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Employment Cost Index

Questions and Answers

Find answers to commonly asked questions about the Employment Cost Index (ECI) and the National Compensation Survey (NCS). Selecting the arrow next to a topic will reveal more information. You may expand or collapse all categories using the buttons below. To expand categories without moving the cursor, you may press tab until "Expand All" is selected, then press enter.

General information
  1. What is the National Compensation Survey (NCS)?
  2. What is the Employment Cost Index (ECI)?
    • The Employment Cost Index (ECI) is a Principal Federal Economic Indicator (PFEI) that measures the change in the hourly labor cost to employers, independent of the influence of employment shifts among occupations and industry categories. Costs represent the pay period that includes the 12th of March, June, September, and December.
  3. How can I stay up to date with the ECI?
    • Future ECI release dates are available on the BLS release calendar. Information is available from the ECI website, through email subscriptions to data products, and from BLS publications such as the Monthly Labor Review (MLR) and Beyond the Numbers. You can search for articles related to the ECI in these publications or from the homepage search bar.
    • BLS is also on social media. Follow the BLS on Twitter to see the latest statistics that can help you make informed decisions, whether you're a worker, jobseeker, student, employer, investor, or policymaker.
  4. How can I get assistance using the ECI?
    • Information specialists are available in the national office to provide assistance via email or telephone: (202) 691-6199 (Monday - Friday, 8:30 A.M. - 4:30 P.M. ET). If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services.
ECI data overview
  1. What types of data are available?
    • In addition to an index value, the ECI publication provides estimates measuring the 3-month percent change and the 12-month percent change of total compensation, including wages and salaries and benefits for the civilian, private industry, and state and local government ownerships, by occupational groups, industry groups, bargaining status or geographic area.
    • For an overview of the ECI industry groups and occupational groups, see the Classification systems used by the National Compensation Survey page. For more information on the geographic areas published in the ECI, see Question 6 under ECI Data Overview.
    • Health insurance cost change estimates are also available for the private industry.
    • Recent ECI data is available on the BLS website in a variety of ways, including the public database. To view the complete list, please visit the accessing data section of the Handbook of Methods. In some circumstances, BLS can provide estimates not available through NCS publications. Examples of previously fulfilled requests can be found in the NCS Data Requests page.
  2. What occupations and industries are published in the ECI?
  3. Is the ECI revised?
    • Unlike some other programs at the BLS, ECI estimates are considered final upon publication and are not revised later. One notable exception are the 3-month seasonal series, which are revised every March release for the previous five years. Seasonally adjusted estimates are available for the 3-month percent change estimates. At the beginning of each calendar year, seasonal adjustment factors are calculated for use during the coming year and revisions of historical seasonally adjusted data are made for the most recent 5 years. For more information, see the Employment Cost Index: Annual seasonal adjustment process page.
  4. How are the data for the ECI obtained?
    • Bureau of Labor Statistics (BLS) field economists collect compensation data from the survey respondents at sampled establishments.
    • The collection forms used by these field economists are available from the Office of Management and Budget (OMB), who maintains the clearance packet that is submitted for the National Compensation Survey.
    • To find out more visit the collection and data sources section in the Handbook of Methods.
  5. Is the ECI adjusted for inflation?
    • ECI constant dollar estimates facilitate analysis by removing changes in consumer prices, such that the estimates are comparable on a same dollar basis. Constant dollar estimates are produced by taking the current dollar (nominal) compensation costs and adjusting them by the Consumer Price Index (CPI). The CPI for All Urban Consumers (CPI-U) U.S. City Average All Items is used for the reference period of interest to adjust prior years' costs to current dollar costs. The Measuring Real Change in the ECI: Constant dollar estimates further explains how ECI indices are adjusted to produce inflation-adjusted estimates.
  6. What geographic detail is available through the ECI?
    • ECI private industry data is available by the four census regions and by the nine census divisions. In addition, private industry data are produced for 15 metropolitan areas. While ECI data is not available by state, the Modeled Wage Estimates, Occupational Employment and Wage Statistics, and State and Metro Area Earnings programs provide wage information at the state level.
    • To learn about the geographic areas, industry, and occupational classification systems used by the NCS, see the Classification systems used by the NCS page. There are four Census regions comprised of states and the District of Columbia. Each Census region can be further disaggregated to smaller areas, which are referred to as Census divisions. The nine Census divisions are groupings of the fifty states as well as the District of Columbia which compose the four Census regions.
    • Published Census regions and divisions in the NCS with associated states
      Region: Northeast South Midwest West
      Division: New England Middle Atlantic South Atlantic East South Central West South Central East North Central West North Central Mountain Pacific
      States: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont New Jersey, New York, Pennsylvania Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia Alabama, Kentucky, Mississippi, Tennessee Arkansas, Louisiana, Oklahoma, Texas Illinois, Indiana, Michigan, Ohio, Wisconsin Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming Alaska, California, Hawaii, Oregon, Washington

      Source: U.S. Bureau of Labor Statistics, National Compensation Survey, U.S. Census, and Office of Management and Budget

Using the ECI
  1. How is the ECI used and who uses the ECI?
    • The ECI should be used for examining changes in compensation over time. Data are used for a variety of reasons, by both the private and public sectors. Some examples include: military pay adjustments, federal pay adjustments, Medicare reimbursement adjustments, contract escalator clauses, labor cost adjustments, and collective bargaining negotiations.
    • The President’s Pay Agent uses the Employment Cost Index (ECI) to determine across-the-board pay adjustments. The Pay Agent Report provides additional information on how the ECI is used to determine federal pay.
    • To learn more about the ECI, watch this short video or visit the presentation section of the Handbook of Methods.
  2. How do I read or interpret an index?
    • The ECI is intended to indicate how the average compensation paid by employers would have changed over time if the industrial-occupational composition of employment had not changed from the base period. An index of 110, for example, means there has been a 10-percent increase in price since the reference period; similarly, an index of 90 means there has been a 10-percent decrease. Movements of the index from one date to another can be expressed as changes in index points (simply, the difference between index levels), but it is more useful to express the movements as percent changes. This is because index points are affected by the level of the index in relation to its reference period, while percent changes are not.
    • Index change calculation
    • The formula is: [(x/y - 1) * 100] where x = ending quarter's index value and y = beginning quarter's index value.
    • An example where December 2007 = 106.6 and December 2011 = 114.6 is shown below:
    • ( (114.6/106.6) - 1 ) * 100 = 7.505 or 7.5%
  3. How do I use the ECI for escalation?
    • The Employment Cost Index (ECI) is particularly well suited as a vehicle to adjust wage rates to keep pace with what is paid by other employers for two reasons. First, it is comprehensive. It includes not only wages and salaries but also employer costs for employee benefits, and represents nearly all employees in the civilian (non-Federal) economy. Second, it measures the "pure" change in labor costs; that is, it is not affected by changes in relative employment of industries and occupations with different wage and compensation levels.
    • The ECI is separate from and different to the measure of the change in the price to urban consumers of a market basket of consumer goods, which is measured by the Consumer Price Index. For more details visit How to Use the Employment Cost Index for Escalation.
  4. When should I use seasonally adjusted data?
    • By using seasonally adjusted data, some users find it easier to see the underlying trend in short-term wage and benefits changes. It is often hard to tell whether developments between any two quarters reflect changing economic conditions or only normal seasonal patterns. Therefore, many economic time series, including the Employment Cost Index (ECI), are adjusted to remove the effect of seasonal influences such as increased work in the construction industry during warm weather or changes in education stemming from new contracts associated with the beginning of the new school year.
    • When evaluating underlying compensation trends (for example when performing policy or economic research) consider using the seasonally adjusted data, as it removes the irregular and seasonal component allowing for better evaluation of the trend components. Conversely, contract escalation agreements may benefit from using the unadjusted data.
  5. What are some limitations of the ECI?
    • The Employment Cost Index (ECI) is designed to be a sophisticated measure of change in the welfare of workers, and not as a measure of the change in compensation cost of the current employment distribution. If compensation cost levels based on current employment increase less than the ECI, where employment weights are kept constant, it suggests there has been a shift in employment in the overall economy toward relatively low-paying industries and or occupations.
    • Some individual compensation components, such as health benefits, may display volatility related to employer nonresponse. These estimates generally have fewer observations supporting them as compared with the overall benefit series. For health benefits specifically, the change in cost to employers may also reflect shifts in cost-sharing with employees.
ECI calculation
  1. How is the ECI calculated?
    • The calculation details for the Employment Cost Index (ECI) are covered in the calculation section of the Handbook of Methods.
    • Currently, the ECI is calculated using a modified Laspeyres methodology (that is, an index reflecting the change in labor costs over time), for which the basic computational framework is the standard formula for an index number with fixed index weights, modified by special statistical conditions and accounting for sampling methodology. The Bureau of Labor Statistics (BLS) has conducted research into a new index of employment cost change that uses a linking Laspeyres approach. The Bureau is evaluating the Linked ECI in order to enable a more direct method for implementing potential sample design improvements, to change the compensation definition without the need to wait for a reweight period, and to allow for flexibility in incorporating new information from collected data. For more information, see The Linked Employment Cost Index; a first look and estimation methodology and estimate tables showing Linked ECI data.
  2. When were the fixed weights of the ECI last updated?
  3. Who is included in the civilian economy?
    • The ECI covers the civilian economy, which includes data from both private industry and state and local government. Excluded from the civilian economy are workers employed in federal government and quasi-federal agencies, military personnel, workers in the agricultural sector, volunteers, unpaid workers, individuals receiving long-term disability compensation, and those working overseas. In addition, private industry excludes workers in private households, the self-employed, workers who set their own pay (e.g., proprietors, owners, major stockholders, and partners in unincorporated firms), and family members paid token wages.
  4. What is included and excluded in wages and salaries and benefits?
    • Wages and salaries are defined as regular payments from employer to employee as compensation for services performed during a specific period of time or based on production, sales, or specific output. For the NCS, tips are excluded, and so are uniform and tool allowances, free or subsidized room and board, and on-call pay. Other BLS programs may include third-party payments, like tips, in wage and salaries; see the comparison matrix of BLS compensation data sources.
    • The following components are included in wages and salaries:
      • Incentive-based pay, including commissions, production bonuses, and piece rates
      • Cost-of-living allowances
      • Hazard pay
      • Payments of income deferred due to participation in a salary reduction plan
      • Deadhead pay, defined as pay given to transportation workers returning in a vehicle without freight or passengers
    • Total benefit costs consist of five major categories and include 18 benefit costs:
      • Paid leave - vacation, holiday, sick, and personal leave
      • Supplemental pay - overtime and premium, shift differentials, and nonproduction bonuses
      • Insurance - life, health, short-term and long-term disability
      • Retirement and savings - defined benefit and defined contribution
      • Legally required benefits - Social Security (refers to Old-Age, Survivors, and Disability Insurance (OASDI) program), Medicare, federal and state unemployment insurance, and Workers’ Compensation
  5. How can an aggregate ECI series be higher than its component series? How can it be lower?
    • It is possible for an aggregate series' percent change to fall outside of its component series because the published index numbers, which are used to calculate the percent changes, are rounded (to one decimal place). BLS does this so that users can replicate our calculations of the published 3-month and 12-month percent changes. This effect is more likely to occur with seasonally adjusted series because of additional rounding that may occur in application of seasonal adjustment factors.
    • For example, the 3-month seasonally adjusted percent change for civilian total compensation in March 2012 was 0.4 percent. However, the change for its two components-wages and salaries and benefits-were both 0.5 percent. In this case, if the index number for the aggregate series was just 0.1 point higher (the smallest increment possible)-116.3 instead of 116.2-the 3-month percent change would round to 0.5 percent, just like its component series.
  6. How reliable are the measurements for the ECI?
    • To assist users in ascertaining the reliability of the estimates, standard errors are made available with the publication of the news release. Standard errors provide users a tool to judge the quality of an estimate to ensure that it is within an acceptable range for their intended purpose. For ECI standard errors see the Technical Information about Standard Errors for Employment Cost Index Estimates page.
    • Standard errors are not available for the ECI seasonally adjusted series and the constant dollar series. In evaluating changes in a seasonally adjusted series, it is important to note that seasonal adjustment is an approximation based on past experience. Seasonally adjusted data have a similar margin of error as the original data on which they are based; therefore, the standard errors of the original (not seasonally adjusted) series could be used to assess the approximate precision of the corresponding seasonally adjusted estimates.

Last Modified Date: October 17, 2023