December 2002 Employment Cost Index

Historical release narrative reproduced from the official public-domain source. Statistical tables, standard technical appendices, administrative material and attendance rosters are omitted; formatting is adapted for reading. Figures retain the release's historical context and may have been revised. Consult the linked source for the complete document.

The Employment Cost Index for total compensation rose 0.7 percent from September to December, following a 0.8 percent gain from June to September, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Benefit costs continued to outpace the gains in wages and salaries for civilian workers in December, increasing 1.3 percent compared with a modest rise of 0.4 percent for wages and salaries. The Employment Cost Index (ECI), a component of the National Compensation Survey, measures quarterly changes in compensation costs, which include wages, salaries, and employer costs for employee benefits, for nonfarm private and State and local government workers.

Employer costs for benefits account for nearly 30 percent of compensation costs and include such items as health and other insurance, retirement plans, paid leave, and legally-required benefits like Social Security. The 1.3 percent increase in benefit costs this quarter was in line with quarterly increases over the past four years. Since 1999, benefit costs for civilian workers have increased about 20 percent, double the pace for 1995-1998. Much of the increase in benefit costs over the past few years stemmed from rising costs for health insurance and retirement plans.

Quarterly changes, seasonally adjusted

The 3-month increase in compensation costs for State and local government workers was 0.9 percent from September to December, after a sharp gain of 1.5 percent for the quarter ended in September. Compensation costs for private sector workers advanced 0.7 percent from September to December, after rising 0.6 percent in the prior quarter. Although compensation costs rose 1.3 percent for construction and durable manufacturing industries, private sector compensation gains were dampened by slower growth among service- producing industries. (See tables A and 1.)

Wages and salaries increased 0.4 percent for civilian workers (nonfarm private industry and State and local government) during the December quarter, following a 0.5 percent rise in the September quarter. The private sector continued to show moderate gains, inching up 0.4 percent for the second consecutive quarter after larger gains earlier in the year. Wage and salary increases slowed in nondurable manufacturing industries, transportation and public utilities, services industries, and among service workers. Wages and salaries in State and local government advanced 0.8 percent during the September-December period, following a 0.9 percent increase in the June-September quarter.

The 1.3 percent increase in benefit costs for civilian workers followed a 1.4 percent gain in the June-September quarter. In the private sector, benefit costs were up 1.2 percent for the December quarter, compared with a 1.0 percent advance in the June-September period. By contrast, the increase for State and local governments declined from the 3.0 percent gain in the September quarter to a 1.6 percent increase in December.

Over-the-year changes, not seasonally adjusted

Compensation gains moderated for civilian workers for the 12 months ended in December. Annual compensation costs for civilian workers (not seasonally adjusted) increased 3.4 percent, lower than the over-the-year increases of 4.1 percent in both December 2001 and December 2000. Compensation costs in private industry rose 3.2 percent in the year ended December 2002, compared with larger increases of 4.2 percent for December 2001 and 4.4 percent for December 2000. In State and local government, compensation costs increased 4.1 percent for the year ended December 2002; over-the-year gains were 4.2 percent in December 2001 and 3.0 percent in December 2000. (See tables B, 2, and 3.)

Nonfarm private industry

In private industry, annual gains slowed in the 12-months ended in December 2002. Wages and salaries rose a modest 2.7 percent, after increasing 3.8 percent in the year ended in December 2001. (See tables B and 6.) Benefit costs for private industry workers advanced 4.7 percent for the year ended in December 2002, compared with an increase of 5.1 percent in December 2001. (See tables B and 8.)

In private industry, over-the-year compensation cost increases were 3.2 percent for white-collar occupations, 3.6 percent for blue-collar occupations, and 3.2 percent for service occupations. Among white-collar occupational groups, compensation gains ranged from 2.6 percent for professional specialty and technical workers to 3.7 percent for administrative support, including clerical workers. Among blue-collar workers, compensation costs moved up 4.1 percent for handlers, equipment cleaners, and laborers, compared with a gain of 3.4 percent among machine operators, assemblers, and inspectors. (See table 3.)

For the year ended December 2002, compensation increased 3.7 percent for goods-producing industries, compared with a 3.8 percent advance for the year ended December 2001. Compensation costs for manufacturing led the gain, turning up 3.8 percent in December 2002 after advancing 3.5 percent in December 2001. Compensation costs for construction slowed to a 3.2 percent gain, compared with a 4.3 percent rise in 2001. (See table 3.)

The over-the-year increase in compensation for service-producing industries declined to 3.1 percent, compared with a 4.3 percent gain for the year ended December 2001. Among service-producing industries, the 12- month increases for business services inched up only 0.8 percent for 2002, down from 4.9 percent in 2001. Conversely, compensation costs jumped 6.3 percent in banking, savings and loan, and other credit agencies in the year ended December 2002, following a 4.7 percent increase for 2001.

Compensation costs for union workers advanced 4.2 percent over the year, greater than the 3.2 percent increase for nonunion workers. In service-producing industries, compensation costs rose 4.5 percent for union workers, higher than the modest gain of 3.0 percent for nonunion workers. In goods-producing industries, the increase for union workers was 4.0 percent, compared with a 3.5 percent advance for nonunion workers. (See tables C and 4.)

Wages and salaries for union workers rose 3.5 percent for the 12 months ended in December 2002. This compares with over-the year increases of 4.4 percent in December 2001 and 3.4 percent in December 2000. Wage and salary gains for nonunion workers were 2.7 percent in December 2002, compared with advances of 3.6 percent in December 2001 and 4.0 percent in December 2000. (See tables C and 7.)

Among the four geographic regions, increases in compensation costs ranged from 2.8 percent in the South to 3.8 percent in the Midwest for the year ended in December 2002. Compensation costs rose 3.2 percent in the Northeast and 3.5 percent in the West. In metropolitan areas, compensation costs advanced 3.2 percent for the year ended in December 2002, compared with a rise of 3.3 percent in other areas. (See table 4.)

State and local government

In State and local government, the December 2002 over-the-year increase in wages and salaries was 3.2 percent, compared with a gain of 3.6 percent for December 2001. Among occupational groups, service workers inched up a modest 2.4 percent for the year ended December 2002, compared with gains of 2.9 percent for blue-collar workers and 3.3 percent for white-collar workers. Benefit costs moved up 6.2 percent for December 2002 compared with the December 2001 gain of 5.5 percent. (See tables B, 5, and 8.)

Supplemental data from the ECI, providing 12-month percent changes in employer costs for health insurance in private industry from March 1982 to December 2002, will be available shortly after publication of this news release on the Internet site http://www.bls.gov/ect/home.htm or upon request.

The costs per hour worked of compensation components, based on data from the ECI, were published on December 11, 2002, in a news release titled "Employer Costs for Employee Compensation-September 2002." Employer Costs for Employee Compensation was changed from an annual to a quarterly publication beginning with June 2002 data. Future publications will be issued approximately three months after the survey months of March, June, September, and December.

ECI data are available on the Compensation Cost Trends page at http://www.bls.gov/ncs/ect/home.htm. To access data using Anonymous FTP, use the Internet address ftp://ftp.bls.gov.

For technical assistance in using the BLS Internet site, send e-mail to webmaster@bls.gov. For ECI data requests, send e-mail to ocltinfo@bls.gov.

The ECI news release is available through an e-mail subscription service. See the subscription link on http://www.bls.gov/ncs/ect/home.htm or http://www.bls.gov/bls/newsrels.htm.

News releases and other information are available from the BLS fax-on- demand service. To request a document fax, call (202) 691-6325. To request a catalog of available documents, select option 2 at the initial voice prompt. To request data found in this news release, enter the following codes: