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April 2006, Vol. 129, No. 4    

Changes affecting the Employment Cost Index: an overview

Richard E. Caroll

Several simultaneous changes occurred with the release of the March 2006
Employment Cost Index (ECI).¹ The Bureau of Labor Statistics changed the way the ECI classifies industries and occupations by switching from the Standard Industrial Classification (SIC) to the North American Industry Classification System (NAICS) and from the Occupational Classification System (OCS) developed for use in the 1990 decennial census to the Standard Occupational Classification (SOC) system. At the same time, the Bureau updated the base weights used to calculate the index in order to reflect both the new classification systems and changes in the industrial and occupational mix of the Nation’s workforce. BLS also changed the way the ECI accounts for missing data and computes seasonal adjustments.

One of the most visible changes was the rebasing of the index. The new base is December 2005. All published ECI series were affected and have the same common base. The previous rebasing of the index was 17 years ago, in June 1989.

The articles in this issue of Monthly Labor Review cover the broad spectrum of changes introduced in the March 2006 release of the ECI. Taken together, these articles present the most significant changes to the index in many years. These changes will help ensure that the index remains an accurate measure of compensation costs in a dynamic economy.

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Footnotes
1 The Employment Cost Index is part of the Bureau’s National Compensation Survey (NCS) program. The NCS is an integrated survey program that provides data on a variety of compensation measures in addition to the ECI. Wage data are published for the Nation, regions, and selected areas. Also part of the NCS survey program is the Employer Costs for Employee Compensation (ECEC) series, which shows employer costs per hour worked for wages and salaries and individual benefits. Another series is the benefits measures, which cover the incidence and detailed provisions of selected employee benefit plans. Additional information on the NCS program is available online at www.bls.gov/bls/wages.htm. ECI data are available at www.bls.gov/ect.

Related BLS programs

National Compensation Survey -- Compensation Cost Trends

Related Monthly Labor Review articles

The Employment Cost Index: what is it?—Sept. 2001.
Introducing new weights for the Employment Cost Index.—Jun. 1985.