Increases in wages and salaries accounted for 84 percent of the rise in compensation costs for civilian workers from December 2006 to March 2007, not seasonally adjusted. Among private industry workers, wages and salaries comprised 96 percent of the compensation gain. In state and local government, wages and salaries accounted for 40 percent of the change in compensation. In state and local government, benefit increases were due primarily to increases in defined benefits and health benefits.
Quarterly changes, seasonally adjusted
For private industry, compensation costs rose 0.6 percent, compared to 0.8 percent for the prior quarter, while state and local government increased 1.3 percent, compared to 1.0 percent for the quarter ended December 2006.
Wages and salaries of civilian workers increased 1.1 percent, up from 0.7 percent in the September to December 2006 quarter. For private industry workers, wages and salaries increased 1.1 percent, up from 0.8 percent. In state and local government, the increase was 0.9 percent, up from 0.8 percent in the prior quarter.
The change in benefit costs for civilian workers in the March quarter was 0.1 percent, down from an increase of 1.1 percent in the December quarter. For state and local government, benefits increased 2.1 percent, up from 1.4 percent in the previous quarter.
In private industry, benefit costs declined 0.3 percent compared to a 0.9 percent increase the previous quarter. This decline was due primarily to lower employer contributions to defined benefit retirement plans, which was seen across industries and occupational groups. Lower contributions may be due to several factors. For example, over the last couple of years, many employers have had to make additional payments to defined benefit funds to make up for lower than expected earnings from investments during the early part of the decade; if these payments are no longer required, current contributions would be lessened. Also, the recent improved performance of the stock market may have also been a factor, requiring employers to contribute less to retirement plans.
Over-the-year changes, not seasonally adjusted
Annual compensation costs for civilian workers increased 3.5 percent for the year ended March 2007, compared with a 2.8 percent increase for the year ended March 2006. In private industry, compensation costs rose 3.2 percent in the year ended March 2007. In March 2006, the increase was 2.6 percent. For state and local government, the yearly increase for March 2007 was 4.6 percent. In March 2006, it was 3.7 percent.
The components of compensation differed in their rate of change. While increases in wages and salaries for civilian workers accelerated, benefit costs increases decelerated due to a slowdown in private industry. Wages and salaries rose 3.6 percent for civilian workers for the year ended March 2007, greater than the 2.7 percent gain for March 2006. Benefit costs increased 3.1 percent for the March 2007 12-month period. In March 2006, the increase was 3.4 percent. Differences in 12-month percent changes for benefit costs between private industry and state and local government were significant. Private industry benefits increased 2.2 percent, down from 3.0 percent while state and local government increased 6.3 percent, up from 5.4 percent.
Nonfarm private industry
For the year ended March 2007, compensation costs increased 2.6 percent for goods-producing industries, compared to a 2.3 percent increase in March 2006. Compensation costs for manufacturing remained low, at 1.9 percent, for the year ended March 2007, the same for the year ended March 2006. Compensation costs for the construction industry rose 4.0 percent, compared to 3.4 percent for the previous year.
The over-the-year increase for March 2007 in compensation costs for service-providing industries was 3.3 percent. In March 2006, the increase was 2.7 percent. Among the supersector industries, compensation gains ranged from 2.3 percent in the trade, transportation, and utilities industries to 4.7 percent in the leisure and hospitality industry.
Among private industry occupational groups, over-the-year compensation gains ranged from 2.1 percent for production, transportation, and material moving to 3.7 percent for service occupations.
Compensation costs for union workers advanced 2.2 percent for the year ended March 2007, compared with a 2.7 percent increase for March 2006. For nonunion workers, the increase for the 12-month period ended March 2007 was 3.3 percent. In March 2006, the increase was 2.6 percent. Wages and salaries for union workers increased 2.5 percent for the 12-month period ended March 2007, while wages for nonunion workers rose 3.7 percent. Benefit costs for union workers rose 1.6 percent for the 12-month period while benefit costs for nonunion workers rose 2.4 percent.
State and local government
For the year ended March 2007, compensation costs for state and local government workers rose 4.6 percent compared to 3.7 percent a year ago. The 12-month gain in wages and salaries was 3.8 percent. Last year, the gain was 2.8 percent. For benefits, costs increased 6.3 percent compared to 5.4 percent for the previous year.
Over-the-year changes in wages and salaries, constant dollars, not seasonally adjusted
Employment cost changes are also provided that measure the change in wages and salaries after adjustment for the changes in the prices of consumer goods and services. These "constant dollar" estimates show that wages and salaries for civilian workers increased 0.7 percent for the 12-month period ended March 2007, compared to a decrease of 0.7 percent in March 2006. The private industry increase was 0.7 percent compared to a decrease of 0.9 percent in March 2006. State and local government registered a 1.0 percent increase, compared to a decrease of 0.6 percent for the previous year.
