Employment Cost - Benefits QoQ

The Employment Cost - Benefits QoQ tracks the 3-month % change (QoQ means change versus the prior quarter) in employer benefit costs. It is the benefits leg of the Employment Cost Index (ECI, a fixed-basket gauge of labor costs), seasonally adjusted (cleaned for normal seasonal patterns). The Bureau of Labor Statistics (BLS, the federal labor statistics agency) builds it from the National Compensation Survey (NCS, its employer pay survey). It covers private industry plus state and local government, excluding federal, farm, military and self-employed workers.

Costs cover the pay period including day 12 of each reference period, with field updates each reference period. Each release arrives about one month after quarter end at 8:30 a.m. Eastern Time (ET) under embargo. Each release shows compensation, wage and benefit tables in nominal and inflation-adjusted dollars and revises 5 years of adjusted data.

Benefit costs move with these 5 categories, with the job mix held fixed.

• Paid leave: employer cost of vacation, holiday, sick and personal leave hours.
• Supplemental pay: overtime and premium pay, shift differentials (extra pay for late shifts) and nonproduction bonuses, counted as benefits not wages.
• Insurance: employer cost of life, health and short- and long-term disability coverage.
• Retirement and savings: employer cost of defined benefit (fixed payouts) and defined contribution (fund accounts) plans.
• Legally required benefits: mandated payroll costs for Social Security, Medicare, unemployment insurance and workers compensation.

As an illustration, civilian benefit costs rose 0.7% (index 162.4) while wages and total compensation each rose 0.9%. Over 12 months, benefits rose 3.8% versus 4.3% for wages, slowing from 4.9% before that. Private benefits rose 0.6% on the quarter (index 156.0) and 3.6% on the year, trailing state and local benefits at 0.9% and 4.6% (index 185.0). The lesson: the headline matched wages while benefits dragged, and the government and private split hid behind the average.

1. Missing data: Fill gaps by reweighting respondents in the same cell (industry-by-occupation group) and imputing benefit items from similar jobs. Then align weights to base-period employment in each cell.
2. Matched quotes: In each of 765 cells, average benefit costs use matched quotes only (the same job in the same establishment in both quarters). This strips out change from staff moves or sample turnover.
3. Fixed basket: Each cell has a base benefit bill (average benefit cost times fixed cell employment, held fixed until updated).
4. Cell link: Divide each cell average by its prior-quarter value, cumulate the ratios, then weight by base bills into an index scaled to 100. Index = period total benefit bill divided by base-period bill (base equals 100), times 100.
5. Quarterly change (link relative): The QoQ figure is new index divided by prior index minus 1, as %. Illustrative example with made-up numbers: base bills of 600000 and 400000 with past gains of 1.150 and 1.200 give 117.0.
6. Seasonal and inflation adjustment: Seasonal adjustment uses the X-13ARIMA-SEATS program (the Census seasonal tool), with 5-year revisions issued each year. Constant-dollar indexes divide by the CPI-U (a consumer-price gauge rebased to the base period) to show real change. Quarterly ratios of 1.008 and 1.005 lift the index to 117.8, so QoQ equals 117.8 divided by 117.0 minus 1, about 0.7%.