Document ID: EPA-HQ-OPPT-2007-0716-0005
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2007-11-14T05:00Z

ATTACHMENT 3

Wage Rates Estimation



Overview

Unit labor costs are calculated by adding fringe benefits and overhead
to the wage or salary to derive a fully loaded labor cost.  The basic
method is described in Wage Rates for Economic Analysis of the Toxics
Release Inventory Program (Rice, 2002).  

In March 2004, BLS began using the North American Industry
Classification System (NAICS) codes instead of the Standard Industrial
Classification (SIC) System, and the Standard Occupational
Classification (SOC) system instead of the Occupational Classification
System (OCS).  The following table shows the crosswalk between old and
new occupational titles. 

EPAB Reports Labor Category	BLS Old Title (OCS)	BLS New Title (SOC)

Managerial	Executive, administrative, and managerial 	Management,
business, and financial

Professional/Technical	Professional specialty and technical	Professional
and related

Clerical	Administrative support, including clerical 	Office and
administrative support

Source: Employer Costs for Employee Compensation: Changes to NAICS and
SOC, Table 2. ECEC Occupational Comparability between SOC and OCS (BLS,
2006a); and Weinstein, 2004.

Costs are calculated for several labor categories: Managerial,
Professional/ Technical, Clerical, Production Workers, and EPA staff. 
The resulting loaded labor rates used in this document are given in the
table below.

LABOR CATEGORY	LOADED HOURLY RATE

Government

   GS-13, Step 1	

$60.86

Industry

   Managerial

   Professional / Technical

   Clerical	

$65.22

$54.72

$27.00

B.	Government

Agency labor costs are calculated based on annual Federal salaries for
the Washington-Baltimore area published by the Office of Personnel
Management effective January 2007 (OPM, 2007).  The average salary for
one Full Time Equivalent (FTE) staff is estimated as the salary for a
GS-13 Step 1 employee. 

Multiplying the annual pay by an assumed loading factor of 1.6 to
reflect Federal fringe benefits and overhead, the loaded annual salary
of EPA staff was calculated to be $127,035.  

The Agency loading factor is from an EPA guide, Instructions for
Preparing Information Collection Requests (ICRs) (OPPE, 1992, page 30,
footnote 9).  The 60 percent assumption was labeled “the benefits
multiplication factor” in the EPA Guide, but has been used in many EPA
Office of Pollution Prevention and Toxics ICRs to reflect both fringe
benefits and overhead for Federal staff.  For example, it was used in an
August 2000 document supporting ICR No. 1139.06, with the following
explanation:

“The annual costs per FTE are derived by multiplying the annual pay
rate by 1.6 (the benefits multiplication factor). The multiplication
factor used is recommended in EPA's Office of Policy, Planning, and
Evaluation's Instructions for Preparing Information Collection Requests
(ICRs) (June 1, 1992). An EPA internal phone call between Carol Rawie
(OPPT/EETD/RIB) and Carl Koch (OPPE/RMD/IMB) on May 3, 1994, indicated
that the 1.6 factor included not only benefits but also overhead.” 
(ICR No.1139.06)

C.	Technical, Managerial, and Clerical Labor

Wages and fringe benefits for managerial, professional/technical,
clerical and production labor were taken from the Bureau of Labor
Statistics (BLS) Employer Costs for Employee Compensation (ECEC) data,
for December, for manufacturing industries.   

The cost of fringe benefits such as paid leave and insurance, specific
to each labor category, are taken from the same ECEC series.  Fringe
benefits as a percent of wages are calculated separately for each labor
category.  For example, for December 2006, the average wage rate for
professional/technical labor was $32.38; the average fringe benefit was
$16.77.  Fringe benefits as a percent of wages were $16.77/$32.38, or
approximately 51.8 percent. 

An additional loading factor of 17 percent is applied to wages to
account for overhead.  This approach is used for consistency with Office
of Pollution Prevention and Toxics economic analyses for two major
rulemakings: Wage Rates for Economic Analyses of the Toxics Release
Inventory Program (Rice, 2002), and the Revised Economic Analysis for
the Amended Inventory Update Rule: Final Report (EPAB, 2002).  This
overhead loading factor is added to the benefits loading factor, and the
total is then applied to the base wage to derive the fully loaded wage. 
For example, the December 2006 fully loaded wage for
professional/technical labor is $32.38 × (1+0.5179 + 0.17) = $54.72. 

Fully loaded costs for managerial, clerical, and production labor are
calculated in a similar manner, as shown in Table 1.  

Table 1  Derivation of Loaded Wage Rates1	 	 

EPAB Labor Category	Data Sources	Un-inflated wages and fringes / hour
Fringe benefits as % of wage	Over-head as % of wage 2 	Fringe + Overhead
factor	Loaded Wage Rate before inflation	Inflation factor 3	Loaded Wage
Rate (2006 dollars)

Date	Wages 

$	Fringe benefits

$

	(a)	(b)	(c) = (b)/(a)	(d)	(e) =(c) + (d) + 1	(f) = (a) x (e)	(g)	(h) =
(f) x (g)

Managerial 	BLS ECEC, Private Manufacturing industries, "Mgt, Business,
and Financial". [BLS, 2006b]	Dec	$39.77 	$18.83 	47.35%	17%	1.64	65.22	1
$65.22 

2006

 

Professional/Technical	BLS ECEC, Private Manufacturing industries
"Professional and Related." [BLS, 2006b]	Dec-06	$32.38 	$16.77 	51.79%
17%	1.69	54.72	1	$54.72 

Clerical	BLS ECEC, Private Manufacturing industries "Office and
Administrative Support." [BLS, 2006b]	Dec	$16.07 	$8.20 	51.03%	17%	1.68
27.0019	1	$27.00 

2006

 

EPA staff FTE	Annual Federal staff cost: OPM
Washington-Baltimore-Northern Virginia, DC-MD-PA-VA-WV area, GS-13 Step
1 pay rates, with 60% overhead. [OPM 2007]	Jan-07	$79,397 	--	[Included
in 60% overhead]	60%	1.60	$127,035 	1	$127,035 

	per year

	per year

per year

	$38.04 

	$60.86 

$60.86 

	per hour

	per hour

per hour

Notes:

1 Wage data are rounded to the nearest cent in this table.

2 An overhead rate of 17% was used based on assumption in Wage Rates for
Economic Analyses of the Toxics Release Inventory Program (Rice, 2002),
and the Revised Economic Analysis for the Amended Inventory Update Rule:
Final Report (EPAB, 2002).

3 An inflation factor of "1" means wage data was not escalated to
reflect inflation.

4  The Federal salary is the unloaded Federal GS-13 Step 1 salary
($79,397) for January 2007, from the Office of Personnel Management
salary table for Washington-Baltimore-Northern Virginia (OPM, 2007). 
The 60% fringes-and-overhead rate is from an EPA guide, Instructions for
Preparing Information Collection Requests (ICRs) (OPPE, 1992, page 30,
footnote 9).



D. 	References

BLS, 2006a.  U.S. Bureau of Labor Statistics, Employer Costs for
Employee Compensation: Changes to NAICS and SOC, Table 2. ECEC
Occupational Comparability between SOC and OCS.  Downloaded February
2006 from   HYPERLINK "http://www.bls.gov/ncs/ect/sp/ecsm0003.htm" 
http://www.bls.gov/ncs/ect/sp/ecsm0003.htm .

BLS, 2006b. U.S. Bureau of Labor Statistics, Employer Costs for Employee
Compensation Supplemental Tables.  Supplementary Table 2. Employer costs
per hour for employee compensation and costs as a percent of total
compensation:  Private industry workers in manufacturing industries, by
occupational group, establishment size and bargaining status. December
2006.

EPAB, 2002.  U.S. EPA, Office of Pollution Prevention and Toxics,
Economic and Policy Analysis Branch. Revised Economic Analysis for the
Amended Inventory Update Rule: Final Report.  Washington, DC.  August
2002.

OPM, 2007.  Office of Personnel Management, Salary Table 2007-DCB,
Washington-Baltimore-Northern Virginia, DC-MD-PA-VA-WV. accessed from  
HYPERLINK "http://www.opm.gov/oca/06tables/indexGS.asp" \t "_blank" 
http://www.opm.gov/oca/06tables/indexGS.asp .

OPPE, 1992.  U.S. EPA, Office of Policy, Planning, and Evaluation. 
Instructions for Preparing Information Collection Requests (ICRs).
Washington, DC, June 1, 1992.

Rice, 2002.  Cody Rice. Wage Rates for Economic Analysis of the Toxics
Release Inventory Program.  Washington, DC: U.S. EPA, Office of
Pollution Prevention and Toxics, Economic and Policy Analysis Branch,
June 10, 2002.

Weinstein, 2004.  Harriet G. Weinstein and Mark A. Loewenstein, U.S.
Bureau of Labor Statistics. Comparing Current and Former Industry and
Occupation ECEC Series. Originally posted August 25, 2004 at   HYPERLINK
"http://www.bls.gov/opub/cwc/print/cm20040823ar01p1.htm" 
http://www.bls.gov/opub/cwc/print/cm20040823ar01p1.htm .

 Past economic analyses, used ECEC data for “All Goods Producing”
sectors (manufacturing, mining, and construction).  However, the
manufacturing sector data seems more relevant since the information
collection mainly affects the chemicals industry.

	 Past economic analyses have used the term “technical” labor. Here
the category is called “professional/technical” labor, to make clear
how it relates to BLS categories.  In 2004, BLS changed from the
Occupational Classification System, OCS, to the Standard Occupational
Classification system, SOC.  In the process, the “Professional
specialty and technical” category became the “Professional and
related” category.  However, the coverage of the old and new
occupational groups is approximately the same. See the BLS article,
Comparing Current and Former Industry and Occupation ECEC Series
(Weinstein, 2004).

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