Abstract
The United States Department of Labor's Bureau of Labor Statistics produces two measures of the cost of compensation, neither of which is easily understood-not even by compensation professionals. The Employment Cost Index (ECI) measures pure wage rate and compensation cost changes, while the second measure, Employer Costs for Employee Compensation (cost levels) provides information on compensation cost trends not available from the ECI and is generally a better measure of the changes affecting the welfare of workers.
Differences between the cost levels and ECI indices in year-to-year changes can be explained by differences in the way the two measures are constructed-that is, the set of weights used and the way the data are linked from quarter to quarter. This article summarizes data collection for these two measures and notes the major trends reflected. It also discusses the differences between the measures and how they can be used, both separately and side-by-side.
Get full access to this article
View all access options for this article.