y percent changes,

ECI cumulative quarterl
ies,
September 1975—March 1981

wages and salar

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1981

1980

1979

1978

1977

1976

1975



Table 2.

Rates of wage and salary change in Employment Cost Index

Series

Percent changes for

3 months ended

12 months ended

March
1980

June
1980

September|
1980

December
1980

March
1981

March|
1980

June
1980)

Septenber
1980

December]
1980

March
i981

All private nonfarm workers 1/. . . .

Workers, by occupational group

White-collar workers... ...
Professional and technical workers
Managers and administrators

Sales workers . .

Clerical workers... 2.

Blue-collar workers

Craft and kindred workers
Operatives, except transport .
Transport equipment operatives

Nonfarm laborers

Service workers. .

iorkers, by industry division

Manufacturing . .
Durables... .
Nondurables. .

Nonmanufacturing .
Construction . .

Transportation and
Wholesale and retail trade. - .

Wholesale trade

public utilities

Retail trade... - -

Finance, insurance, and rea.

Services... .

Workers, by region

Northeast
South
North Central . .
West.

Workers, by bargaining status

Union . .
Manufacturing .
Nonmanufacturing

Nonunion
Manufacturing .
Nonmanufacturing

Workers, by area

Metropolitan areas
Other areas

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A/- Excludes private household workers.


EXPLANATORY NOTE

The Employment Cost Index (ECI) is a quarterly measure of the change in the rate of employee
compensation, free from the influence of employment shifts among occupations and industries with
different wage and compensation levels. Compensation is made up of two major components:

Wage and salary rates and employer costs for employee benefits.

Since 1975, the ECI has provided quarterly measures on 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.

With the addition of employee benefit costs, the ECI measures quarterly changes in compen-
sation along with changes in wage and salary rates. Benefits covered by the ECI include:

Hours related benefits - Premium pay for overtime and work on weekends
and holidays, paid holidays, paid vacations, 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;

Legally required benefits - social security, railroad retirement and
supplemental retirement, railroad umemployment insurance, Federal and
State unemployment insurance, workers' compensation, and other legally
required benefits such as State temporary disability insurance; and
Other benefits - Merchandise discounts in department stores.
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. Occupations were defined to correspond to 417 occupational categories

used in the 1970 Census.


é

, United States
Department Y
of Labor |

Bureau of Labor Statistics Washington, D.C. 20212

Judith Finger (202) 523-1165 USDL: 81-262
Kathryn Hoyle (202) 523-1913

FOR RELEASE: Immediate
Thursday, May 28, 1981

EMPLOYMENT COST INDEX - FIRST QUARTER 1981

Employee compensation rates, as measured by the Employment Cost Index (ECI), increased 3.6
percent for the 3 months ended in March 1981, the Bureau of Labor Statistics of the U.S. Depart-
ment of Labor reported today. Compensation, which includes wages, salaries, and employer costs
for employee benefits, advanced 10.7 percent for the 12 months ended in March 1981. The ECT is
not seasonally adjusted.

The first-quarter compensation increase (3.6 percent) was substantially larger than the gain
recorded a year ago (2.7 percent). The accelerated compensation rise reflected a number of
developments that occurred this year. The social security tax on employers and the earnings
ceiling to which the tax applies increased January 1. At the same time, the Federal minimum wage
increased from $3.10 per hour to $3.35 per hour. In addition, benefit costs, particularly
insurance, rose during the quarter. On the other hand, relatively few collective bargaining

.
settlements took place in the first 3 months of 1981.

Wage and salary rates, a major component of the compensation measure, rose 2.7 percent in
the first quarter of 1981, compared with 2.4 percent a year earlier. For the 12 months ended in
March 1981, wages and salaries were up 9.3 percent.

December 1980 - March 1981

Compensation rate increases for all occupational and industry groups were higher in the 3
months ended in March 1981 than in any quarter in 1980. The average increase in compensation for
all private nonfarm workers was 3.6 percent. The increase in the social security tax rate for
employers (6.13 percent to 6.65 percent) and earnings ceiling ($25,900 to $29,700) accounted for
about 0.5 percentage point of the 3.6 percent rise. (These increases also raised employee
contributions to social security.) Wages and salaries also rose markedly in the first quarter

of 1981, increasing 2.7 percent for all private nonfarm workers.


The sample establishments were classified in 62 industry groups based on a two-digit
Standard Industrial Classification (SIC), as defined by the U.S. Office of Management and
Budget. Base-period sample weights are applied to the occupational data in the sample
establishments to calculate weighted averages on earnings, benefit costs, and compensa-
tion for each occupation by industry.

Multiplying these averages by occupational employment weights from the 1970 Census produces
total wage and compensation bills for the occupations by two-digit SIC. The bills are summed
over industry/occupation components to produce levels of aggregation used in the ECI series
(e.g., occupational groups, industry divisions).

Dividing current quarter wage and compensation bills by those in the previous quarter
provides the quarter-to-quarter percent changes published for the ECI.

Data are collected for the pay period encompassing 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 2.7 percent change in wage and salary rates for
"all private nonfarm workers" in the first quarter of 1981 (table 2) is the actual percent
change in straight-time average hourly earings from the pay period including the 12th day
of December 1980 to the comparable pay period in March 1981.

ECI wage and salary data are also published by region and metropolitan areas (based on
the location of the sample establishment) and for "union" and "nonunion" series (based on
whether the sample occupations are covered by collective bargaining agreements) .

Publication of quarterly changes in compensation is limited to six major ECI series.

(See table 1.) These series are part of the ECI's basic occupation and industry estimating
structure and, with one exception, represent at least 3,000 occupations surveyed at an establish-
ment level. Service workers' data represent about 900 establishment/occupations. Compensation
data for other ECI series will be published after assessment of sample sizes and the quarter-to-
quarter changes in benefit costs.

More detailed information on the ECI is available in several articles and publications.
These include a chapter in the BLS Handbook of Methods (Bulletin 1910), "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 are available upon request.


March 1980 - March 1981

Compensation rates rose 10.7 percent on average for all private nonfarm workers in the 12
months ended in March compared with 9.3 percent for wages in the same period. The difference
between compensation and wage gains was larger in manufacturing industries (10.5 percent in -
compensation and 8.8 percent in wages) than in nonmanufacturing (10.9 percent and 9.6 percent).

Among occupational groups, compensation advances were similar for white-collar and blue-
collar workers -10.8 percent and 10.7 percent, respectively. Compensation rates for service
workers showed slightly lower increases, 10.5 percent. All three occupational groups registered
wage gains of 9.3 percent.

Wage increases for union workers outpaced those for nonunion workers--10.2 percent to
8.9 percent. In the manufacturing sector, corresponding pay gains were 10.1 percent and 7.6
percent. Wages in the nonmanufacturing sector were up 10.4 percent for union workers and 9.4
percent for nonunion workers.

Regionally, pay rose most rapidly in the West, 10.9 percent, and slowest in the Northeast,
8.5 percent. Workers in metropolitan areas received wage increases of 9.5 percent compared with

9.1 percent for those in other areas.


Table 1. Rates of compensation change in the Employment Cost Index

Percent changes for

3 months ended 12 months ended
Series
March«| June | September | December [ March | December | March
1980 | 1980 1980 1980 1981 1980 1981
All private nonfarm
workers 1/..... 2.7 | 2.3 2.3 2.1 3.6 9.8 10.7
White-collar workers . 2.8 | 2.3 2.0 2.1 3.9 9.5 10.8
Blue-collar workers . . 2.4-| 2.5 2.7 2.1 3.0 10.1 10.7
Service workers... . 4.3] ll 2.1 1.7 5.4 9.4 10.5
Manufacturing
industries . we 2.8 | 2.0 2.3 2.2 3.5 9.8 10.5
Nonmanufacturing
industries .. oe 2.7 | 2.5 2.3 2.0 3.7 9.8 10.9

1/ Excludes private household workers.