Employment Costs Edge 0.9% Higher in Second Quarter

July 31, 2003 (PLANSPONSOR.com) - Continuing to ride the ever-escalating wave of benefit costs, the Employment Cost Index (ECI) for total compensation rose 0.9% from March 2003 to June 2003.

Benefit costs increased 1.4% and continued to outpace the 0.6% gain in wages and salaries for civilian workers in June.  However, the second quarter’s increase is relatively calm when compared to the seasonally adjusted 1.3% gain from December 2002 to March 2003 (See  Employment Costs Spike 1.3% in the First Quarter ), according to a Bureau of Labor Statistics (BLS) news release.

Overall, employer costs for benefits account for nearly 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.  For the year ended June 2003, benefit costs increased 2.7%.

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 1.3% for the June quarter, lower than the 2.4% gain in the previous three-month time frame. The increase for state and local governments was 1.3% in the June 2003 quarter, following a 1.5%-increase previously.

Compensation Costs

Compensation costs for private sector workers rose 0.8% from March 2003 to June 2003, after advancing 1.4% in the prior quarter.  For state and local government workers, the increase in compensation costs was 1% from March to June, compared with the gain of 0.9% for the quarter ended in March.  Gains in private sector compensation costs were led by large increases in nondurable manufacturing; transportation, and public utilities and construction.

Gains in wages and salaries were 0.6% for both civilian and private sectors workers during the June quarter, following a 1% rise in the March quarter.  Wage gains in the construction and nondurable manufacturing industries led the increase.  Comparatively, wages and salaries in state and local government advanced 0.8% during the March 2003 to June 2003 period, following the 0.7% 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.   September 2003 figures are scheduled for release on October 30, 2003.