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The Bureau of Labor Statistics Releases June 2007 Employment Cost Index

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RISMEDIA, August 1, 2007—This week, the Bureau of Labor Statistics of the U.S. Department of Labor, released its June 2007 Employment Cost Index. The Employment Cost Index (ECI) is a measure of the change in the cost of labor, free from the influence
of employment shifts among occupations and industries.

Total compensation costs for civilian workers increased 0.9% from March to June 2007, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported. This was about the same as the 0.8% increase for the December 2006 to March 2007 period. Wages and salaries rose 0.8% from March to June 2007, compared with 1.1% for the previous quarter. Benefit costs increased 1.3%, up from 0.1% during the previous three-month period. 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).

Wage and salary costs, which account for 70% of total civilian compensation costs, were responsible for 63% of the increase in compensation costs for this quarter. In state and local government, wages and salaries make up 67% of total compensation but were responsible for only 47% of the increase in compensation. Benefit increases in state and local government accounted for a larger portion of the change this quarter due primarily to increases in defined benefit retirement plans and health
benefits.

Quarterly changes, seasonally adjusted

For private industry, compensation costs rose 0.9% from March to June 2007, compared to 0.6% for the prior quarter, while state and local government costs increased 1.1%, compared to 1.3% for the quarter ended March 2007.

Wages and salaries for private industry workers increased 0.8%, compared with 1.1% for the previous quarter. In state and local government, the increase was 0.8%, compared with 0.9% in the prior quarter.

Benefit costs for private industry rose sharply by 1.1%, compared to a decline of .3% the previous quarter. For state and local government, benefit costs increased 1.7%, compared to 2.1% in the previous quarter.

Over-the-year changes, not seasonally adjusted

Annual compensation costs for civilian workers increased 3.3% for the year ended June 2007, compared with a 3.0% increase for the year ended June 2006. In private industry, compensation costs rose 3.1% in the year ended June 2007. In June 2006, the increase was 2.8%. For state and local government, the yearly increase for June 2007 was 4.8%, higher than the June 2006 increase of 3.8%.

The components of compensation differed in their rate of change. While increases in wages and salaries for civilian workers accelerated, benefit cost increases stayed the same. Wages and salaries rose 3.4% for civilian workers for the year ended June 2007, greater than the 2.8% gain for June 2006. Despite remaining the same for civilian workers at 3.4%, benefit cost increases differed significantly between private industry and state and local government. Private industry benefits increased 2.6%, about the same as the 2.7% increase in June 2006, while state and local government benefits rose 6.6%, up from 5.5%.

Nonfarm private industry

For the year ended June 2007, compensation costs increased 2.6% for goods-producing industries, compared to a 2.3% increase in June 2006. Compensation cost increases for manufacturing remained low, at 1.9% for the year ended June 2007, the same for the year ended June 2006. Compensation costs for the construction industry rose 3.9%, compared to 3.5% for the previous year.
The over-the-year increase for June 2007 in compensation costs for service-providing industries was 3.3%. In June 2006, the increase was 2.9%. Among the major industries, compensation gains ranged from 2.8% in financial activities and the trade, transportation, and utilities industries to 4.6% in the leisure and hospitality industry.

Among private industry occupational groups, over-the-year compensation gains ranged from 2.2% for production, transportation, and material moving to 3.6% for service occupations.

Compensation costs for union workers advanced 2.1% for the year ended June 2007. This was outpaced by nonunion workers, which increased 3.3% for the same 12-month period. Wages and salaries for union workers increased 2.5% for the 12-month period ended June 2007, less than that for 3 nonunion workers, which rose 3.4%. Benefit costs for union workers rose 1.4% for the 12-month period, which were also less than benefit cost increases for nonunion workers, which rose 2.8%.

State and local government

For the year ended June 2007, wages and salaries for state and local government workers rose 3.8% compared to 3.1% a year ago. For benefits, costs increased 6.6% compared to 5.5% for the previous year. Hospitals had the largest increase in wages and salaries, rising to 5.0% from 2.8% a year earlier. Public administration wages and salaries increased 4.1%, up from 2.8% while education services wages and salaries increased 3.5% compared to 3.0% the year earlier.

Over-the-year changes in wages and salaries, constant dollars, not seasonally adjusted
After adjusting for the changes in the prices of consumer goods and services, wages and salaries for civilian workers increased 0.7% for the 12-month period ended June 2007, compared to a decrease of 1.3% for the 12-month period ending June 2006.

The private industry increase was 0.7% compared to a decrease of 1.5% for the year ending June 2006. State and local government registered a 1.0% increase, compared to a decrease of 1.2% for the previous year.

Beginning with the March 2007 ECI news release, “white-collar occupations,” “blue-collar occupations,” “excluding sales occupations,” “manufacturing – durable goods,” and “manufacturing – nondurable goods” series were discontinued.

For more information, visit http://www.bls.gov/news.release/pdf/eci.pdf.

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