The Employment Cost Index for total compensation rose 1.3 percent from December
2002 to March 2003, following a 0.7 percent gain from September to December
2002, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department
of Labor reported. The index measures quarterly changes in compensation costs,
which include wages, salaries, and employer costs for employee benefits.
Benefit costs increased 2.2 percent and continued to substantially outpace
the 1.0- percent gain in wages and salaries for civilian workers in March.
Employer costs for benefits account for nearly 30 percent 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
March 2003, benefit costs increased 6.1 percent, greater than the 4.9 percent
gain for the year ended March 2002.
Much of the increase in benefit costs stemmed from the continuing rise in the
costs for health insurance and the recent upturn in retirement costs, particularly
for defined benefit pension plans.
Compensation costs for private sector workers rose sharply, 1.4 percent from
December 2002 to March 2003, after advancing 0.7 percent in the prior quarter.
For State and local government workers, the increase in compensation costs was
0.9 percent from December to March, compared with the gain of 1.0 percent for
the quarter ended in December. Gains in private sector compensation costs were
led by large increases in durable manufacturing; finance, insurance, and real
estate; and wholesale trade. Retail trade, transportation and public utilities,
and construction dampened private sector compensation gains.
Benefit costs accelerated during the quarter, increasing 2.2 percent for civilian
workers (nonfarm private industry and State and local government) in the March
2003 quarter following a gain of 1.3 percent in the December 2002 quarter. In
the private sector, benefit costs shot up 2.4 percent for the March quarter,
significantly higher than all quarterly gains since March 2000. By contrast,
the increase for State and local governments was 1.5 percent in the March 2003
quarter, following a 1.7- percent increase in December 2002.
Gains in wages and salaries were 1.0 percent for civilian workers during the
March quarter, following a 0.5 percent rise in the December quarter. Private
sector wages advanced 1.0 percent for the quarter after posting moderate gains
during the prior two quarters. Wage gains in the finance, insurance, and real
estate and wholesale trade industries led the increase. Wage and salary increases
were slowed by smaller gains in nondurable manufacturing industries, transportation
and public utilities, services industries, and among service workers.
Wages and salaries in State and local government advanced 0.7 percent during
the December 2002 to March 2003 period, identical to the gain in the September-December
Annual compensation costs for civilian workers (not seasonally adjusted) increased
3.9 percent for the year ended March 2003, identical to the over-the-year increase
for March 2002. Compensation costs in private industry rose 3.8 percent in the
year ended March 2003, compared with increases of 3.9 percent for March 2002,
and 4.2 percent for March 2001. In State and local government, compensation
costs increased 4.2 percent for the year ended March 2003; over-the-year gains
were 3.9 percent in March 2002 and 3.3 percent in March 2001.