employee benefits.

Quarterly changes, seasonally adjusted

On a seasonally adjusted basis, compensation costs as measured by the ECI rose 0.8 percent in the
June-September 1993 period, about the same as the 0.9 percent rise in the previous 3-month period. An
acceleration in the rate of wage and salary increases (0.9 percent in June-September, up from 0.6 percent

in March-June) was about offset by a deceleration in the rate of benefit cost gains (0.8 percent, down from
.4 percent).

Table A. Percent changes in ECI for civilian workers

Seasonally adjusted Unadjusted
Compensation 3-months ended 12-months
component 1991 1992 1993 ended
Dec, | Mar, June Sep, Dec, | Mar. June Sep, | Sep, 1993 __
Compensation costs........... 0.9 10 #07 #09 09 10 #09 08 3.6
‘Wages and salaries....... 0.7 08 #06 O05 08 07 #06 09 3.0
Benefit costs... 12 1300612 #15 12 14° 14 08 49

ver-the-

Compensation costs (not seasonally adjusted) increased 3.6 percent for the year ended in
September 1993, the same as the gain for the year ended in June 1993. Private industry worker increases
also were about the same as for the year ended in June (3.7 percent and 3.6 percent, respectively), while
State and local government gains were lower (3.0 percent, down from 3.4 percent). Compensation costs
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.


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17

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
compensation.

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
and the public sector--excluding farms, households, and 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 over 23,000 occupations within
over 4,600 sample establishments in private industry and about 7,000 occupations within 1,000
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.

The sample establishments are classified in industry categories based on the 1987 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 Employment Cost Index," in the June 1985 issue of the Monthly
Labor Review.

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


Changes in wages and salaries and benefit costs, private industry, 1980-93

12-month percent change

15
14
13
12
11

10

aon @ ©

S

Benefit costs

Wages and salaries

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

12-month percent change

15

14

13

12

1



2

The deceleration in the rate of compensation cost gains for State and local government workers
primarily reflected a slowdown in benefit cost increases (3.2 percent in the year ended in September
1993, down from 4.4 percent in the year ended in June 1993). The benefit cost gains were dampened by
reductions in nonproduction bonuses and by decreases or temporary suspensions of payments into
retirement funds by several jurisdictions. Wage and salary increases were about the same for the 12-
month periods ended in September and June.

Private industry workers had a different pattern of gains for wages and salaries than for benefits.
Wage and salary increases were higher in the September 1992-93 period than in June 1992-93 (3.1
percent, up from 2.7 percent). This acceleration reflected larger gains for sales workers. In contrast,
benefit cost increases were lower in the September 1992-93 period (5.4 percent, down from 5.8 percent),
due to a continuing slowdown in the rate of gain in health and workers’ compensation insurance costs
(which continue to rise more rapidly than other benefit costs), as well as smaller increases in pension
costs.

For the year ended September 1993, compensation cost gains in private industry were higher in
goods-producing industries (4.0 percent) than in service-producing industries (3.6 percent).
Compensation cost increases in goods-producing industries ranged from 3.3 percent in construction to 4.5
percent in durable goods manufacturing. Gains in service-producing industries ranged from 1.9 percent in
general merchandise stores to 5.3 percent in banking, savings and loan, and other credit agencies.

Over-the-year compensation cost increases in private industry were about the same for white-
collar workers (3.7 percent) and blue-collar workers (3.8 percent); both were above the gain for service
workers (3.0 percent). Compensation cost increases for white-collar occupations ranged from 3.4 percent
for sales workers to 4.2 percent for administrative support including clerical occupations. Within blue-
collar occupations, compensation cost gains ranged from 3.3 percent for handlers, equipment cleaners,
helpers, and laborers to 4.3 percent for machine operators, assemblers, and inspectors.

Compensation cost increases over the year ended September 1993 were higher for union (4.2
percent) than for nonunion workers (3.6 percent). This pattern held in goods-producing industries (4.6
percent and 3.7 percent, respectively), but not in service-producing industries where both groups showed
3.5 percent increases.

This release provides first-time index series that exclude sales workers from the
insurance industry. (See tables 5 and 8.) These new series permit examination
of compensation and wage trends, free from the influence of sales worker pay
which reflects volatile changes in commission earnings.

ECI data for December 1993 will be released on Tuesday, January 25, 1994, at 8:30 A.M. (EST).


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