September 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 1.0 percent from June to September 2006, seasonally adjusted, virtually unchanged from the 0.9 percent gain from March to June, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Benefit costs between June and September rose 1.1 percent, compared with the gain of 0.8 percent from the previous quarter. Wages and salaries increased 0.9 percent during the quarter, unchanged from the 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).

Increases in benefit costs accounted for one-third of the rise in compensation costs for civilian workers from June to September 2006. Among private industry workers, benefit costs attributed about one-fourth of the compensation gains during the quarter. Among state and local government workers, benefit costs comprised approximately two-fifths of the compensation cost gains during the June to September quarter. Health insurance costs and defined benefit contributions represented over one-quarter of the gain in compensation costs for state and local government workers from June to September 2006.

Quarterly changes, seasonally adjusted

Compensation costs for the private sector rose 0.9 percent from June to September, after advancing 0.8 percent in the prior quarter. For state and local government workers, compensation costs increased 1.4 percent from June to September, after increasing 1.1 percent for the quarter ended in June. (See tables A and 1.)

Wages and salaries of civilian workers increased 0.9 percent during the September quarter, unchanged from the gain of the June quarter. Wages and salaries for private industry workers rose 0.8 percent for the September quarter, compared with an increase of 0.9 percent in the prior quarter. Wages and salaries in state and local government advanced 1.4 percent during the June to September period, higher than the 0.9 percent gain in the prior quarter. (See tables A and 2.)

Benefit costs advanced 1.1 percent for civilian workers in the September quarter, compared with a 0.8 percent gain in the June quarter. Private sector benefit costs rose 1.0 percent for the September quarter, following a 0.7 percent gain in the previous quarter. Benefit costs for state and local government workers increased 1.5 percent in the September quarter, unchanged from the gain in June. (See tables A and 3.)

Over-the-year changes, not seasonally adjusted

Annual compensation costs for civilian workers increased 3.3 percent for the year ended September 2006, compared with a 3.0 percent over-the-year increase for September 2005. Compensation costs in private industry rose 3.0 percent in the year ended September 2006, compared with a 2.9 percent increase in September 2005. For state and local governments, compensation costs increased 4.1 percent for the year ended September 2006, compared with the over-the-year gain of 3.9 percent in September 2005. (See tables B, 4, 5, and 7.)

The components of compensation differed in their rates of change. While increases in wages and salaries became greater, 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 3.2 percent in the year ended September 2006, greater than the gain of 2.3 percent in September 2005 and 2.5 percent in September 2004. Benefit costs gained 3.3 percent for civilian workers for the year ended September 2006, slowing significantly from increases of 5.0 percent for the year ended September 2005 and 6.6 percent for the year ended September 2004. (See tables B, 8, and 12.)

Nonfarm private industry

For the year ended September 2006, compensation costs increased 2.2 percent for goods-producing industries, slowing from the increase of 3.4 percent for the year ended September 2005. The rise in compensation costs for manufacturing moderated for the year ending September 2006, advancing 1.6 percent compared with the 3.2 percent gain in September 2005. Compensation costs for construction rose 3.3 percent in September 2006, the same rate of increase as in September 2005. (See table 5.)

The over-the-year increase for September 2006 in compensation for service-providing industries was 3.2 percent, compared with the 2.8 percent gain for the year ended September 2005. Among service-providing supersector industries, compensation gains ranged from 2.8 percent in the leisure and hospitality industry to 3.9 percent in education and health services. For the year ended September 2006, compensation costs jumped 10.7 percent in the utilities industry sector, higher than the increase of 4.5 percent for the year ended September 2005. In contrast, compensation costs slowed sharply for the real estate and rental and leasing sector, increasing 1.6 percent for September 2006 compared with a jump of 8.0 percent for the year ended September 2005. (See table 5.)

Among white-collar occupational groups, over-the-year compensation cost gains for the year ended September 2006 ranged from 2.5 percent for sales and related workers, to 3.6 percent for professional and related employees. Among blue-collar occupational groups, compensation cost changes ranged from 2.0 percent for production workers to 3.6 percent for construction and extraction workers. Compensation costs for service workers gained 2.8 percent for the year ended September 2006. (See table 5.)

Compensation costs for union workers advanced 2.8 percent over the year ended September 2006, compared with 3.0 percent for the year ended September 2005. For nonunion workers, compensation costs rose 3.1 percent for the year ended September 2006, compared with a gain of 2.9 percent in September 2005. Wages and salaries for nonunion workers rose 3.2 percent for the 12 months ended in September 2006, compared with the over-the-year increase of 2.2 percent for union workers. Benefit costs for union workers rose 3.6 percent, compared with the 2.7 percent gain for nonunion workers in September 2006. (See tables C, 6, 10, and 12.)

State and local government

Wages and salaries for state and local government workers rose 3.7 percent in the year ended September 2006, greater than the gain of 2.6 percent for the year ended September 2005. Benefit costs rose 5.2 percent for the year ended September 2006, moderating from the gain of 6.5 percent for the year ended September 2005. (See tables B, 11, and 12.)

For the year ended September 2006, compensation costs increased 5.6 percent for the health care and social assistance industry, significantly higher than the 3.3 percent increase for the year ended September 2005. Compensation costs for elementary and secondary schools rose 4.9 percent, compared with an increase of 3.7 percent for the year ended September 2005. Among occupational groups, compensation costs for professional and related workers rose 4.6 percent, for office and administrative support workers, 4.3 percent, and for service workers, 4.0 percent for the year ended September 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 rose 1.1 percent for the year ended September 2006; a 3.2 percent gain in nominal wages and salaries for the year ended September 2006 was offset by an increase of 2.1 percent in the Consumer Price Index for the same time period. Wages and salaries for civilian workers declined 2.3 percent for the year ended September 2005. Wages and salaries in private industry rose 1.0 percent in the year ended September 2006, compared with a decline of 2.3 percent in September 2005. Wages and salaries increased 1.6 percent for state and local government workers for the year ended September 2006, compared with an over-the-year decrease of 2.0 percent in September 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, the Technical Note, and the Constant Dollar historical listing at http://www.bls.gov/web/ecconst.pdf, 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.

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