Investing October 30, 2003

Employment Cost Continue to Rise in Q3

October 30, 2003 (PLANSPONSOR.com) - Marching in step with the increase in benefits costs, the Employment Cost Index (ECI) for total compensation rose 1% from June 2003 to September 2003.
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Benefit costs increased 1.5% and continued to outpace the 0.7% gain in wages and salaries for civilian workers in September.  However, the third quarter’s increase is not out of line when compared to the seasonally adjusted 0.9% gain from March 2003 to June 2003 (See Employment Costs Edge 0.9% Higher in Second Quarter ), according to a Bureau of Labor Statistics (BLS) news release.

Overall, employer costs for benefits account for over a third of compensation costs and include such items as health and other insurance, retirement plans, paid leave, and legally required benefits like Social Security. Much of the increase in benefit costs stemmed from the continuing rise in the costs for health insurance. In the private sector, benefit costs rose 1.4% for the September quarter, following the 1.3% gain in the previous three-month time frame. The increase for state and local governments was 2% in the September 2003 quarter, following a 1.3%-increase previously.

Compensation Costs

Compensation costs for private sector workers rose 1% from June 2003 to September 2003, after advancing 0.8% in the prior quarter.  For state and local government workers, the increase in compensation costs was 0.7% from June to September, compared with the gain of 0.8% for the quarter ended in March.  Gains in private sector compensation costs were led by large increases in retail trade and white-collar workers.   At the same time transportation and public utilities sand service workers put a damper on private sector compensation gains.

Gains in wages and salaries were 0.7% for both civilian and private sectors workers during the September quarter, following a 0.6% rise in the June quarter.   Comparatively, wages and salaries in state and local government advanced 0.1% during the June 2003 to September 2003 period, following the 0.8% increase in the previous period.

The ECI is a component of the National Compensation Survey and measures changes in compensation costs, which include wages, salaries, and employer costs for employee benefits.   December 2003 figures are scheduled for release on January 29, 2004.

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