March 2004 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.

Total compensation costs for civilian workers increased 1.1 percent from December 2003 to March 2004, seasonally adjusted, rising from the 0.8 percent gain from September to December 2003, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Benefit costs jumped 2.4 percent, continuing to strongly outpace the gain for wages and salaries of 0.6 percent. 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.

Although benefits contribute only 30 percent to total compensation costs, two-thirds of the increase in compensation costs was attributable to rises in benefit costs during the December 2003 to March 2004 period. Among private industry workers, benefit costs accounted for 67 percent of compensation gains during the quarter, with defined benefit retirement costs accounting for nearly half of the rise in benefit costs. Among State and local government workers, benefit costs contributed 63 percent of compensation gains during the December 2003 to March 2004 period, and health insurance contributions accounted for over one-half of the gain in benefit costs.

Quarterly changes, seasonally adjusted

Compensation costs for the private sector rose 1.1 percent from December 2003 to March 2004, after advancing 0.8 percent in the prior quarter. March gains were led by sharp increases in manufacturing, particularly durable goods manufacturing, and smaller gains in retail trade. For State and local government workers, compensation costs increased 1.0 percent from December to March, compared with a gain of 0.8 percent for the quarter ended in December. (See tables A and 1.)

Benefit costs jumped 2.4 percent for civilian workers (nonfarm private industry and State and local government) in the March 2004 quarter, following a gain of 1.4 percent in the December 2003 quarter. Private sector benefit costs shot up 2.6 percent for the March quarter, sharply higher than the 1.4 percent gain in the previous quarter. Benefit costs for State and local governments increased 1.7 percent in the March quarter, following an increase of 1.3 percent in December 2003.

Wages and salaries for civilian, private, and State and local government workers each advanced 0.6 percent during the March quarter. During the prior quarter, civilian and private industry wages and salaries rose 0.5 percent, and State and local government wages and salaries rose 0.6 percent.

Over-the-year changes, not seasonally adjusted

Annual compensation costs for civilian workers increased 3.8 percent for the year ended March 2004, compared with a 3.9 percent over-the-year increase for March 2003. Compensation costs in private industry rose 3.9 percent in the year ended March 2004, compared with a 3.8 percent increase in March 2003. In contrast, compensation costs slowed to a 3.3 percent increase for State and local government for the year ended March 2004, compared with an over-the-year gain of 4.2 percent in March 2003. (See tables B, 2, and 3.)

The components of compensation continued to show significant differences. While increases in wages and salaries continued to slow, benefit costs continued to rise sharply during the year ended March 2004. For civilian workers, wages and salaries increased 2.5 percent in the year ended March 2004, compared with a gain of 2.9 percent in March 2003. Benefit costs jumped 6.9 percent for the period ended March 2004, higher than the increase of 6.1 percent for the year ended March 2003. (See tables B, 5, 6, and 8.)

Nonfarm private industry

For the year ended March 2004, compensation costs in private industry increased 4.5 percent for goods-producing industries, compared with a 4.4 percent advance for the year ended March 2003. Compensation costs for manufacturing advanced 4.7 percent in March 2004, identical to the increase of a year earlier. Compensation costs for construction rose 3.5 percent in March 2004, compared with a 3.2 percent rise in March 2003. (See table 3.)

The over-the-year increase in compensation for service-producing industries was 3.6 percent, identical to the gain for the year ended March 2003. Among service-producing industries, the 12-month increase for transportation and public utilities was 4.0 percent for the year ended in March 2004, led by an increase in public utilities, particularly the communications industry. Compensation costs rose modestly in wholesale trade, increasing 2.5 percent in the year ended March 2004.

Over-the-year compensation cost increases were 4.5 percent for blue- collar occupations, 3.6 percent for white-collar occupations, and 3.2 percent for service occupations for the year ended March 2004. Among white-collar occupational groups, compensation cost changes ranged from 2.7 percent for executive, administrative, and managerial employees to 4.2 percent for administrative support, including clerical workers. Among blue-collar workers, compensation cost increases ranged from 3.5 percent for transportation and material moving workers to 5.5 percent for machine operators, assemblers, and inspectors. (See table 3.)

Compensation costs for union workers advanced sharply, rising 5.7 percent over the year ended March 2004, significantly higher than the 3.6 percent increase for nonunion workers. Compensation costs among blue- collar union workers advanced 6.2 percent, greater than the gain of 3.7 percent for blue-collar nonunion workers. In goods-producing industries, a 6.8 percent increase for union workers was greater than the 3.7 percent advance for nonunion workers. (See tables C and 4.)

Wages and salaries for union workers rose a modest 2.5 percent for the 12 months ended in March 2004, compared with an over-the-year increase of 2.6 percent for nonunion workers. In contrast, benefit costs for union workers jumped sharply, rising 11.2 percent, compared with an increase of 6.0 percent for nonunion workers in March 2004. Employer contributions for defined benefit plans accounted for over half the rise in benefit costs for union workers. (See tables C, 7, and 8.)

Among the four geographic regions, increases in compensation costs ranged from 3.4 percent in the Midwest to 4.8 percent in the West. Compensation costs rose 3.9 percent in the Northeast and 3.6 percent in the South. (See table 4.)

State and local government

Wages and salaries for State and local government workers rose 2.1 percent in the year ended March 2004, moderating from a gain of 3.1 percent for March 2003. Benefit costs rose 6.2 percent for the year ended March 2004, compared with an increase of 6.6 percent for the year ended March 2003. (See tables B, 5, and 8.)

Compensation gains moderated for educational services, rising 2.9 percent for the year ended March 2004, down from a 4.1 percent increase for the year ended March 2003. For the year ended March 2004, compensation costs increased 3.5 percent for health services, compared with a 3.7 percent rise for the year ended March 2003. Among occupational groups, compensation costs of service workers rose 3.9 percent for the year ended March 2004, compared with gains of 3.3 percent for blue-collar workers and 3.2 percent for white-collar workers. (See table 2.)

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 1999-2003 were revised to reflect updated seasonal factors. The new seasonal factors and the historical listing containing revised seasonally adjusted indexes are available on the Internet site http://www.bls.gov/ect/home.htm, by e-mail request at ocltinfo@bls.gov, or by telephone (202) 691-6199.

The costs per hour worked of compensation components, based on data from the ECI, were published on February 26, 2004, in a news release titled "Employer Costs for Employee Compensation-December 2003." The Employer Costs for Employee Compensation will reflect the 2002 North American Industry Classification and the 2000 Standard Occupational Classification systems with the release of the March 2004 estimates. Information on the transition to the new industry and occupational classification systems will be available prior to the June 2004 publication date on the Internet site http://www.bls.gov/ect/home.htm or upon request.

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.

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