June 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 0.9 percent from March to June 2004, seasonally adjusted, moderating from the 1.1 percent gain from December 2003 to March 2004, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Wage and salary costs increased 0.6 percent and benefit costs rose 1.8 percent, continuing to rise sharply. 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.

Rises in benefit costs accounted for a little over half of the increase in compensation costs for civilian workers during the March-to- June period. Among private industry workers, benefit costs were one-half of compensation gains during the quarter, with health insurance and defined benefit retirement costs combined accounting for one-quarter of the rise in compensation costs. Among State and local government workers, benefit costs contributed nearly three-fourths of compensation gains during the March-to-June 2004 period, with defined benefit retirement costs accounting for almost one-half and health insurance contributions accounting for one-fourth of the gain in compensation costs.

Quarterly changes, seasonally adjusted

Compensation costs for the private sector rose 1.0 percent from March to June 2004, after advancing 1.1 percent in the prior quarter. After a strong gain of 1.8 percent in the March quarter, gains in the goods- producing industries moderated to 0.9 percent for the period ended June 2004. For State and local government workers, compensation costs increased 1.1 percent from March to June, compared with a gain of 1.0 percent for the quarter ended in March. (See tables A and 1.)

Benefit costs increased 1.8 percent for civilian workers (nonfarm private industry and State and local government) in the June 2004 quarter, following a gain of 2.4 percent in the March 2004 quarter. Private sector benefit costs rose 1.7 percent for the June quarter, moderating from the 2.6 percent gain in the previous quarter. Benefit costs for State and local governments increased 1.9 percent in the June quarter, following an increase of 1.7 percent in March 2004.

Wages and salaries for civilian and private workers advanced 0.6 percent during the June quarter, identical to the increases in March 2004. Wage and salary gains in transportation and public utilities and in service industries led the increase. Wage and salary increases were lower in construction, wholesale trade, and finance, insurance, and real estate. Wages and salaries in State and local governments advanced 0.7 percent during the March-to-June period, after gaining 0.6 percent in the previous quarter.

Over-the-year changes, not seasonally adjusted

Annual compensation costs for civilian workers increased 3.9 percent for the year ended June 2004, compared with a 3.7 percent over-the-year increase for June 2003. Compensation costs in private industry rose 4.0 percent in the year ended June 2004, greater than the 3.5 percent increase in June 2003. In contrast, compensation costs slowed to a 3.4 percent increase for State and local government for the year ended June 2004, compared with an over-the-year gain of 4.1 percent in June 2003. (See tables B, 2, and 3.)

The components of compensation continued to show significant differences. While increases in wages and salaries continued to be moderate, benefit costs continued to rise during the year ended June 2004. For civilian workers, wages and salaries increased 2.5 percent in the year ended June 2004, compared with a gain of 2.7 percent in June 2003. Benefit costs jumped 7.2 percent for the period ended June 2004, compared with an increase of 6.3 percent for the year ended June 2003. (See tables B, 5, 6, and 8.)

Nonfarm private industry

For the year ended June 2004, compensation costs in private industry increased 4.4 percent for goods-producing industries, identical to the advance for the year ended June 2003. Compensation costs for manufacturing advanced 4.7 percent in June 2004, after increasing 4.6 percent in June 2003. Compensation costs for construction rose 3.0 percent in June 2004, compared with a 3.8 percent rise in June 2003. (See table 3.)

The over-the-year increase in compensation for service-producing industries was 3.8 percent, compared with a 3.2 percent gain for the year ended June 2003. Among service-producing industries, the 12-month increase for transportation and public utilities was 4.3 percent for the year ended in June 2004, led by higher increases in public utilities, particularly the electric, gas, and sanitary services industry. Compensation costs rose modestly in wholesale trade, increasing 2.7 percent in the year ended June 2004.

Over-the-year compensation cost increases were 4.6 percent for blue- collar occupations, 3.7 percent for white-collar occupations, and 3.4 percent for service occupations for the year ended June 2004. Among white- collar occupational groups, compensation cost changes ranged from 2.9 percent for executive, administrative, and managerial employees to 4.2 percent for professional specialty and technical workers and administrative support, including clerical workers. Among blue-collar workers, compensation cost increases ranged from 3.5 percent for transportation and material moving workers to 5.8 percent for machine operators, assemblers, and inspectors. (See table 3.)

Gains in compensation costs for union workers outpaced those for nonunion workers. Compensation costs for union workers advanced sharply, rising 6.0 percent over the year ended June 2004, significantly higher than the 3.5 percent increase for nonunion workers. Compensation costs among blue-collar union workers advanced 6.1 percent, greater than the gain of 3.8 percent for blue-collar nonunion workers. In goods-producing industries, a 6.9 percent increase for union workers was greater than the 3.6 percent advance for nonunion workers. (See tables C and 4.)

Wages and salaries for union workers rose 2.9 percent for the 12 months ended in June 2004, compared with an over-the-year increase of 2.5 percent for nonunion workers. In contrast, benefit costs for union workers continued to rise sharply, jumping 11.3 percent, compared with an increase of 6.3 percent for nonunion workers in June 2004. Employer contributions for defined benefit and for health insurance plans accounted for nearly half the rise in compensation costs for union workers for the year ended June 2004. (See tables C, 7, and 8.)

Among the four geographic regions, increases in compensation costs ranged from 3.4 percent in the Midwest to 4.3 percent in the Northeast and West. Compensation costs rose 3.9 percent in the South. (See table 4.) Gains in wages and salaries showed significant differences among regions. In the Midwest, wages and salaries inched up 1.6 percent for the year ended June 2004, slowing from the 4.1 percent gain of the year ended June 2003. In contrast, wages and salaries rose 3.3 percent in the Northeast and 2.6 percent in the South for the year ended June 2004, compared with over-the-year gains in June 2003 of 2.3 percent and 1.6 percent, respectively. Wages and salaries rose 2.9 percent in the West for the period ended June 2004, compared with a gain of 2.8 percent in June 2003.

State and local government

Wages and salaries for State and local government workers inched up 1.9 percent in the year ended June 2004, moderating from a gain of 3.1 percent for June 2003. Benefit costs rose 6.6 percent for the year ended June 2004, compared with an increase of 6.8 percent for the year ended June 2003. (See tables B, 5, and 8.)

Compensation gains slowed for educational services, rising 2.6 percent for the year ended June 2004, down from a 4.3 percent increase for the year ended June 2003. Within educational services, compensation increases for colleges and universities slowed to 2.1 percent, compared with a 4.4 percent rise for the year ended June 2003. Among occupational groups, compensation costs of service workers rose 3.8 percent for the year ended June 2004, compared with gains of 3.6 percent for blue-collar workers and 3.3 percent for white-collar workers. (See table 2.)

The costs per hour worked of compensation components, based on data from the ECI, were published on June 24, 2004, in a news release titled "Employer Costs for Employee Compensation-March 2004." Beginning with this release, the Employer Costs for Employee Compensation data are based on the 2002 North American Industry Classification System (NAICS) and the 2000 Standard Occupational Classification (SOC). The release and information on the transition to the new industry and occupational classification systems 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.

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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