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Introducing 2002 weights for the Employment Cost Index
Stephanie L. Costo
The Employment Cost Index (ECI), an employment-cost-weighted Laspeyres index,1 is a measure of the change in the cost of employing a fixed set of labor inputs.2 Most Laspeyres indexes update their fixed weights periodically, and the ECI is no exception. In March 2006, the ECI introduced 2002 fixed employment weights to replace the 1990 weights used from 1995 through 2005.3 The new weights are based primarily on data from the BLS Occupational Employment Statistics (OES) survey.4
In addition to using new employment weights, the ECI changed in several other ways. One dramatic change was the conversion to the 2002 North American Industry Classification System (NAICS) and the 2000 Standard Occupational Classification (SOC) system in order to classify, respectively, industries and occupations. Other changes to the ECI in March 2006 included new imputation methods and the introduction of new series. These changes affected the historical continuity between the old and new indexes, as well as our ability to measure the impact of the new weights.5
This excerpt is from an article published in the April 2006 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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Footnotes
1
A Laspeyres index is an index that measures the change in some
aspect of a group of items over time, using weights based on values in a
specific base year. Because the weights are constant from year to year, a whole
run of index numbers can be compared with one another.
2 For a more detailed discussion of the Employment Cost Index and its uses, see John W. Ruser, "The Employment Cost Index: what is it?" Monthly Labor Review, September 2001, pp. 3�; and Handbook of Methods (Bureau of Labor Statistics, April 1997), on the Internet at www.bls.gov/opub/hom (last updated April 2003), Chapter 8.
3 Much of this article is based on two earlier ones discussing the shifts from the 1970-to-80 and 1980-to-90 employment weights. (See Albert E. Schwenk, "Introducing new weights for the Employment Cost Index," Monthly Labor Review, June 1985, pp. 22�, and "Introducing 1990 Weights for the Employment Cost Index," Compensation and Working Conditions, June 1995, pp. 1�)
4 For more information on the OES survey, visit www.bls.gov/oes/home.htm on the Internet.
5 All of these changes are discussed in more detail in other articles in this issue.
National Compensation Survey -- Compensation Cost Trends
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