The Employment Cost Index (ECI) is a quarterly measure of the change in the price of labor, defined as compensation per employee hour worked. Closely watched by many economists, the ECI is an indicator of cost pressures within companies that could lead to price inflation for finished goods and services. The index measures changes in the cost of compensation not only for wages and salaries, but also for an extensive list of benefits. As a fixed-weight, or Laspeyres, index, the ECI controls for changes occurring over time in the industrial-occupational composition of employment.
Compensation costs for civilian workers increased 0.5 percent, seasonally adjusted, for the 3-month period ending in September 2020, the U.S. Bureau of Labor Statistics reported today. Wages and salaries increased 0.4 percent and benefit costs increased 0.6 percent from June 2020. (See chart 1 and tables A, 1, 2, and 3.)
Compensation costs for civilian workers increased 2.4 percent for the 12-month period ending in September 2020 and increased 2.8 percent in September 2019. Wages and salaries increased 2.5 percent over the year and increased 2.9 percent for the 12-month period ending in September 2019. Benefit costs increased 2.3 percent and also increased 2.3 percent for the 12-month period ending in September 2019. (See chart 2 and tables A, 4, 8, and 12.)
Below are three charts, updated on October 30, 2020 that depict various aspects of the ECI, which is seasonally adjusted (SA):
The second chart depicts the ECI on a “Percent Change from Year Ago” basis, with a value of 2.5%:
The third chart depicts the ECI on a “Percent Change” (from last quarter) basis, with a value of .5%:
I post various indicators and indices because I believe they should be carefully monitored. However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.
The Special Note summarizes my overall thoughts about our economic situation