June 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 0.9 percent from March to June 2006, seasonally adjusted, following a more modest 0.6 percent gain from December 2005 to March 2006, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Benefit costs between March and June rose 0.8 percent, greater than the gain of 0.5 percent from the previous quarter. Wages and salaries increased 0.9 percent during the quarter, compared with the 0.7 percent gain of 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 additional estimates on total compensation and wages and salaries in private industry for the nursing care facilities industry to provide more detail on compensation trends in the health care sector. Compensation costs for this industry inched up 0.4 percent, not seasonally adjusted, from March to June 2006. Data on nursing care facilities from December 2005 are available in tables 5 and 9.

The ECI converted to the 2002 North American Industry Classification System and the 2000 Standard Occupational Classification System with the release of the March 2006 estimates. In addition, several computational changes were introduced in March, including rebasing all series to December 2005 = 100 from June 1989 = 100 and the introduction of new employment weights. Beginning in March 2007, all "white-collar occupations," "blue-collar occupations," and "excluding sales occupations" series will be discontinued, along with durable and nondurable manufacturing estimates. For more information on the changes, see the BLS website http://www.bls.gov/ncs/ect/sp/ecsm0001.htm.

Quarterly changes, seasonally adjusted

Compensation costs for the private sector rose 0.8 percent from March to June, after advancing 0.6 percent in the prior quarter. For state and local government workers, compensation costs increased sharply, rising 1.1 percent from March to June after increasing 0.5 percent for the quarter ended in March. (See tables A and 1.)

Wages and salaries of civilian workers and private industry both rose 0.9 percent in the June quarter, compared with an increase of 0.7 percent in the prior quarter. Wages and salaries in state and local government advanced 0.9 percent during the March to June period, higher than the 0.4 percent gain in the prior quarter. (See tables A and 2.)

Benefit costs advanced 0.8 percent for civilian workers in the June quarter, compared with a 0.5 percent gain in the March quarter. Private sector benefit costs rose 0.7 percent for the June quarter, following a 0.4 percent gain in the previous quarter. Benefit costs for state and local government workers increased 1.5 percent in the June quarter, following a more modest gain of 0.7 percent in March. (See tables A and 3.)

Over-the-year changes, not seasonally adjusted

Annual compensation costs for civilian workers increased 3.0 percent for the year ended June 2006, compared with a 3.2 percent over-the-year increase for June 2005. Compensation costs in private industry rose 2.8 percent in the year ended June 2006, compared with a 3.1 percent increase in June 2005. For state and local governments, compensation costs increased 3.8 percent for the year ended June 2006, compared with the over-the-year gain of 3.5 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 for civilian and private industry workers over the past several years slowed to a more moderate pace. For civilian workers, wages and salaries rose 2.8 percent in the year ended June 2006, compared with a gain of 2.5 percent in June 2005 and 2.6 percent in June 2004. Benefit costs gained 3.4 percent for civilian workers for the year ended June 2006, slowing sharply from increases of 5.0 percent for the year ended June 2005 and 7.1 percent for the year ended June 2004. (See tables B, 8, and 12.)

Nonfarm private industry

For the year ended June 2006, compensation costs increased 2.3 percent for goods-producing industries, sharply lower than the increase of 3.8 percent for the year ended June 2005. The rise in compensation costs for manufacturing moderated for the year ending June 2006, advancing 1.9 percent compared with the 3.7 percent gain in June 2005. Compensation costs for construction rose 3.5 percent in June 2006, compared with a 3.2 percent gain in June 2005. (See table 5.)

The over-the-year increase for June 2006 in compensation for service-providing industries was 2.9 percent, unchanged from the year ended June 2005. Among service-providing supersector industries, compensation gains ranged from 2.2 percent in the leisure and hospitality industry to 4.2 percent in other services, except public administration. For the year ended June 2006, compensation costs jumped 10.1 percent in the utilities industry sector, higher than the increase of 4.7 percent for the year ended June 2005. In contrast, compensation costs slowed sharply for the real estate and rental and leasing sector, increasing 2.7 percent for June 2006 compared with a 7.7 percent gain for the year ended June 2005. (See table 5.)

Among white-collar occupational groups, over-the-year compensation cost gains for the year ended June 2006 ranged from 2.4 percent for management, business, and financial workers, to 3.3 percent for sales and related employees. Among blue-collar occupational groups, compensation cost changes ranged from 1.9 percent for production workers to 3.5 percent for construction and extraction workers. Compensation costs for service workers gained 2.5 percent for the year ended June 2006. (See table 5.)

Compensation costs for union workers advanced 3.0 percent over the year ended June 2006, unchanged from the year ended June 2005. For nonunion workers, compensation costs rose 2.8 percent for the year ended June 2006, compared with a gain of 3.1 percent in June 2005. Wages and salaries for nonunion workers rose 2.9 percent for the 12 months ended in June 2006, compared with an over-the-year increase of 2.5 percent for union workers. Benefit costs for union workers rose 3.8 percent, compared with the 2.5 percent gain for nonunion workers in June 2006. (See tables C, 6, 10, and 12.)

In manufacturing industries, compensation cost gains for union workers rose 1.0 percent for year ended June 2006, compared with the 2.5 percent gain in June 2005. For nonunion workers in manufacturing, compensation costs rose 2.2 percent for the year ended June 2006, slowing from the over-the-year gain of 4.0 percent in June 2005. (See table 6.)

Among the four geographic regions, increases in compensation costs ranged from 2.3 percent in the South to 3.4 percent in the Northeast and Midwest for the year ended June 2006. Compensation costs rose 2.5 percent in the West. Gains in wages and salaries ranged from 2.3 percent in the South to 3.3 percent in the Midwest for the year ended June 2006. Wages and salaries rose 2.8 percent in the West and 3.1 percent in the Northeast for the same period. (See tables 6 and 10.)

State and local government

Wages and salaries for state and local government workers rose 3.1 percent in the year ended June 2006, compared with the gain of 2.3 percent for the year ended June 2005. Benefit costs rose 5.5 percent for the year ended June 2006, compared with the gain of 6.3 percent for the year ended June 2005. (See tables B, 11, and 12.)

For the year ended June 2006, compensation costs increased 3.7 percent for education services, compared with the 3.3 percent increase for the year ended June 2005. Compensation costs for elementary and secondary schools rose 4.0 percent, compared with an increase of 3.4 percent for the year ended June 2005. Among occupational groups, compensation costs for office and administrative support workers rose 4.2 percent, for professional and related workers, 3.8 percent, and for service workers, 4.7 percent for the year ended June 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 that wages and salaries for civilian workers dropped 1.3 percent for the year ended June 2006. A 2.8 percent gain in wages and salaries for the year ended June 2006 was offset by an increase of 4.3 percent in the Consumer Price Index for the same time period. Wages and salaries for civilian workers changed -0.1 percent for the year ended June 2005. Wages and salaries in private industry declined 1.5 percent in the year ended June 2006, compared with no change in June 2005. Wages and salaries declined 1.2 percent for state and local government workers for the year ended June 2006, compared with an over-the-year change of -0.1 percent in June 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.

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