Firms’ costs of employing workers include wages and salaries as well as benefits. Total compensation costs, as measured by the Employment Cost Index (ECI), continue to grow only moderately: In 2005:IIQ, total compensation costs for workers in private industry rose 3.1% on a year-over-year basis, less than their average growth over the past two decades and only slightly above CPI inflation. Although total compensation has kept pace with inflation, real wages have been declining because inflation has outpaced wage growth over the past year: In 2005:IIQ, wages and salaries grew only 2.4% but the inflation rate rose 2.9%.
Suggested citation: “Employment Costs,” Federal Reserve Bank of Cleveland, Economic Trends, no. 05-08, pp. 13, 08.01.2005.