March 2006 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 0.6 percent from December 2005 to March 2006, seasonally adjusted, compared with the 0.8 percent gain from September to December 2005, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Benefit costs between December and March rose 0.5 percent, decelerating from the gain of 0.9 percent from the previous quarter. Wages and salaries increased 0.7 percent during the quarter, the same increase as the previous quarter. 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 industry and state and local government).

Beginning with this release, the Employment Cost Index has introduced a number of changes. Among the most significant, data are based on new industry and occupational classifications: the 2002 North American Industry Classification System (NAICS) and the 2000 Standard Occupational Classification (SOC) system. These systems replace the 1987 Standard Industrial Classification (SIC) system and the 1990 Occupational Classification System (OCS) based on the Census of Population. The tables are reordered and renumbered; for a crosswalk between the old and new tables see the BLS website http://www.bls.gov/ncs/ect/ecicrswlk.htm. Estimates for "excluding incentive paid occupations" and nine census divisions are added. In addition, all series are rebased to December 2005 = 100 from June 1989 = 100. See page 2 for additional information.

Quarterly changes, seasonally adjusted

Compensation costs for the private sector rose 0.6 percent from December 2005 to March 2006, after advancing 0.7 percent in the prior quarter. For state and local government workers, compensation costs increased 0.5 percent from December to March, slowing from the increase of 1.1 percent for the quarter ended in December. (See tables A and 1.)

Wages and salaries of civilian workers rose 0.7 percent in the March quarter, unchanged from the prior quarter. Private industry workers wages and salaries increased 0.7 percent during the March 2006 quarter, compared with a 0.6 percent gain in the previous quarter. Wages and salaries in state and local government advanced 0.4 percent during the December to March period, moderating from the 1.0 percent increase in the prior quarter. (See tables A and 2.)

Benefit costs advanced 0.5 percent for civilian workers in the March quarter, slowing from the 0.9 percent gain in the December 2005 quarter. Private sector benefit costs rose 0.4 percent for the March quarter, following a 0.7 percent gain in the previous quarter. Benefit costs for state and local government workers increased 0.7 percent in the March quarter, moderating from the 1.5 percent gain in the December quarter. (See tables A and 3.)

CHANGES TO THE ECI

The ECI introduced the following changes with this release:

- The 2002 North American Industry Classification System (NAICS) replaced the 1987 Standard Industrial Classification (SIC) system. See the BLS Web site http://www.bls.gov/bls/naics.htm for more information.

- The 2000 Standard Occupational Classification (SOC) system replaced the 1990 Occupational Classification System (OCS) based on the Census of Population. For more information on the background and definitions, see the Web site http://www.bls.gov/soc/home.htm.

- The tables were reordered and renumbered. For a crosswalk between the new and old tables, see the BLS website at http://www.bls.gov/ect/ecicrswlk.htm.

- Severance pay and supplemental unemployment benefit plans, formerly included in total compensation and benefits, are no longer collected.

- New series were added for "excluding incentive paid occupations."

- In addition to the four census regions, new series were added for the nine census divisions within these regions.

- The index was rebased, setting December 2005 equal to 100 for each non-seasonally adjusted series. Historical data series were also rebased to December 2005 = 100 and are available upon request or on the Internet site http://www.bls.gov/ect/home.htm.

- Improvements in seasonal adjustment methodology were introduced. See the Internet site http://www.bls.gov/ncs/ect/home.htm for the latest annual seasonal factors.

- A new imputation procedure utilizing additional information for estimating missing values was introduced.

- New 2002 fixed employment weights replaced the 1990 fixed employment weights that were used from 1995 through 2005.

The introduction of the NAICS and SOC classification systems to replace the SIC and OCS systems has caused changes in series. 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 those with the same title) may not be comparable. Additional industry and occupational series based on NAICS and SOC are introduced with this release while others are discontinued. For more information on the comparability of industry and occupational series, see the BLS website at http://www.bls.gov/ncs/ect/sp/ecsm0001.htm.

NAICS classifies industries into 20 sectors, 4 within goods producing and 16 within service providing. In addition, BLS has created additional "supersectors," which combine industry sectors. Within service-providing private industries, the ECI will publish series for all sectors and 7 supersectors.

The SOC system defines 5 high-level and 10 intermediate nonmilitary aggregations. The ECI includes estimates for all but the farming, fishing, and forestry occupational group.

The April 2006 Monthly Labor Review is devoted to a series of articles detailing the changes to the ECI. In addition, a question-and-answer document provides more information on these changes. For more details on these publications, call (202) 691-6199, send an e-mail message to ncsinfo@bls.gov, or visit the BLS websites at http://www.bls.gov/opub/mlr/welcome.htm and http://www.bls.gov/ncs/ect/sp/ecsm0001.htm.

Over-the-year changes, not seasonally adjusted

Annual compensation cost increases moderated for civilian and private industry workers for the year ended March 2006, compared with their over-the-year increases for March 2005. Compensation costs for civilian workers increased 2.8 percent for the year ended March 2006, moderating from the 3.6 percent over-the-year increase for March 2005. Compensation costs in private industry rose 2.6 percent in the year ended March 2006, slowing from a 3.5 percent increase in March 2005. In contrast, compensation costs increased 3.7 percent for state and local governments for the year ended March 2006, compared with the over-the-year gain of 3.6 percent in March 2005. (See tables B, 4, 5, and 7.)

The components of compensation differed in their rates of change. While increases in wages and salaries continued at a moderate pace, the sharp increases in benefit costs seen over the past several years slowed to a more moderate pace. For civilian workers, wages and salaries rose 2.7 percent in the year ended March 2006, compared with a gain of 2.5 percent in March 2005. Benefit costs gained 3.4 percent for civilian workers for the year ended March 2006, slowing sharply from an increase of 5.9 percent for the year ended March 2005. (See tables B, 8, and 12.)

Nonfarm private industry

For the year ended March 2006, compensation costs increased 2.3 percent for goods-producing industries, sharply lower than the increase of 3.7 percent for the year ended March 2005. The rise in compensation costs for manufacturing moderated for the year ending March 2006, advancing 1.9 percent compared with the 3.7 percent gain in March 2005. Compensation costs for construction rose 3.4 percent in March 2006, compared with a 3.1 percent gain in March 2005. (See table 5.)

The over-the-year increase in compensation for service-providing industries was 2.7 percent, compared with the 3.4 percent gain for the year ended March 2005. Among service-providing supersector industries, compensation gains ranged from 2.0 percent in professional and business services to 3.5 percent in other services, except public administration. For the year ended March 2006, compensation costs jumped 9.9 percent in the utilities industry sector, higher than the increase of 6.4 percent for the year ended March 2005. In contrast, compensation costs slowed sharply for the real estate and rental and leasing sector, increasing 3.0 percent for March 2006 compared with a 9.5 percent gain for the year ended March 2005. (See table 5.)

Among white-collar occupational groups, over-the-year compensation cost gains for the year ended March 2006 ranged from 2.2 percent for management, business, and financial workers, to 3.1 percent for professional and related employees. Among blue-collar occupational groups, compensation cost changes ranged from 1.8 percent for production workers to 3.1 percent for construction and extraction workers. Service workers gained 2.3 percent for the year ended March 2006. (See table 5.)

Compensation costs for union workers advanced 2.7 percent over the year ended March 2006, slowing from the 3.6 percent gain for the year ended March 2005. For nonunion workers, compensation costs rose 2.6 percent for the year ended March 2006, slowing from a gain of 3.5 percent in March 2005. Wages and salaries for both union and nonunion workers rose 2.5 percent for the 12 months ended in March 2006. Benefit costs for both union and nonunion workers rose 2.9 percent for the year ended March 2006, moderating from the gain of 5.6 percent for both groups in March 2005. (See tables C, 6, 10, and 12.)

In manufacturing industries, compensation cost gains slowed for nonunion workers, rising 2.1 percent for the year ended March 2006, less than the 4.0 percent increase in March 2005. For union workers in manufacturing, compensation costs rose 1.0 percent for the year ended March 2006, compared with an over-the-year gain of 2.8 percent in March 2005. (See table 6.)

Among the four geographic regions, increases in compensation costs ranged from 2.1 percent in the South to 3.4 percent in the Northeast the year ended March 2006. Compensation costs rose 2.2 percent in the West and 3.0 percent in the Midwest. Gains in wages and salaries ranged from 2.1 percent in the South to 3.1 percent in the Northeast for the year ended March 2006. Wages and salaries rose 2.3 percent in West and 2.7 percent in the Midwest for the same period. (See tables 6 and 10.)

State and local government

Wages and salaries for state and local government workers rose 2.8 percent in the year ended March 2006, compared with the gain of 2.3 percent for the year ended March 2005. Benefit costs rose 5.4 percent for the year ended March 2006, moderating from the gain of 6.7 percent for the year ended March 2005. (See tables B, 11, and 12.)

For the year ended March 2006, compensation costs increased 3.7 percent for education services, outpacing the 3.2 percent increase for the year ended March 2005. Compensation costs for elementary and secondary schools rose 3.9 percent, compared with an increase of 3.4 percent for the year ended March 2005. Among occupations, compensation costs of office and administrative support workers rose 3.7 percent and service workers rose 4.6 percent for the year ended March 2006. (See table 7.)

Over-the-year changes in wages and salaries, constant dollars, not seasonally adjusted

Annual changes are computed in terms of December 2005 dollars to give an approximate measure of changes in wages and salaries after adjustment for the changes over the same time in the price of consumer goods and services. These estimates, in "constant dollars," show wages and salaries for civilian workers dropped -0.7 percent for the year ended March 2006, nearly the same -0.6 percent change for the year ended March 2005. Wages and salaries in private industry declined -0.9 percent in the year ended March 2006, compared with a -0.5 percent change in March 2005. Wages and salaries changed -0.6 percent for state and local government for the year ended March 2006, compared with an over-the-year decline of -0.8 percent in March 2005. These inflation-adjusted ECI series were derived using the Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average All Items. (See table D and the Technical Note for details.)

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 ncsinfo@bls.gov.

BLS news releases, including the ECI, are 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.