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United States
Department >
p of Labor

Bureau of Labor Statistics Washington, D.C. 20212

Technical, historical contact: USDL: 87-164
Felicia Nathan (202) 523-1165

Media contact: (202) 523-1913 FOR RELEASE: 10:00 A.M. E.D.T.
Tuesday, April 28, 1987

EMPLOYMENT COST INDEX - MARCH 1987

The Employment Cost Index (ECI) increased 0.9 percent in the 3 months ended in
March 1987, the U.S. Department of Labor's Bureau of Labor Statistics reported
today. For the year ended in March 1987, the increase was 3.4 percent. The
March 1987 ECI level stood at 135.0, based on June 1981=100. The ECI measures
changes in compensation costs--wages, salaries, and employer costs for ¢ em-
ployee benefits. It is not seasonally adjusted.

The 0.9 percent increase in compensation costs in.the December 1986-March 1987
period was similar to the 1.1 percent increase in the same period a year ago.
This similarity held for both private industry workers (1.0 and 1.1 percent,
respectively) and state and local government workers (0.8 percent and 1.0
percent).

The 3.4 percent compensation cost increase for the year ended in March 1987
was below the 4.1 percent gain a year ago. A similar pattern was recorded for
wages and salaries alone (3.5 percent, down from 4.2 percent)--indicating that
benefit costs have increased at about the same pace as wages over the past two
years and that the pace has slowed.

In private industry, over-the-year compensation cost increases were higher for
white-collar workers (3.7 percent) than for blue-collar (2.1 percent) or

IIIS III III IAI III III ISI IIIA ISAS SII AISI III AIS AIS AS AISI SAS AS ASAI.

This release presents, for the first time, estimates of
quarterly change in compensation costs, and in wages and
salaries only, for workers in banking, savings and loan, °
and other credit agencies and for workers’ in business ser-
vices. (See tables 5 and 6.) The. addition of these series
is part of the Federal government's effort to improve
Statistical programs for service-producing industries.

Since June 1986, ECI measures have been based on fixed em-
ployment counts from the 1980 Census of Population rather
than from the 1970 Census. ECI estimates for the period
March 1985 to March 1986 were recalculated, using the 1980
Census weights. The recalculations, which are available
upon request, provide a one-year overlap for ECI estimates
* based on 1970 and 1980 weights.

PIII III IAAI IISA ISI ISI IASI IA ISI IAI SII IIA ISI IAI SISA IAI ASSIA.

2b Ob OF Ob OF OF OF OF OF RO
ob ROR OF OF OF FO OF


12
1970 Census Category 1980 Census Category

Managers and administrators Executive, administrative, and
managerial occupations

Professional and technical Professional specialty and

workers technical occupations

Sales workers on Sales occupations

Clerical workers Administrative support
occupations, including
clerical

Craft and kindred Precision production, craft,

workers : and repair occupations

Operatives, except . Machine operators, assemblers,

transport and inspectors

Transport equipment Transportation and material

operatives moving occupations

Nonfarm laborers Handlers, equipment cleaners,

helpers, and laborers

Service workers Service occupations

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. .

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 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. a :

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 {aber y* 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 complete historical listing of ECI data are
available upon request. “


ll
EXPLANATORY NOTE

The Employment Cost Index (ECI) is a 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 and for 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.

The compensation series includes employer costs for employee benefits as well
as wages and salaries. 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); 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, eypPtemental unemployment plans, and merchandise discounts in department
stores).

The ECI provides data for both the private and public sectors, which are
published spearately and also combined as the total civilian economy. The
private sector includes the total private econom » 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 16,000 occupations within 2,800 sample establishments in private
industry and about 3,500 occupations within 700 sample establishments in state
and local governments. Data are collected for the Pay period including the
12th day of the survey months of March, dune, September, and December. £CI
statistics are neither annualized nor adjusted for seasonal influences.

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. Beginning in June 1986, the jobs are
classified according to definitions used in the 1980 Census. Prior to June
1986, they were classified according to the 1970 Census. The titles of the
published 1970 and 1980 occupation groups are listed below for comparison.
Differences between the two classification systems are slight, as indicated in
the article "Introducing new weights for the Employment Cost Index," in the’
dune 1985 issue of the Monthly Labor Review. .


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2

service workers (2.9 percent). Among white-collar workers, compensation cost
increases ranged from 2.8 percent for sales workers to 4.3 percent for
executive, administrative, and managerial occupations. (See table 3.) The
larger increase for managers partly reflects increases in nonproduction
bonuses. .

Over-the-year gains in wages and salaries for private industry workers ranged
from 1.6 percent for laborers to 4.3 percent for professional and technical
occupations. (See table 4.) The relatively large pay increases for pro-
fessionals occurred in most industries, but were particularly high in legal
and health services.

Workers in private service-producing industries had over-the-year pay gains
averaging 3.4 percent compared with 2.7 percent for those in goods-producing
industries. (See table 6.) The increase for goods-producing industries was
the lowest over-the-year pay gain recorded in the ll-year history of that
series. Other record low wage and salary increases covered workers in:

* Manufacturing (2.7 percent)

* The South (2.6 percent)

* Machine operating occupations (2.4 percent)

* Skilled craft occupations (2.1 percent)

* Union occupations (1.7 percent) :

* Transportation and public utilities (1.4 percent)

Wages and salaries rose 3.5 percent for nonunion workers over the year ended
in March 1987, compared with the record-low pay gain of 1.7 percent for union
workers. (See table 8.) Pay gains for nonunion workers have outpaced those
for union workers for the past 4 years.

ECI data for June 1987 will be released on Tuesday, July 28, 1987, at
10:00 a.m. E.D.T. .