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Employment Cost Index

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:

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

Public sector:

  1. Formulate and assess public policy;
  2. Aid collective bargaining negotiations;
  3. Evaluate benefits packages;
  4. Analyze contract settlements;
  5. Index Medicare payments;
  6. Formulate monetary policy.

Examples of uses for NCS data:

  1. Wages and salaries▸
    • 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 (10th, 50th, and 90th). 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.
  2. Benefits▸
    • 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