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Economy in Brief

Employment Cost Index Boosted By Benefit Costs
by Tom Moeller October 28, 2005

The employment cost index for private industry workers rose 0.8% last quarter. The increase was up from the 0.6% 2Q gain and equaled Consensus expectations.Year to year, the ECI's gain of 3.0% was the slowest since early 1999.

Benefit costs increased 1.3%, up from the slow 0.8% 2Q gain and it was the quickest this year. Benefit costs in service occupations rose 1.1% (2.8% y/y) and benefit costs in manufacturing rose 1.6% (5.5% y/y).

The y/y gain in the cost of health benefits rose to 6.7% but that remained down from a 7.3% increase last year and a 10.5% gain in 2003.

Wage and salary growth was stable at 0.6% for the third straight quarter. Wages account for roughly 70% of the compensation index.

It's Who You Are and What You Do: Explaining the IT Industry Wage Premium from the Federal Reserve Bank of Atlanta is available here.

ECI- Private Industry Workers 3Q '05 2Q '05 Y/Y 2004 2003 2002
Compensation 0.8% 0.6% 3.0% 3.8% 4.0% 3.2%
  Wages & Salaries 0.6% 0.6% 2.2% 2.4% 3.0% 2.7%
  Benefit Costs 1.3% 0.8% 4.8% 6.9% 6.4% 4.7%
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