June 2005 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 0.7 percent from March to June 2005, seasonally adjusted, the same increase as occurred between December 2004 and March 2005, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Benefit costs between March and June rose 0.8 percent, compared with 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 civilian workers (nonfarm private and State and local government).

Increases in benefit costs accounted for over 35 percent of the rise in compensation costs for civilian workers from March to June 2005. Among private industry workers, benefit costs contributed nearly 35 percent of compensation gains during the quarter; compared with nearly 60 percent from December 2004 to March 2005. Health insurance costs constituted about 10 percent of the compensation gains during the quarter. Among State and local government workers, benefit costs comprised nearly one- half of compensation cost gains during the March to June period, virtually unchanged from the December to March quarter. Health insurance costs represented nearly one-third of the gain in compensation costs from March to June 2005.

Quarterly changes, seasonally adjusted

Compensation costs for the private sector rose 0.6 percent from March to June 2005, identical to the gain in the prior quarter. For State and local government workers, compensation costs rose 0.7 percent in June, compared with a gain of 1.0 percent for the quarter ended in March. (See tables A and 1.)

Benefit costs advanced 0.8 percent for civilian workers in the June 2005 quarter, moderating from the gain of 1.2 percent in the March quarter. Private sector benefit costs rose 0.8 percent for the June quarter, following the 1.1 percent gain in the previous quarter. Benefit costs for State and local government workers increased 1.2 percent in the June quarter, compared with a 1.5 percent gain in the prior quarter.

Wages and salaries for civilian and private industry workers increased 0.6 percent during the June 2005 quarter, the same as in the first quarter of the year. Wages and salaries in State and local government advanced 0.5 percent during the March to June 2005 period, following an increase of 0.8 percent in the previous quarter.

Over-the-year changes, not seasonally adjusted

Annual compensation cost increases slowed for civilian and private industry workers for the year ended June 2005 compared with over-the-year increases for June 2004. Compensation costs for civilian and private industry workers each increased 3.2 percent for the year ended June 2005, compared with a 3.9 percent and 4.0 percent gain, respectively, for June 2004. Compensation costs increased 3.6 percent for State and local governments for the year ended June 2005, compared with an over-the-year gain of 3.4 percent in June 2004. (See tables B, 2, and 3.)

The components of compensation showed differences in the rate of change. While increases in wages and salaries continued at a moderate pace, the sharp increases in benefit costs began to moderate. For civilian workers, wages and salaries rose 2.4 percent in the year ended June 2005, nearly identical with a gain of 2.5 percent in June 2004. Benefit costs gained 5.1 percent for civilian workers for the period ended June 2005, slowing dramatically from an increase of 7.2 percent for the year ended June 2004. (See tables B, 5, 6, and 8.)

Nonfarm private industry

For the year ended June 2005, compensation costs in private industry increased 3.9 percent for goods-producing industries, compared with an advance of 4.4 percent for the year ended June 2004. Compensation costs for manufacturing advanced 3.7 percent in June 2005, compared with the 4.7 percent gain in June 2004. Compensation costs for construction rose 3.1 percent in June 2005, nearly identical to the 3.0 percent rise in June 2004. (See table 3.)

The over-the-year increase in compensation for service-producing industries was 2.8 percent, declining from the 3.8 percent gain for the year ended June 2004. Among service-producing industries, compensation costs rose modestly for wholesale trade and transportation and public utilities, increasing 1.9 percent in June 2005. (See table 3.)

Over-the-year compensation cost increases were 3.4 percent for white- collar occupations, 2.9 percent for blue-collar occupations, and 2.2 percent for service occupations for the year ended June 2005. Among white- collar occupational groups, compensation cost changes ranged from 1.9 percent for sales workers to 3.9 percent for professional specialty and technical employees. Among blue-collar occupational groups, compensation cost increases ranged from 1.9 percent for machine operators, assemblers, and inspectors to 3.4 percent for precision production, craft, and repair occupations. (See table 3.)

Compensation costs for union workers advanced 2.9 percent over the year ended June 2005, falling sharply from the 6.0 percent gain for the year ended June 2004. For nonunion workers compensation costs rose 3.2 percent for the year ended June 2005, compared with the gain of 3.5 percent for June 2004. Benefit costs for union workers rose 4.1 percent for the year ended June 2005, decelerating sharply compared with the gain of 11.3 percent in June 2004. Benefit costs for nonunion workers advanced 5.1 percent over the year ended June 2005, compared with an increase of 6.3 percent in June 2004. Wages and salaries for union workers rose 2.1 percent for the 12 months ended in June 2005, compared with an over-the- year increase of 2.4 percent for nonunion workers. (See tables C, 4, 7, and 8.)

Among blue-collar workers, compensation costs advanced 3.2 percent for union workers, compared with the gain of 2.8 percent for nonunion workers for the 12 months ended in June 2005. In manufacturing industries, compensation cost gains for union workers slowed sharply, rising 2.7 percent for year ended June 2005, significantly less than the 8.1 percent increase for the year-ended June 2004. For nonunion workers in manufacturing, compensation costs rose 4.1 percent for the year ended June 2005, compared with an over-the year gain of 3.7 percent in June 2004. (See table 4.)

Among the four geographic regions, increases in compensation costs ranged from 2.7 percent in the Midwest to 3.7 percent in the West for the year ended June 2005. Compensation costs rose 3.1 percent in the Northeast and 3.3 percent in the South. In the Northeast, gains in wages and salaries slowed to 2.3 percent for the year ended June 2005, significantly less than the 3.3 percent gain for the year ended June 2004. Among the remaining regions, wages and salaries rose 2.1 percent in the Midwest, 2.4 percent in the West, and 2.7 percent in the South for the year ended June 2005. (See tables 4 and 7.)

State and local government

Wages and salaries for State and local government workers rose 2.4 percent in the year ended June 2005, greater than the gain of 1.9 percent for June 2004. Benefit costs rose 6.0 percent for the year ended June 2005, slower than the gain of 6.6 percent for the year ended June 2004. (See tables B, 5, and 8.)

For the year ended June 2005, compensation costs increased 3.3 percent for educational services, compared with a 2.6 percent increase for the year ended June 2004. Within educational services, compensation increases were 3.5 percent for elementary and secondary schools and 2.7 percent for colleges and universities. Among occupational groups, compensation costs of service workers rose 4.4 percent for the year ended June 2005, compared with gains of 3.3 percent for white-collar workers and 3.8 percent for blue-collar workers. (See table 2.)

Beginning with the release of the March 2006 estimates, the ECI will publish industry categories based on the 2002 North American Industry Classification System (NAICS) and classify jobs into occupational categories according to the 2000 Standard Occupational Classification (SOC) Manual. These systems will replace the 1987 Standard Industrial Classification (SIC) Manual and the Occupational Classification System (OCS) currently being used in the ECI. Broad categories, such as civilian workers and private industry workers, are comparable for both the old and new classification systems; however, some detailed occupational and industry classifications (even with the same title) may not be comparable. Some new series will be introduced while others will be dropped. For more detailed information on NAICS and SOC, including background and comparability criteria, see the BLS websites: http://www.bls.gov/bls/naics.htm and http://www.bls.gov/soc/home.htm.

In addition, several computational changes will be introduced, including rebasing all series to December 2005=100 from June 1989=100, and the initiation of new employment weights and seasonal adjustment factors. At the same time, an improved process for imputing costs for missing values will be introduced.

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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