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Economy in Brief

U.S. Employment Cost Index Fell To Lowest On Record
by Tom Moeller January 29, 2010

unemployment dragged the y/y change in the Employment Cost Index down to its lowest on record. (The series dates back to 1980). Overall the employment cost index for private industry workers rose 1.2% for the year which ended with a 0.4% rise during 4Q following upwardly revised gains during the prior two quarters. The latest rise about matched Consensus expectations.

Weaker growth in both in wages and benefits pulled the overall index lower. Wages grew just 1.5% last year which was exactly half the 2008 gain. By the end of 2009, however, growth did improve modestly as the recession ended. For the year management, professional & related workers saw their wages rise just 1.1% after a after a 3.2% gain during 2008. Sales & office worker wage gains also more-than-halved to 1.0%.

Total benefit costs in private sector increased just 1.2% for the year, a record low. In the management, professional & related businesses benefits grew just 0.7% but for production, transportation & materials handling industries growth held up and stable at 2.2% for the year. The cost of health benefits was an improved 4.4% in the latest 12 months.

The employment cost index figures are available in Haver's USECON database.

Myths about Budget Deficits from the American Enterprise Institute can be found here. 

ECI - Private Industry Workers (%) 4Q '09 3Q '09 2Q '09 4Q Y/Y 2009 2008 2007
Compensation 0.4 0.5 0.2 1.2 1.5 2.8 3.1
  Wages & Salaries 0.5 0.5 0.2 1.3 1.5 3.0 3.4
  Benefit Costs 0.4 0.3 0.2 1.0 1.2 2.6 2.4
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