ICS Commentary - U.S. Employment Cost Index, Q3 2011
With inflation at 3.5 percent, employment costs for state and local governments are shrinking in real terms.
“While the debate about government spending may be focused on the deficit-reduction actions (or lack thereof) of the Super Committee in Washington,” says Linda Barrington, Managing Director of the Institute for Compensation Studies in Cornell’s ILR School, “we shouldn’t forget that state and local governments are shedding employees and compressing pay and benefit increases to levels not recorded before.”
For state and local government employees, salary and wage costs rose only 1.0 percent over the 12-month period ending September 2011, according to the Employment Cost Index released Friday October 28, 2011 by the U.S. Bureau of Labor Statistics. The 1.0 percent increase over the 12-month period ending September 2011 is the lowest year-on-year increase for public sector wage costs over the series (begun in 1982), and the first dip in percent change since the third quarter of 2010. Even year-on-year increases in benefit costs dropped for the second quarter in a row to 2.5 percent, the lowest 12-month cost index for benefits since the first quarter of 1995.
The 12-month Employment Cost Index for all civilian employment (government and private sector) decelerated for the first time since its trough in Q4 2009. Employer spending on wages, salaries, and benefits across the civilian U.S. labor force is 2.0 percent higher than a year ago. This is 0.2 percentage points lower than last quarter’s 12-month increase.