Compensation costs up 1.1% Jun 2023 to Sep 2023 and up 4.3% over the year ending Sep 2023

[mahatmakanejeeves]

Source: U.S. Bureau of Labor Statistics

Compensation costs up 1.1% Jun 2023 to Sep 2023 and up 4.3% over the year ending Sep 2023

Economic News Release USDL-23-2314

Employment Cost Index Summary
Transmission of material in this release is embargoed until 8:30 a.m. (ET) Tuesday, October 31, 2023

Technical information: [phone] • [e-mail] • www.bls.gov/eci
Media contact: [phone] • [e-mail]

EMPLOYMENT COST INDEX – SEPTEMBER 2023

Compensation costs for civilian workers increased 1.1 percent, seasonally adjusted, for the 3-month period ending in September 2023, the U.S. Bureau of Labor Statistics reported today. Wages and salaries increased 1.2 percent and benefit costs increased 0.9 percent from June 2023. (See tables A, 1, 2, and 3.)

Compensation costs for civilian workers increased 4.3 percent for the 12-month period ending in September 2023 and increased 5.0 percent in September 2022. Wages and salaries increased 4.6 percent for the 12-month period ending in September 2023 and increased 5.1 percent for the 12-month period ending in September 2022. Benefit costs increased 4.1 percent over the year and increased 4.9 percent for the 12-month period ending in September 2022. (See tables A, 4, 8, and 12.)

Compensation costs for private industry workers increased 4.3 percent over the year. In September 2022, the increase was 5.2 percent. Wages and salaries increased 4.5 percent for the 12-month period ending in September 2023 and increased 5.2 percent in September 2022. The cost of benefits increased 3.9 percent for the 12-month period ending in September 2023 and increased 5.0 percent in September 2022. Inflation-adjusted (constant dollar) compensation costs for private industry increased 0.6 percent for the 12-month period ending in September 2023. Inflation-adjusted wages and salaries increased 0.8 percent for the 12 months ending September 2023. Inflation-adjusted benefit costs in the private sector increased 0.2 percent over that same period. (See tables A, 5, 9, and 12.)

Among private industry occupational groups, compensation cost increases for the 12-month period ending in September 2023 ranged from 3.9 percent for production, transportation, and material moving occupations to 4.5 percent for service occupations. Within industry supersectors, compensation cost increases ranged from 3.7 percent for manufacturing to 4.9 percent for both education and health services and for other services, except public administration. (See table 5.)

{snip}

Read more: https://www.bls.gov/news.release/eci.nr0.htm

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Compensation costs increased 1.1 percent for civilian workers, seasonally adjusted, from June 2023 to September 2023. Over the year, total compensation rose 4.3 percent, wages and salaries rose 4.6 percent, and benefit costs rose 4.1 percent.

[Lonestarblue]

1. In other words, workers' wages increased.

The headline is written as a negative “costs are up” for businesses versus the positive of wages went up for workers.

[progree]

2. GRAPH: ECI - Employment Cost Index: 2018-Q1 thru 2023-Q3

The Employment Cost Index as it is said to be a much better indicator of wages and compensation than the usual go-to metric of average hourly earnings that comes out on first Fridays (usually). The ECI is said to looks at trends in the same occupations, whereas average hourly earnings gets distorted by job losses or gains occurring in certain sectors more than others; last hired first fired stuff (in the pandemic that caused the averages to soar). Whatever. I'm saying this off the top of my head, there are better explanations out there.

http://www.bls.gov/news.release/eci.nr0.htm

Their table shows the 12 month INFLATION-ADJUSTED number is +0.6%. At a glance I don't see their inflation-adjusted 3 month number anywhere.

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From: https://www.piie.com/blogs/realtime-economic-issues-watch/us-wages-grew-fastest-pace-decades-2021-prices-grew-even-more

The BLS releases ECI statistics, showing compensation, wage, and benefit growth over the prior three months, four times a year. The ECI shows changes in wages and benefits in a manner that fixes the composition of the workforce. This is important, particularly when there are large changes in employment, because these data are not subject to the same distortions as the monthly average hourly earnings series, which can artificially be increased when low-wage workers lose their jobs and drop out of the sample (as happened in 2020) or artificially be decreased when these same workers are hired back (as happened in 2021) [1].

By fixing workforce composition, the ECI provides a more accurate picture of what is actually happening to wages.

[1] The Pandemic’s Effect on Measured Wage Growth, The WHite House, 4/19/21
https://www.whitehouse.gov/cea/written-materials/2021/04/19/the-pandemics-effect-on-measured-wage-growth/

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This particular one is INFLATION-ADJUSTED wage and salaries for private sector workers.

Note the build-up to the Q2.2020 peak. Then it plateaued through Q1.2021, President Biden's first quarter, then went down.
Finally it has been turning up since a local bottom in Q3.2022 for four quarters.

The last reading (103.2) is 3.1% below the peak, and 2.9% below the Q1.2021 value.

We're not quite at the 2019 Q4 pre-pandemic level of 104.4, but are getting there (We're down 1.1% from that level).

Source: https://fredblog.stlouisfed.org/2018/02/are-wages-increasing-or-decreasing

I tediously moused over point by point gathering the data from their graph (the numbers for each point pop up, so I didn't have to "read" the graph like back in middle school). Later: There's a "Download data" link at the lower left of the second graph at the Source that I had been aware of and had clicked and thought it was just downloading a PDF file of the page. But it turned out it was offering to download the Excel data for the graph which is of course what I wanted. So I did that and verified that the data was the same, to within 0.0 accuracy, as used for my graph, but I went ahead and replaced my old data with it (since it has a few more digits to the right of the decimal, and heck why not).

The source link just above also compares to inflation-adjusted average hourly earnings and also to inflation-adjusted median usual earnings of full-time workers.

This (the ECI) is reportedly the Fed's favorite wage and salary indicator as explained earlier in the post.

[mahatmakanejeeves]

3. Thanks. I read your post where you said you were waiting for this. NT