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February 03, 2003
Compensation Costs Up Slightly
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>Employment costs rose 0.7 percent from September to December, following a 0.8 percent gain from June to September, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported.

Benefit costs continued to outpace the gains in wages and salaries for civilian workers in December, increasing 1.3 percent compared with a modest rise of 0.4 percent for wages and salaries. 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 nonfarm private and State and local government workers.

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.

The 1.3 percent increase in benefit costs this quarter was in line with quarterly increases over the past four years. Since 1999, benefit costs for civilian workers have increased about 20 percent, double the pace for 1995-1998. Much of the increase in benefit costs over the past few years stemmed from rising costs for health insurance and retirement plans.

Compensation costs for private sector workers advanced 0.7 percent from September to December, after rising 0.6 percent in the prior quarter. Although compensation costs rose 1.3 percent for construction and durable manufacturing industries, private sector compensation gains were dampened by slower growth among service- producing industries.

Wages and salaries increased 0.4 percent for civilian workers (nonfarm private industry and State and local government) during the December quarter, following a 0.5 percent rise in the September quarter. The private sector continued to show moderate gains, inching up 0.4 percent for the second consecutive quarter after larger gains earlier in the year. Wage and salary increases slowed in nondurable manufacturing industries, transportation and public utilities, services industries, and among service workers.

For the year 2002, employment costs rose 3.4 percent, the smallest increase since 1999, according to the BLS.

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