December 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 0.8 percent from September to December 2006, seasonally adjusted, moderating from the 1.0 percent gain from June to September, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Wages and salaries increased 0.8 percent between September and December, compared with the 0.9 percent gain of the previous quarter. Benefit costs during the quarter rose 1.1 percent, 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 September to December 2006. Among private industry workers, benefit costs attributed about three-tenths 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 September to December quarter. Health insurance costs and defined benefit contributions represented nearly three-tenths of the gain in compensation costs for state and local government workers from September to December 2006.

Quarterly changes, seasonally adjusted

Compensation costs for the private sector rose 0.8 percent from September to December, after advancing 0.9 percent in the prior quarter. For state and local government workers, compensation costs increased 1.0 percent from September to December, after increasing 1.4 percent for the quarter ended in September. (See tables A and 1.)

Wages and salaries of civilian workers increased 0.8 percent during the December quarter, compared with an increase of 0.9 percent in the September quarter. Wages and salaries for private industry workers rose 0.7 percent for the December quarter, compared with an increase of 0.8 percent in the prior quarter. Wages and salaries in state and local government advanced 0.8 percent during the September to December period, slowing from the 1.4 percent gain in the prior quarter. (See tables A and 2.)

NOTE

Beginning with the March 2007 data, "white-collar occupations," blue-collar occupations," and "excluding sales occupations" series will be discontinued, along with "durable goods" and "nondurable goods" manufacturing estimates. For more information on the changes, see the BLS website at http://www.bls.gov/ncs/ect/sp/ecsm0001.htm.

Benefit costs for civilian and private industry workers in the December quarter were unchanged from the September quarter, advancing 1.1 percent for civilian and 1.0 percent for private industry workers. Benefit costs for state and local government workers increased 1.4 percent in the December quarter, compared with the 1.5 percent gain in September. (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 December 2006, compared with a 3.1 percent over-the-year increase for December 2005. Compensation costs in private industry rose 3.2 percent in the year ended December 2006, compared with a 2.9 percent increase in December 2005. For state and local governments, compensation costs increased 4.1 percent for the year ended December 2006, the same over-the-year gain as in December 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 December 2006, greater than the gains of 2.6 percent in December 2005 and 2.5 percent in December 2004. Benefit costs gained 3.6 percent for civilian workers for the year ended December 2006, slowing significantly from increases of 4.5 percent for the year ended December 2005 and 6.7 percent for the year ended December 2004. (See tables B, 8, and 12.)

Nonfarm private industry

For the year ended December 2006, compensation costs increased 2.5 percent for goods-producing industries, slowing from the increase of 3.2 percent for the year ended December 2005. The rise in compensation costs for manufacturing slowed for the year ending December 2006, advancing 1.8 percent compared with the 3.2 percent gain in December 2005. (See table 5.)

The over-the-year increase for December 2006 in compensation for service-providing industries was 3.4 percent, compared with the 2.8 percent gain for the year ended December 2005. Among the service-providing supersector industries, compensation gains ranged from 2.5 percent in the financial activities industry to 4.1 percent in education and health services. For the year ended December 2006, compensation costs jumped 10.4 percent in the utilities industry sector, compared with an increase of 5.2 percent for the year ended December 2005. In contrast, compensation costs slowed sharply for the real estate and rental and leasing sector, the jump of 9.6 percent for the year ended December 2005 slowed to a change of 0.8 percent for December 2006. (See table 5.)

Among white-collar occupational groups, over-the-year compensation cost gains for the year ended December 2006 ranged from 2.3 percent for sales and related workers to 3.9 percent for professional and related employees. Among blue-collar occupational groups, compensation cost changes ranged from 2.0 percent for production workers to 3.7 percent for construction and extraction workers. Compensation costs for service workers gained 3.1 percent for the year ended December 2006. (See table 5.)

Compensation costs for union workers advanced 3.0 percent over the year ended December 2006, compared with 2.8 percent for the year ended December 2005. For nonunion workers, compensation costs rose 3.2 percent for the year ended December 2006, compared with a gain of 2.9 percent in September 2005. Wages and salaries for nonunion workers rose 3.3 percent for the 12 months ended in December 2006, compared with the over-the-year increase of 2.3 percent for union workers. Benefit costs for union workers rose 4.2 percent, greater than the 2.9 percent gain for nonunion workers in December 2006. (See tables C, 6, 10, and 12.)

State and local government

Wages and salaries for state and local government workers rose 3.5 percent in the year ended December 2006, compared with a gain of 3.1 percent for the year ended December 2005. Benefit costs rose 5.2 percent for the year ended December 2006, moderating from the gain of 6.3 percent for the year ended December 2005. (See tables B, 11, and 12.)

For the year ended December 2006, compensation costs increased 5.7 percent for the health care and social assistance industry, significantly higher than the 3.6 percent increase for the year ended December 2005. Compensation costs for education services rose 4.1 percent, the same increase as the year ended December 2005. Among occupational groups, compensation costs for professional and related workers rose 4.0 percent, for office and administrative support workers, 4.2 percent, and for service workers, 4.5 percent for the year ended December 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 most sectors increased for the year ended December 2006 for the first time since December 2003. Wages and salaries of civilian workers rose 0.7 percent for the year ended December 2006; a 3.2 percent gain in nominal wages and salaries for the year ended December 2006 was offset by an increase of 2.5 percent in the Consumer Price Index for the same time period. Wages and salaries for civilian workers declined 0.8 percent for the year ended December 2005. Wages and salaries in private industry rose 0.6 percent in the year ended December 2006, compared with a decline of 0.9 percent in December 2005. Wages and salaries increased 1.0 percent for state and local government workers for the year ended December 2006, compared with an over-the-year decrease of 0.3 percent in December 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.

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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