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April 2008, Vol. 131, No. 4
Transitional Employment Cost Indexes for seasonal adjustment
E. Raphael Branch, James A. Buszuwski, Albert E. Schwenk, Mark Gough
As part of the National Compensation Survey (NCS) of the Bureau of Labor Statistics (BLS), the Employment Cost Index (ECI) provides quarterly measures that represent the change in employers’ labor costs per employee hour worked, exclusive of shifts in employment among industries and occupations.1 The ECI program publishes indexes and 3- and 12-month percent change estimates for total compensation, wages and salaries, and total benefits. Since 1975, the ECI has been computed from survey information on a sample of establishments and jobs weighted to represent the universe of establishments and occupations in the U.S. economy. The ECI is a principal Federal economic indicator that has many uses, both public and private, including formulating monetary policy, indexing hospital charges for Medicare reimbursement, adjusting Federal Government pay, and adjusting wages in long-term contracts.
After more than a quarter of a century, the ECI program has switched to new industry and occupational classifications, as required by Office of Management and Budget mandates stating that all Federal statistical agencies which produce industry or occupation statistics shall adopt the North American Industry Classification System (NAICS)2 and the Standard Occupational Classification System (SOC).3 Before the conversion to NAICS and SOC, the ECI program had been using the Standard Industrial Classification (SIC)4 system and the BLS Occupational Classification System (OCS).5 Among the changes to the ECI made in response to the mandates were changes for seasonal adjustment purposes.6
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1 The ECI is a Laspeyres index calculated with the use of fixed employment weights from the 2002 BLS Occupational Employment Statistics (OES) program. The ECI fixed weights control for employment shifts among occupations and industries. (See BLS Handbook of Methods (Bureau of Labor Statistics, last modified Apr. 25, 2007), chapter 8, pp. 1, 4–6, on the Internet at www.bls.gov/opub/hom/pdf/homch8.pdf; see also Stephanie L. Costo, “Introducing 2002 weights for the Employment Cost Index,” Monthly Labor Review, April 2006, pp. 28–32, on the Internet at www.bls.gov/opub/mlr/2006/04/art5full.pdf.)
2 See North American Industry Classification System: United States, 2002 (Executive Office of the President, Office of Management and Budget, 2002); on the Internet at www.census.gov/epcd/naics02.
3 See Standard Occupational Classification Manual: 2000 (Executive Office of the President, Office of Management and Budget, 2000); on the Internet at www.bls.gov/soc. See also Federal Register Notice 62 FR 36337-36409, July 7, 1997.
4 See Standard Industrial Classification System, 1987 (Executive Office of the President, Office of Management and Budget, 1987).
5 1990 OCSM, Occupational Classification System Manual for the Employment Cost Index Survey Program (Bureau of Labor Statistics, December 1993); on the Internet at www.bls.gov/news.release/archives/eci_04282006.pdf.
6 For more information on changes to the ECI, see Richard E. Caroll, “Changes affecting the Employment Cost Index: an overview,” Monthly Labor Review, April 2006, pp. 3–5; on the Internet at www.bls.gov/opub/mlr/2006/04/art1full.pdf.
Related BLS programs
Compensation Cost Trends
Changes affecting the Employment Cost Index: an overview. — Apr. 2006.
Seasonal adjustments in the Employment Cost Index. — Apr. 2006.
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