Employment Cost Index

Total Compensation

Costs Increase
Nearly 1 Percent

BY WAYNE SHELLY

The Employment Cost Index (ECI), a measure of changes
in compensation costs, increased 0.9 percent before sea-
sonal adjustment in the 3 months ended in March 1996.
The March 1996 ECT level of 128.5 (June 1989=100) was
3.0 percent higher than in March 1995. Included in the
ECI are changes in 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 0.7 percent in the first quarter of
1996, compared with 0.8 percent in the last 3 months of
1995. Wages and salaries rose 1.0 percent during the first
quarter of 1996, up from 0.7 percent in the September-De-
cember 1995 period. Benefit costs decreased 0.1 percent
for the quarter, compared with an increase of 1.0 percent

‘Wayne Shelly is an economist in the Division of Compensation Data Analy-
sis and Planning, Bureau of Labor Statistics. Telephone (202) 606-6278.

for the previous quarter. (See chart 1.)

Over-the-year changes, unadjusted

Compensation costs for civilian workers (not seasonally
adjusted) increased 3.0 percent for the year ended in March
1996, about the same as the 2.9-percent increase for the
year ended in March 1995. (See chart 2.) Compensation
costs for private industry workers rose 3.0 percent, while
those of State and local government rose 2.8 percent.

For private industry workers, wages and salaries in-
creased 3.3 percent, the largest increase in 4 years, Benefit
costs increased 2.0 percent, the lowest 12-month increase
since the series began in 1980. This moderation in benefit
cost increases reflects a slowdown in nonproduction bo-
nuses, health benefits, unemployment insurance, and work-
ers’ compensation.

For the year ended in March 1996, compensation costs
in service-producing industries increased 3.4 percent com-
pared with 2.2 percent for goods-producing industries. This

Table 1. Percent changes In Employment Cost Index for clvilian workers, selected quarters and year ended March 1996

‘Seasonally adjusted 3-months ended Unadjusted
‘Compensation component 12-months
dune | Sept. | Dec. | Mar. | June | Sept | Dec. | Mar. | ended
1994 1994 1994 1995, 1995 1995, 1995, 1996 | Mar. 1996
08 os 07 07 08 06 08 o7 3.0
&.- 8 7 7 7 7 7 1.0 32
a 1.0 5 3 & 10 01 22

Compensation and Working Conditions June 1996 48



Chart 1. Changes In benefits, seasonally adjusted and
not seasonally adjusted, private industry

saadastbonadans fesabenlnasions
we 1982 1984 1988 1988 1990 1982 904 908

Chart 2. Changes in wages and salaries and benefit
costs, private Industry

b

1984 1996

o- b Latalitadaatdioadaashaasosns
1980 19862 1984 1966 1968 1990 1992

Chart 3. Changes in benefits, by bargaining status,
private industry

op wish Listlinnissansisinbatainantaandana
1980 1082 1984 1988 1988 1990 1902 10041906,

Chart 4. Changes In benefits by Industry sector, pri-
vate Industry

 wtesiiaiaantusabus fasiaaad
1900 1962 1964 1968 1988 1900 1902 1904 1906 |

49 Compensation and Working Conditions



pattern held for both wages and salaries and benefits.
Wages and salaries increased 3.5 percent in service-pro-
ducing industries, compared with 2.8 percent in good-pro-
ducing industries. Benefit costs increased 2.6 and 1.0 per-
cent, respectively.

Compensation costs for white-collar workers increased
3.4 percent, compared with 2.2 percent for blue-collar work-
ers and service occupations, This continuing trend of larger
increases for white-collar workers has occurred over most

of the last 15 years.

Compensation cost gains over the year ended in March
1996 were higher for nonunion workers (3.1 percent) than
for union workers (2.7 percent). (See chart 3.) This also
was true for goods-producing industries (2.3 percent for
nonunion and 2.0 percent for union), but not for service-
producing industries (3.3 percent for nonunion and 3.4 per-
cent for union). (See chart 4.)

Table 2. Percent changes in Employment Cost Index for private industry workers, March 1995-March 1996

‘Compensation Wages and salaries
Industry sector White Bue | Service | White Bue | Service
collar collar workers collar collar workers
34 22 22 37 27 23
19 23 25 24 3.0 32
38 20 21 40 22 23

Compensation and Working Conditions June 1996 50