Employer Costs Grew Slowly in Third Quarter

Staff -- Graphic Arts Online, 12/1/2000

The government's third-quarter Employment Cost Index (ECI) report showed an increase of 0.9% from the previous quarter-a seemingly miniscule figure that could have larger significance for business owners, as it represents the slowest rate of increase in the overall ECI since Q3 1999. Benefit costs moved up at a faster rate than wage/salary rates for the fourth consecutive quarter. Further, wages/salaries grew at their slowest rate since Q1 1999 during the July-through-September 2000 period, according to government and private sector analysts.

The ECI comprises two components of employer costs: wages/salaries and benefits. Wages/salaries throughout the U.S. economy's private sector rose by 0.8% from July through September. During the same three-month period, benefit costs to employers increased by 1.0%.

Between 9/99 and 9/00, the ECI increased by a cumulative 4.3%. This growth was at an annual rate of wage/benefit inflation well above that recorded for any comparable period during the past eight years. Benefit costs for U.S. companies have increased 5.3% during the past year, while during the previous five years the benefits component of the ECI rose at an annual rate of just 2.2%. Inflation in straight wages/salaries has accelerated less dramatically-up 4.0% during the past 12 months, versus 3.4% on average for the previous four years. Nevertheless, that modest increase represents a significant additional cost burden for American businesses.