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Economy in Brief

U.S. Employment Costs Moderated in Q2
by Carol Stone, CBE  July 30, 2021

• Overall compensation rose 0.7% in Q2; in the private sector, it was up 0.8%.

• Wage and salaries increased 0.9% in Q2, while benefits slowed to 0.4%.

The employment cost index (ECI) for civilian workers increased 0.7% for the three months ended in June 2021 and 2.9% for the year ending in June. That followed a 0.9% advance in the March quarter, which was up 2.6% on the year. The Q2 increase was less than the Action Economics Forecast Survey consensus of 0.9%.

Wage and salaries rose 0.9% in Q2 (3.2% y/y), slightly less than the 1% in Q1. Benefits were up 0.4% (2.2% y/y), following 0.6% in Q1.

Private sector compensation rose 0.8% during Q2 and was up 3.1% from Q2 2020. Wages and salaries advanced 1.0% in the quarter and were up 3.5% from a year ago; in Q1, they had been up 1.1%. Benefits rose just 0.3% in Q2, which was just 2.0% above the year earlier.

Compensation in goods-producing industries grew 1.1% in Q2 (2.8% y/y), which was the strongest quarterly increase since Q1 2004 (+1.8%). Compensation in service-providing industries rose 0.7% (+2.9% y/y) in Q2, down somewhat from 0.9% in Q1.

Total compensation for non-incentive paid occupations increased 0.8% (not seasonally adjusted), the same as in Q1; year-on-year this measure was up 2.8% in Q2, following 2.5% in Q1.

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

Civilian Workers (% chg) Q2'21 Q1'21 Q4'20 Y/Y 2020 2019 2018
Compensation 0.7 0.9 0.7 2.9 2.6 2.7 2.8
 Wages & Salaries 0.9 1.0 0.8 3.2 2.8 2.9 2.9
 Benefit Costs 0.4 0.6 0.6 2.2 2.2 2.4 2.7
Private Industry Workers (% chg)    
Compensation 0.8 1.0 0.8 3.1 2.6 2.7 2.9
 Wages & Salaries 1.0 1.1 0.8 3.5 2.9 3.0 3.0
 Benefit Costs 0.3 0.6 0.6 2.0 1.9 2.0 2.6
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