March 2003 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 1.3 percent from December 2002 to March 2003, following a 0.7 percent gain from September to December 2002, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Benefit costs increased 2.2 percent and continued to substantially outpace the 1.0 percent gain in wages and salaries for civilian workers in March. 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. For the year ended March 2003, benefit costs increased 6.1 percent, greater than the 4.9 percent gain for the year ended March 2002. Much of the increase in benefit costs stemmed from the continuing rise in the costs for health insurance and the recent upturn in retirement costs, particularly for defined benefit pension plans.

Quarterly changes, seasonally adjusted

Compensation costs for private sector workers rose sharply, 1.4 percent from December 2002 to March 2003, after advancing 0.7 percent in the prior quarter. For State and local government workers, the increase in compensation costs was 0.9 percent from December to March, compared with the gain of 1.0 percent for the quarter ended in December. Gains in private sector compensation costs were led by large increases in durable manufacturing; finance, insurance, and real estate; and wholesale trade. Private sector compensation gains were dampened by retail trade, transportation and public utilities, and construction. (See tables A and 1.)

Benefit costs accelerated during the quarter, increasing 2.2 percent for civilian workers (nonfarm private industry and State and local government) in the March 2003 quarter following a gain of 1.3 percent in the December 2002 quarter. In the private sector, benefit costs shot up 2.4 percent for the March quarter, significantly higher than all quarterly gains since March 2000. By contrast, the increase for State and local governments was 1.5 percent in the March 2003 quarter, following a 1.7 percent increase in December 2002.

Gains in wages and salaries were 1.0 percent for civilian workers during the March quarter, following a 0.5 percent rise in the December quarter. Private sector wages advanced 1.0 percent for the quarter after posting moderate gains during the prior two quarters. Wage gains in the finance, insurance, and real estate and wholesale trade industries led the increase. Wage and salary increases were slowed by smaller gains in nondurable manufacturing industries, transportation and public utilities, services industries, and among service workers. Wages and salaries in State and local government advanced 0.7 percent during the December 2002 to March 2003 period, identical to the gain in the September-December 2002 quarter.

Over-the-year changes, not seasonally adjusted

Annual compensation costs for civilian workers (not seasonally adjusted) increased 3.9 percent for the year ended March 2003, identical to the over-the-year increase for March 2002. Compensation costs in private industry rose 3.8 percent in the year ended March 2003, compared with increases of 3.9 percent for March 2002, and 4.2 percent for March 2001. In State and local government, compensation costs increased 4.2 percent for the year ended March 2003; over-the-year gains were 3.9 percent in March 2002 and 3.3 percent in March 2001. (See tables B, 2, and 3.)

Although over-the-year compensation gains remained relatively constant for the years ending March 2002 and March 2003, the components of compensation showed significant differences. While increases in wages and salaries turned down, benefit costs rose sharply during the year. For civilian workers, wages and salaries inched up 2.9 percent in the year ended March 2003, compared with a gain of 6.1 percent for benefits. Both private industry and State and local government followed similar patterns. (See tables B, 5, 6, and 8.)

Nonfarm private industry

For the year ended March 2003, compensation costs in private industry increased 4.4 percent for goods-producing industries, higher than the 3.6 percent advance for the year ended March 2002. Compensation costs for manufacturing led the gain, advancing 4.7 percent in March 2003 after increasing 3.5 percent in March 2002. Compensation costs for construction rose 3.2 percent compared with a 4.0 percent rise in 2002. (See table 3.)

The over-the-year increase in compensation for service-producing industries was 3.6 percent, compared with a 4.0 percent gain for the year ended March 2002. Among service-producing industries, the 12-month increase for finance, insurance, and real estate was 7.0 percent for the year ended in March 2003, led by increases in banking, savings and loan, and other credit agencies. Conversely, compensation costs inched up 1.3 percent in business services in the year ended March 2003, following a 3.6 percent increase for 2002.

Over-the-year compensation cost increases were 3.8 percent for white- collar occupations, 4.0 percent for blue-collar occupations, and 3.4 percent for service occupations for the year ended March 2003. Among white-collar occupational groups, compensation gains ranged from 3.1 percent for professional specialty and technical workers to 4.7 percent for executive, administrative, and managerial workers. Among blue-collar workers, compensation cost increases ranged from 3.0 percent for transportation and material moving workers to 4.1 percent for precision production, craft, and repair workers and machine operators, assemblers, and inspectors. (See table 3.)

Compensation costs for union workers advanced 4.7 percent over the year ending March 2003, greater than the 3.6 percent increase for nonunion workers. Compensation costs among blue-collar union workers rose 4.9 percent, higher than the modest gain of 3.3 percent for blue-collar nonunion workers. In goods-producing industries, the 5.2 percent increase for union workers was greater than the 4.1 percent advance for nonunion workers. (See tables C and 4.)

Wages and salaries for union workers rose 3.3 percent for the 12 months ended in March 2003. This compares with an over-the-year increase of 2.9 percent for nonunion workers. Benefit costs for union workers rose sharply, 7.3 percent, greater than the increase of 5.8 percent for nonunion workers in 2003. (See tables C, 7, and 8.)

Among the four geographic regions, increases in compensation costs ranged from 2.8 percent in the South to 4.9 percent in the Midwest for the year ended in March 2003. Compensation costs rose 3.5 percent in the Northeast and 4.3 percent in the West. (See table 4.)

State and local government

In State and local government, the March 2003 over-the-year increase in wages and salaries was 3.1 percent, compared with a gain of 3.4 percent for March 2002. Among occupational groups, wages of service workers rose 2.8 percent for the year ended March 2003, compared with gains of 3.0 percent for blue-collar workers and 3.2 percent for white-collar workers. Benefit costs jumped 6.6 percent for March 2003, significantly higher than the March 2002 gain of 5.0 percent. (See tables B, 5, and 8.)

This release incorporates annual revisions in seasonally adjusted Employment Cost Index (ECI) data for total compensation, wages and salaries, and benefit costs. Seasonally adjusted data for 1998-2002 were revised to reflect updated seasonal factors. The new seasonal factors and historical listing containing revised seasonally adjusted indexes are available on the Internet site http://www.bls.gov/ect/home.htm, by e-mail request ocltinfo@bls.gov, or by telephone (202) 691-6199.

Supplemental data from the ECI, providing 12-month percent changes in employer costs for health insurance in private industry from March 1982 to March 2003, 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 March 18, 2003, in a news release titled "Employer Costs for Employee Compensation-December 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.

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