ICS Commentary - U.S. Employment Cost Index, Q2 2014
12-month increase in Civilian workers' compensation costs continues steady at 2.0 percent
The U.S. Bureau of Labor Statistics' 12-month Employment Cost Index (ECI) increased slightly in the second quarter of 2014, rising to 2.0 percent. Released July 31st 2014, the ECI for all civilian workers returned to its Q4-2013 level of 2.0 percent, continuing its four-year steady pace (Chart 1).
"We are still not seeing any significant inflation acceleration in the costs that employers pay overall for U.S. employee compensation," says Linda Barrington, Executive Director of Cornell's Institute for Compensation Studies in the ILR School. "This quarter's 12-month increase in total compensation costs of two percent is consistent with the pattern we've seen for the past 18-quarters," she added.
Acceleration in the growth of both employee benefit costs and salary and wage costs and over the previous 12 months contributed to the 0.2 percentage point increase in the 12-month total compensation ECI. (On average, employer-provided benefits compose roughly 30 percent of the total compensation costs of employees, with wages and salaries composing the remaining 70 percent.) Of note is that the quarterly year-over-year inflation rate for employee benefit cost (2.5 percent) is the largest reported in more than two years. (See Table 1)
The Employment Cost Index (ECI), released July 31, 2014 by the U.S. Bureau of Labor Statistics, reflects trends in the costs to employers for the wages and benefits they provide to their workers. The ECI is one of the labor market indicators used by the Federal Reserve Board to monitor the effects of fiscal and monetary policies and is released quarterly.