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Data Usage

The National Compensation Survey (NCS) is an establishment-based survey that provides comprehensive measures of (1) employer costs for employee compensation, including wages and salaries, and benefits, (2) compensation trends, and (3) the incidence of employer-sponsored benefits among workers. The NCS also publishes estimates on the provisions of employer-sponsored benefit plans.

Data uses in private and public sectors:

Private sector:

Aid collective bargaining negotiations;
Evaluate benefit packages;
Analyze contract settlements;
Guide decisions in business or plant location;
Assist in wage and salary administration;
Adjust wages in long-term contracts.

Public sector:

Formulate and assess public policy;
Aid collective bargaining negotiations;
Evaluate benefits packages;
Analyze contract settlements;
Index Medicare payments;
Formulate monetary policy.

Examples of uses for NCS data:

Wages and salaries&rtrif;
- Negotiating wage contracts – average hourly wages for occupations and for occupational groups in an area can be used as a point of departure for wage negotiations. If certain occupations are not published, data on “benchmark occupations” — those occupations that may be common in a number of establishments — may be used to compare an employer’s pay to pay in the area.
- Determining compensation rates – private companies, labor organizations, and government agencies use the NCS to help determine compensation rates for pay ranges or merit increases.
- Determining prevailing wage rates – legislation such as the Service Contract Act and the Davis-Bacon Act require employers to pay the “prevailing wage rate” of the area for certain types of work. In such cases, a government agency, such as the Wage and Hour Division (WHD), may use BLS survey data as a tool in determining the prevailing rate. The survey results, however, are not automatically “the prevailing rate.” BLS does not set, nor enforce, prevailing wage rates.
- Setting compensation rates for workers with different duties and responsibilities – The NCS is used to help evaluate wage rates for different work levels of an occupation. Work levels represent the different duties and responsibilities within an occupation. Levels are derived from generic standards used for all occupations, so occupational pay can be compared at each work level. A common point-factor analysis is applied to each occupation to measure the requirements of the position and derive the work levels. Each selected job can be slotted into a work level based on 4 factors: knowledge, controls and complexity, contacts (nature and purpose), physical demands, and work environment.
- Comparing geographical area wages – private companies use wage data to identify areas for expansion or relocation. Individuals find wage data useful when choosing an area to seek employment.
- Evaluating wage distributions – wages are presented as averages and as percentiles (10^th, 50^th, and 90^th). Percentiles describe the average compensation costs around the percentile wage bands, see Compensation Percentiles: A tool for assessing employee compensation.
- Paying market wage rates – employers set pay at or above the mean wage rate to attract top quality professionals into a job that is hard to fill.
- Federal pay adjustments – wage data are used to determine pay adjustments by locality for federal white-collar workers under the Federal Employees Pay Comparability Act, see General Schedule Classification and Pay.
Compensation trends&rtrif;
- Federal pay adjustments – The Employment Cost Index (ECI) is used to determine Federal white-collar pay adjustments under the Federal Employees Pay Comparability Act.
- Active&dash;duty military pay adjustments– In November 2003, Congress passed a permanent law requiring that annual basic pay increases for active–duty military personnel be indexed to the annual increase in the ECI, for Fiscal Year 2007 and beyond. (See: Section 602 of the Fiscal Year 2004 National Defense Authorization Act; and P.L. 108&dash;136, November 24, 2003; 117 Stat. 1498, amending 37 USC 1009.) Prior to this legislation, active–duty military personnel wages had been linked to the annual percent increase in the General Schedule (GS) federal civil service pay scale under the Federal Employees Pay Comparability Act of 1990. In 1999, with a widening pay gap between military and private industry pay, Congress acted to set annual military pay increases to the annual increase in the ECI plus 0.5 percent, which was in effect for Fiscal Years 2001–2006.
- US economic policy decisions – The Federal Reserve uses the ECI as a major economic indicator for monetary policy decision making.
- Escalator clauses in collective bargaining contracts –Wage escalator clauses can allow for a pay increase that is dependent upon results of the ECI.
- Escalator clauses in US government contracts – Various ECI series are used as labor cost escalators in US government contracts. For example, the production and logistics division of the Department of Defense uses the wages and salaries and benefit costs series as escalators in numerous defense contracts, including contracts for computer research. The Contracts Division of the Environmental Protection Agency uses the total compensation private industry/white–collar series as the designated cost escalator in at least 10 contracts for systems design services.
- Adjustments to Medicare reimbursements for hospital, physician, and related services– The U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services, uses data from the ECI to determine allowable increases in reimbursements to hospitals, skilled nursing facilities, home health care organizations, and physicians under Medicare’s Prospective Payment Systems (PPS). The PPS designates the level of reimbursement for Medicare-covered services, based on the diagnosis and geographic location of care. PPS reimbursements are adjusted annually based on a number of factors, including changes in compensation for medical and related personnel, see The Employment Cost Index and the Impact on Medicare Reimbursements.
- The Pennsylvania Department of Education uses the ECI as an inflationary measure to determine how much school districts can raise property taxes each year. Pennsylvania began using the ECI in 2005 after the General Assembly passed and Governor signed a new local tax reform alternative, Act 72, which is entitled “The Homeowner Tax Relief Act.” This tax reform initiative was designed to reduce the property tax burden on Pennsylvania residents.
  As part of this legislation, the Pennsylvania Department of Education started using the ECI as a component in creating a base inflation index in order to determine the maximum school district property tax increase allowed.
  The base index is calculated by averaging the percent increases in the Pennsylvania Statewide average weekly wage (as determined by the Pennsylvania Department of Labor) and the annual percent change (June reference month) in the ECI elementary and secondary school series.
  For example, the 2008–2009 school year
  Percent increase in Statewide weekly wage: 4.3%
  Percent annual ECI increase (June 2007): 4.5%
  Base inflation index : 4.4%
  Further adjustments are made to each individual school distric’s inflation index based on the district’s relative market value and personal income valuation, compared to the statewide average. For school districts with a market value/personal income aid ratio (MV/PI AR) greater than 0.4000, the value of their index is adjusted upward by multiplying the base index by the sum of 0.75 and their MV/PI AR.
  For example, the Scranton school district
  State base inflation index: 4.4%
  Scranton MV/PI aid ratio: .6999
  Adjusted index= 4.4% X (.75 + .6999) = 6.4%
  Therefore, the Scranton school district can raise property taxes no more than 6.4%.
  The “Homeowner Tax Relief Act” did not mandate that school districts participate, but in 2006 Pennsylvania legislators passed another bill entitled the “Taxpayer Relief Act,” which required that all school districts comply with the new policies. As such, all property owners and school districts in Pennsylvania are now affected by the ECI&derived base index.
- Economic price adjustments in long term purchase contracts– Long&dash;term purchase contracts may specify the ECI is to be used to adjust the labor cost portion of contracts.
- Escalator clauses in foreign government contracts– Foreign governments sometimes use ECI series in contracts with US firms. For example, the Government of Switzerland uses the manufacturing durable goods series as a wage escalator in a contract with a US firm that makes computers.
- Economic consulting/forecasting– Various ECI series are used in models for economic forecasting, including forecasting the ECI values for clients’ use in budgeting and other activities. ECI series are also used in developing inflation indexes of personnel and other costs for elementary and secondary schools and colleges.
- Costs associated with employee compensation– Employer Costs for Employee Compensation focuses on costs associated with providing total compensation packages that includes wages/salaries and benefits. A user can look at this publication and see what amount of a total compensation figure is attributed to wages/salaries and various benefits per hour worked.
Benefits&rtrif;
- Planning and improving company benefits – BLS data are used as a guide when companies choose the provisions for their benefit plans. In addition, companies may improve benefit packages to remain competitive in the labor market. For example, a technology company may have a difficult time finding qualified computer engineers; or, a car dealership may not be able to attract the best salesperson. Instead of raising the wage, companies may enhance or add new benefits to attract candidates.
- Lowering turnover rates – to attract and retain workers, employers may provide additional benefits. Employers can search the benefits data to evaluate their benefit packages against those available to workers nationwide.
- Aiding collective bargaining negotiations – collective bargaining units periodically renegotiate their contracts. The bargaining unit and the employer can use the benefits data to assist them in making decisions about compensation packages.
- Understanding health benefits data – health benefits data provide information on average contribution costs for medical coverage and average plan limits. A new company can reference these averages when selecting group health plan coverage and compare against these averages to proposals that health plan companies have given the new company. An established company can compare its current premiums paid for health benefits to the averages nationwide. This helps the established company assess their health benefits or negotiate contracts with health benefit companies.
- Assessing and formulating public policy – BLS benefits data were used to design defined benefit and savings and thrift plans for federal employees. In the debate over a universal health care system, benefits data on employee premium sharing was considered in formulating proposals. Data on the amount of retirement income from employer plans has helped to frame the debate over social security reform. Policy makers used our benefits data when drafting the Family and Medical Leave Act of 1993.
- Researching current benefit issues – students, consultants, and researchers use benefits data. Students may be writing a thesis or trying to identify a noteworthy item on which to focus an assignment. Consultants may be trying to recommend benefit actions to a company or provide supporting data to clients. Researchers sometimes want to investigate a particular issue in benefits or may focus on a few years of previous data to develop research on trends or other benefit issues.

Last Modified Date: January 10, 2020