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Economy in Brief

U.S. Employment Cost Growth Ticks Up in Q1
by Kathleen Stephansen  April 30, 2021

• Overall Compensation rose 0.9% in Q1; year-on-year growth accelerate slightly to 2.6%.

• Wage and salaries increased 1% in Q1 (2.7% y/y), while benefits grew 0.6% (2.5% y/y).

The employment cost index (ECI) for civilian workers rose 0.9% in the first quarter of 2021, following a 0.7% rise in the fourth quarter of last year. The quarterly rise was also faster than the 0.7% consensus from Action Economics Forecast Survey. Year-on-year, total compensation rose 2.6%, slightly better than the 2.5% advance in the fourth quarter and matching the full-year 2020 advance.

Wage and salaries increased 1% in Q1 (2.7% y/y), up from 0.8% in Q4 2020 (2.6% y/y), while benefits grew 0.6%, matching the advances posting in Q3 and Q4 of 2020. The 2.5% year-on-year rise in Q1 was an acceleration from the 2.3% rise in the prior two quarters.

Private sector compensation rose 1% over the quarter (2.8% y/y), wages and salaries rose 1.1% (3% y/y), while private sector benefit rose 0.6% (2.5% y/y).

Compensation in goods- and service-producing industries grew 0.7% and 0.9%, respectively in Q1 (2.4% and 2.7% y/y), a slight pickup from the year-on-year growth experienced in Q4. Overall compensation for non-incentive paid occupations increased 0.8% (not seasonally adjusted) and 2.5% y/y. The y/y rise was the same as in Q4.

The employment cost index, which measures the change in the cost of labor, free from the influence of employment shifts among occupations and industries, is available in Haver's USECON database. Consensus estimates from the Action Economics survey are in Haver's AS1REPNA database.

Civilian Workers (% chg) Q1'21 Q4'20 Q3'20 Y/Y 2020 2019 2018
Compensation 0.9 0.7 0.5 2.6 2.6 2.7 2.8
 Wages & Salaries 1.0 0.8 0.5 2.7 2.8 2.9 2.9
 Benefit Costs 0.6 0.6 0.6 2.5 2.2 2.4 2.7
Private Industry Workers (% chg)    
Compensation 1.0 0.8 0.6 2.8 2.6 2.7 2.9
 Wages & Salaries 1.1 0.8 0.6 3.0 2.9 3.0 3.0
 Benefit Costs 0.6 0.6 0.6 2.5 1.9 2.0 2.6
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