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United States Ya
, CW. Department : »
: : y of Labor _

Bureau of Labor Statistics Washington, D.C. 20212

Technical, historical contact: USDL: 90-195
Wayne Shelly (202) 523-1165

Media contact: ; TRANSMISSION OF MATERIAL IN
Kathryn Hoyle - (202) 523-1913 THIS RELEASE IS EMBARGOED
oo UNTIL 8:30 A.M. (EDT).,

TUESDAY, APRIL 24, 1990

| NOTE: Beginning with this release, the Employment Cost Index is based on |
| June 1989=100, rather than June 1981=100. (See page 3.) |

“EMPLOYMENT COST INDEX - MARCH 1990

The Employment Cost Index (ECI) rose 1.7 percent in the 3 months ended in
March 1990, the U.S. Department of Labor's Bureau of Labor Statistics reported
today. The March “1990 ECI stood at 104.3, based on June 1989=100. The ECI
Measures changes in compensation costs--wages, salaries, and employer costs
for employee benefits. It is not seasonally adjusted. .

Compensation costs rose 5.5 percent for the year ended in March 1990,
Compared with a 4.8 percent gain over the same period a year ago. (See table.
1.) This acceleration in compensation costs held for both state and local
government workers (6.4 percent, up from 5.5 percent) and for private industry
workers “(5.2 percent, up from 4.6 percent).

The table below shows over-the-year changes in private industry
compensation costs since March 1988.

12-month percent changes in the ECI, private industry workers

12-months Compensation Wages and Benefit
ended costs: salaries costs
1988 March 3.8 3.3 5.9
June 4.5 3.8 6.4
Sept. 4.4 3.7 6.8
Dec. 4.8 4.1 6.9
1989 March 4.6 4.2 5.4
dune 4.5 4.1 5.6
Sept. 4.8 4.3 6.0
Dec. 4.8 4.1 6.1
1990 March 5.2 4.2 7.2



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4
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 payrol] 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-sickhess 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, excluding farms and households, and the public sector, excluding
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
nearly. 23,000 occupations within 4,400 sample establishments in private industry.
and about 6,000 occupations within 1,000 sample establishments in state. and-Jocal
governments. Data-are collected for the pay period including the 12th day of the
survey months of March, June, September, and December. CI statistics. are
neither annualized nor adjusted for seasonal influences.

1 the benefit cost indexes. provide the change in the cost of benefits to a fixed
labor force. They are not price indexes for a fixed market basket of benefits.
Therefore, the indexes will change as a result of either a change-in the price of
benefits provided (for example, higher pay for holidays) or a change in the
benefits (for example, an additional holiday).



3
EMPLOYMENT COST INDEX SHIFTS TO NEW REFERENCE BASE

Beginning with this release, the ECI is based on June 1989=100. The ECI
previously used a June 1981=100 base. The change is in keeping with the
government's longstanding policy to update index bases in statistical series

periodically.

Indexes for selected ECI series based on June 1981=100 will be available
for the next 2 years. Historical data for both June 1989 and June 1981 bases
are available from the Bureau of Labor Statistics, Division of Employment Cost
Trends, 441 G Street, N.W., Washington, D.C. 20212 (202--523-1165).

For further information, see the technical note, “Employment Cost Index
Rebased to June 1989," in the April 1990 issue of the Monthly Labor Review.

Changes in wages and salaries and benefit costs, private industry, 1980-1990
12-month 12—-month
Percent change : percent change
15 15
14 4-14
i
13 + 13
12 b (Fey 4 12
11 L” qj ii
10 fF 4 10 i
oF 49 :
ar 48 i
|
7+ 4 7 |
- |
6+ de |
5 + 45
Wages and salaries
ak 44
BE 4 3
2E 42
tf . 41
o Fttite titted tt H
1960 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 i



2

The acceleration in compensation costs for private industry workers was
concentrated in benefit costs rather than wages and salaries. Wages and
salaries rose 4.2 percent over the year ended in March 1990, the same as the
increase a year earlier. In contrast, benefit costs rose 7.2 percent for the
year ended in March 1990, up from 5.4 percent a year ago. The higher benefit
costs primarily resulted from a 1.9 percent rise in employers’ social security
tax rate (from 7.51 to 7.65 percent), as well as higher health insurance costs
and nonproduction bonuses including lump-sum payments in lieu of wage
increases. :

Wage and salary increases in private industry for the year ended in March
1990 were higher for white-collar occupations (4.6 percent) than for blue-
collar or service workers (3.7 percent). Average pay gains for white-collar
occupational groups ranged from 4.0 percent for managers and administrators to
4.8 percent for professional and technical workers and sales workers. Pay
increases for blue-collar workers varied from 2.7 percent for transportation
and material moving occupations to 4.0 percent for machine operators,
assemblers, and inspectors.

March 1989-90 wage and salary gains were higher for workers in private
service-producing than in goods-producing industries (4.2 percent compared,
with 4.0 percent}. Within the service-producing sector, pay gains ranged from
2.8 percent in food stores and banking to 6.3 percent in health services. :

Over-the-year wage and salary advances for nonunion workers (4.4 percent)
exceeded those for union workers (3.4 percent), as they have since March 1983~-
84. This pattern held in both goods-producing and service-producing
industries. (See table 7.) With benefits included in the comparison,
compensation cost increases also were higher for nonunion workers (5.4
percent) than for union workers (4.3 percent). (See table 6.)

For state and local govenment workers, pay gains for the year ended in
March 1990 (5.6 percent) were higher than those a year ago (4.7 percent). The
March 1989-90 gains were highest for workers in health services, 6.7 percent.

ECI data for June 1990 will be released on Tuesday, July 24, 1990, at
8:30 A.M. E.D.T.



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16

The sample establishments are classified in industry categories based on the
1972 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

~-eTassified 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 etch’ quarter to calculate the most
aggregate “indexes»-civilian, private, atid: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, emplayment 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 serie’ each quarter based'dn ‘the ‘current ECI. sample. The indexes
for these series, consequently, are not: strictly comparable to those for the
aggregate; industry, and occupation series. A.fuTler explanation of the”
calculation’ of ‘index numbers: appears “in an ‘article, “Estimation procedures for
ocethe: ‘Employment Cost. Index," in the May 1982. issue of the Monthly Labor Review.

ri : Bagirining: with the March. 1990 ECI rejease, indexes were rebased to June
‘1989=108. A description of the rebasing is: included in: the article "Employment
a Index Rebased to dune 1989, "in. the April 1990 issue of. the Monthly Labor
Review jew. :

The costs per: “hour worked of compensation components, based on March 1989
data from the ECI, are published in a’separate news release titled: “Employer
Costs for Employee Compensation - March 1989." A description of the cost levels

“tstsprovidedin the: article "Analyzing employers' costs for wages, salaries, and
benefiits":.in the October 1987 issue of the Monthly Labor Review. ~The cost

Tevels,?which are published‘ annually in mid-June, are calculated with current

“emptoyment: weights;.rather. than*thé fixed 1980. Census weights used in computing

: the £€I.° "Therefore, year- ~to-year changes in the cost levels will usually differ
from those fn'the ECI. -

More detailed information on the ECI is available in several sources. These
include an annual bulletin, Employment Cost Indexes and Levels, 1975-89,
(Bulletin 2339); a chapter in the BLS Handbook of Methods (Bulletin 2285), "The
Employment Cost Index;" and several articles published in the Monthly Labor
Review. The annual bulletin is available from the Superintendent of Documents,
U-Sv Government Printing Office, Washington, D.C. 20402, or Bureau of Labor
Statistics, Publications Sales Center, P.0, Box 2145, Chicago, Illinois 60690.
Reprints’ of the-articles plus other-descriptive pieces and a complete historical
listing: are available upon request: “ECE historical data are also available on
data’ diskettes: formatted for use with Lotus 1-2-3.

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