Total compensation costs for civilian workers increased 0.9 percent from March to June 2007, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported. This was about the same as the 0.8 percent increase for the December 2006 to March 2007 period. Wages and salaries rose 0.8 percent from March to June 2007, compared with 1.1 percent for the previous quarter. Benefit costs increased 1.3 percent, up from 0.1 percent during the previous three-month period.

Wage and salary costs, which account for 70 percent of total civilian compensation costs, were responsible for 63 percent of the increase in compensation costs for this quarter. In state and local government, wages and salaries make up 67 percent of total compensation but were responsible for only 47 percent of the increase in compensation. Benefit increases in state and local government accounted for a larger portion of the change this quarter due primarily to increases in defined benefit retirement plans and health benefits.

Quarterly changes, seasonally adjusted

For private industry, compensation costs rose 0.9 percent from March to June 2007, compared to 0.6 percent for the prior quarter, while state and local government costs increased 1.1 percent, compared to 1.3 percent for the quarter ended March 2007.

Wages and salaries for private industry workers increased 0.8 percent, compared with 1.1 percent for the previous quarter. In state and local government, the increase was 0.8 percent, compared with 0.9 percent in the prior quarter.

Benefit costs for private industry rose sharply by 1.1 percent, compared to a decline of 0.3 percent the previous quarter. For state and local government, benefit costs increased 1.7 percent, compared to 2.1 percent in the previous quarter.

Over-the-year changes, not seasonally adjusted

Annual compensation costs for civilian workers increased 3.3 percent for the year ended June 2007, compared with a 3.0 percent increase for the year ended June 2006. In private industry, compensation costs rose 3.1 percent in the year ended June 2007. In June 2006, the increase was 2.8 percent. For state and local government, the yearly increase for June 2007 was 4.8 percent, higher than the June 2006 increase of 3.8 percent.

The components of compensation differed in their rate of change. While increases in wages and salaries for civilian workers accelerated, benefit cost increases stayed the same. Wages and salaries rose 3.4 percent for civilian workers for the year ended June 2007, greater than the 2.8 percent gain for June 2006. Despite remaining the same for civilian workers at 3.4 percent, benefit cost increases differed significantly between private industry and state and local government. Private industry benefits increased 2.6 percent, about the same as the 2.7 percent increase in June 2006, while state and local government benefits rose 6.6 percent, up from 5.5 percent.

Nonfarm private industry

For the year ended June 2007, compensation costs increased 2.6 percent for goods-producing industries, compared to a 2.3 percent increase in June 2006. Compensation cost increases for manufacturing remained low, at 1.9 percent for the year ended June 2007, the same for the year ended June 2006. Compensation costs for the construction industry rose 3.9 percent, compared to 3.5 percent for the previous year.

The over-the-year increase for June 2007 in compensation costs for service-providing industries was 3.3 percent. In June 2006, the increase was 2.9 percent. Among the major industries, compensation gains ranged from 2.8 percent in financial activities and the trade, transportation, and utilities industries to 4.6 percent in the leisure and
hospitality industry.

Among private industry occupational groups, over-the-year compensation gains ranged from 2.2 percent for production, transportation, and material moving to 3.6 percent for service occupations.

Compensation costs for union workers advanced 2.1 percent for the year ended June 2007. This was outpaced by nonunion workers, which increased 3.3 percent for the same 12-month period. Wages and salaries for union workers increased 2.5 percent for the 12-month period ended June 2007, less than that for nonunion workers, which rose 3.4 percent. Benefit costs for union workers rose 1.4 percent for the 12-month period, which were also less than benefit cost increases for nonunion workers, which rose 2.8 percent.

State and local government

For the year ended June 2007, wages and salaries for state and local government workers rose 3.8 percent compared to 3.1 percent a year ago. For benefits, costs increased 6.6 percent compared to 5.5 percent for the previous year. Hospitals had the largest increase in wages and salaries, rising to 5.0 percent from 2.8 percent a year earlier. Public administration wages and salaries increased 4.1 percent, up from
2.8 percent while education services wages and salaries increased 3.5 percent compared to 3.0 percent the year earlier.

Over-the-year changes in wages and salaries, constant dollars, not seasonally adjusted

After adjusting for the changes in the prices of consumer goods and services, wages and salaries for civilian workers increased 0.7 percent for the 12-month period ended June 2007, compared to a decrease of 1.3 percent for the 12-month period ending June 2006. The private industry increase was 0.7 percent compared to a decrease of 1.5 percent for the year ending June 2006. State and local government registered a 1.0 percent increase, compared to a decrease of 1.2 percent for the previous year.