The Employment Cost Index, or ECI, is a Principal Federal Economic Indicator produced from the National Compensation Survey (NCS). It measures changes in the hourly labor costs to employers, independent of employment shifts among occupations and industries. For example, these compensation costs changes are often expressed as “In December 2018, private industry wages and salaries grew 3.1 percent from the previous December.”
The Employer Costs for Employee Compensation, or ECEC, which is also produced from the NCS, measures employers’ costs per hour worked for total compensation, and costs as a percent of total compensation. For example, these costs are often expressed as “In December 2018, civilian employers on average paid $36.32 per hour worked for total compensation, which consists of wages and salaries and the cost of employee benefits.”
The data for both surveys cover all civilian workers, defined by NCS as those employed in private industry and state and local government.
What is the NCS?▸
The National Compensation Survey (NCS) is an establishment-based and nationally-representative survey that provides data on pay and benefits. Its outputs include the ECI, ECEC, Employee Benefits in the United States, as well as Health and Retirement Plan Provisions publications.
What are some differences between the ECI and the ECEC?▸
How reliable are the measurements for the ECEC and the ECI?▸
To assist users in ascertaining the reliability series, standard errors of all current quarter estimates except ECI seasonally adjusted series are made available with the publication of the news release. Standard errors provide users a tool to judge the quality of an estimate to ensure that it is within an acceptable range for their intended purpose.
ECI standard errors are available in TXT and PDF format.
ECEC relative standard errors are available in HTM and PDF format. Private industry supplementary tables are available in TXT or PDF.
How are the data for the ECI and ECEC obtained?▸
NCS uses Bureau of Labor Statistics (BLS) field economists to collect compensation data from the selected survey respondents.
The collection forms used by these field economists are available from The Office of Management and Budget (OMB), who maintains the clearance packet that is submitted for the National Compensation Survey.
The National Compensation Survey (NCS) data are collected from national probability samples selected in two stages: 1) a probability sample of establishments and 2) a probability sample of occupations within sampled establishments. To find out more visit the Sample Design section in the Handbook of Methods.
Probability samples are subject to sampling and non-sampling errors, which are discussed in the Calculation section.
What types of data are available?▸
Recent NCS data is available on the BLS website in a variety of ways. To view the complete list, please visit the Accessing Data section of the Handbook of Methods.
What is the role of the Bureau of Labor Statistics in the Federal pay administration process?▸
For the purposes of determining across-the-board pay adjustments, the NCS provides the Employment Cost Index (ECI) for wages and salaries for private industry workers less 0.5 percentage points, as of September, 15 months preceding the January adjustment, to the President’s Pay Agent. For more information about how The President’s Pay Agent uses that estimate in their determination of federal pay, please see the most recent Pay Agent Report.
FEPCA’s second component of pay adjustment is that of locality pay, which is based on the comparison between federal and non-federal pay in specific areas. The law also requires that work level be taken into account when comparing these federal and non-federal pay gaps, a concept found in the NCS. More information about the NCS job leveling process can be found in the guide, Guide for Evaluating Your Firm’s Jobs and Pay.
While the NCS has detailed job characteristics such as the aforementioned work levels, bargaining status (union and nonunion), and work status (part-time or full-time), it has a small sample with which to calculate occupation-area wage estimates. Another BLS survey, the Occupational Employment Statistics (OES) survey, provides wage estimates by occupation for each locality pay area. The OES-NCS regression model is used to combine information from both surveys. More information about the model can be found in the most recent Pay Agent Report.
The computed pay gaps are then used by the President’s Pay Agent to make recommendations regarding federal locality pay. The article, Fifty years of BLS surveys on Federal employees’ pay describes the changes in the Federal pay adjustment process over the years and how the changes affected the Bureau’s occupational wage survey programs.
How can I get assistance with using the ECI and ECEC?▸
Information specialists are available in the national office to provide assistance via email or Telephone: (202) 691-6199 (Monday - Friday, 8:30 A.M. - 4:30 P.M.).
How can I stay up to date with the ECI and ECEC?▸
Information is available from our website, through email subscriptions to data products, and from Bureau publications such as the Monthly Labor Review (MLR) and Beyond the Numbers. You can search for articles related to the ECI in these publications or from the homepage search bar.
We are also on social media. BLS has a stat for that! Follow us on Twitter to see the latest statistics that can help you make informed decisions, whether you're a worker, jobseeker, student, employer, investor, or policymaker.
Where can I find information about other NCS Products?▸
The Employment Cost Index (ECI) data from the National Compensation Survey (NCS) are used for a variety of reasons, by both the private and public sectors. Some examples include: military pay adjustments, federal pay adjustments, Medicare reimbursement adjustments, contract escalator clauses, labor cost adjustments, and collective bargaining negotiations.
The ECI is intended to indicate how the average compensation paid by employers would have changed over time if the industrial-occupational composition of employment had not changed from the base period. An index of 110, for example, means there has been a 10-percent increase in price since the reference period; similarly, an index of 90 means there has been a 10-percent decrease. Movements of the index from one date to another can be expressed as changes in index points (simply, the difference between index levels), but it is more useful to express the movements as percent changes. This is because index points are affected by the level of the index in relation to its reference period, while percent changes are not.
Index change calculation
The formula is: [(x/y - 1) * 100] where x = ending quarter's index value and y = beginning quarter's index value.
An example where December 2007 = 106.6 and December 2011 = 114.6 is shown below:
( (114.6/106.6) - 1 ) * 100 = 7.505 or 7.5%
What are some limitations of the ECI?▸
The Employment Cost Index (ECI) is designed to be a sophisticated measure of change in the welfare of workers, and not as a measure of the change in compensation cost of the current employment distribution. If compensation cost levels based on current employment increase less than the ECI, where employment weights are kept constant, it suggests there has been a shift in employment in the overall economy toward relatively low-paying industries and or occupations.
Some individual compensation components, such as health benefits, may display volatility related to employer nonresponse. These estimates generally have fewer observations supporting them as compared with the overall benefit series.
For health benefits specifically, the change in cost to employers may also reflect shifts in cost-sharing with employees.
The ECI does not provide information on state level or individual occupation changes.
When were the fixed weights of the ECI last updated?▸
Beginning with the release of December 2013 estimates, the ECI was reweighted to reflect 2012 employment counts. This reweighting accounted for updates to the occupational and industry classification systems, incorporating the 2010 Standard Occupational Classification system and the 2012 North American Industry Classification System. These changes had minimal impact on the historical continuity of the ECI.
Unlike some other programs at the Bureau of Labor Statistics (BLS), Employment Cost Index (ECI) estimates are considered final upon publication and are not later revised, with the exception of the 3-month seasonal series, which are revised every March quarter for the previous five years.
How do I use the Employment Cost Index for escalation?▸
The ECI is particularly well suited as a vehicle to adjust wage rates to keep pace with what is paid by other employers for two reasons. First, it is comprehensive. It includes not only wages and salaries but also employer costs for employee benefits, and covers nearly all employees in the civilian (non-Federal) economy. Second, it measures the "pure" change in labor costs; that is, it is not affected by changes in relative employment of industries and occupations with different wage and compensation levels.
The ECI is separate from and different to the measure of the change in the price to urban consumers of a market basket of consumer goods, which is measured by the Consumer Price Index.
When should I use seasonally adjusted data?▸
By using seasonally adjusted data, some users find it easier to see the underlying trend in short-term wage and benefits changes. It is often hard to tell whether developments between any two quarters reflect changing economic conditions or only normal seasonal patterns. Therefore, many economic time series, including the ECI, are adjusted to remove the effect of seasonal influences such as increased work in the construction industry during warm weather or changes in education stemming from new contracts associated with the beginning of the new school year.
You should use seasonally adjusted data when doing policy or economic research as it helps clarify underlying trends. Conversely, when using ECI data for escalation agreements it is best to use unadjusted data to measure the true price change period to period.
How can an aggregate ECI series be lower, or higher, than all of its component series?▸
It is possible for an aggregate series' percent change to fall outside of its component series because the published index numbers, which are used to calculate the percent changes, are rounded (to one decimal place). We do this so that users can replicate our calculations of the published 3-month and 12-month percent changes. This effect is more likely to occur with seasonally adjusted series because of additional rounding that may occur in application of seasonal adjustment factors.
For example, the 3-month seasonally adjusted percent change for civilian total compensation in March 2012 was 0.4 percent. However, the change for its two components-wages and salaries and benefits-were both 0.5 percent. In this case, if the index number for the aggregate series was just 0.1 point higher (the smallest increment possible)-116.3 instead of 116.2-the 3-month percent change would round to 0.5 percent, just like its component series.
Is the ECI adjusted for inflation?▸
The ECI data found in the news releases are not inflation-adjusted. However, constant dollar ECI data are available. Constant dollar estimates are produced by taking the current dollar (nominal) compensation costs and adjusting them by the Consumer Price Index (CPI) in order to produce real or inflation-adjusted estimates. Constant dollar estimates facilitate analysis by removing changes in consumer prices, such that the estimates are comparable on a same dollar basis. The CPI for All Urban Consumers (CPI-U) U.S. City Average All Items is used for the reference period of interest to adjust prior years' costs to current dollar costs.
Employer Costs for Employee Compensation (ECEC)
Can you compare private and public sector data in the ECEC?▸
Compensation cost levels in state and local government should not be directly compared with levels in private industry. Differences between these sectors stem from factors such as variation in work activities and occupational structures. Manufacturing and sales, for example, make up a large part of private industry work activities but are rare in state and local government. Professional and administrative support occupations (including teachers) account for two-thirds of the state and local government workforce, compared with one-half of private industry.
What are some limitations of ECEC?▸
Although the ECEC statistics cover both wages and employee benefits, there is an important distinction between the two concepts that must be kept in mind when interpreting the ECEC benefit cost measures: all jobs pay a wage or salary, but not all employers offer the same employee benefits. The same employer may even offer different benefits for different jobs. This distinction arises when either the employer does not provide the benefit to workers in the job or when workers choose not to participate in the benefit even when the employer offers it.