The Employment Cost Index
The Employment Cost Index (ECI) measures U.S. firms’ total compensation costs (wages plus benefits). Similar to the way the Consumer Price Index (CPI) measures product prices, the ECI summarizes the cost of procuring a workforce with a fixed set of occupations. Because workers and firms generally try to maintain the real (inflation-adjusted) value of compensation, the ECI and CPI typically track each other closely. In periods when productivity growth is high, however, the ECI tends to exceed the CPI.
Suggested citation: “The Employment Cost Index,” Federal Reserve Bank of Cleveland, Economic Trends, no. 98-05, pp. 09, 05.01.1998.