Employment Cost Index
Encyclopedia
The Employment Cost Index (ECI) is a quarterly economic series detailing the changes in the costs of labor for businesses in the United States
economy. The ECI is prepared by the Bureau of Labor Statistics
(BLS), in the U.S. Department of Labor.
(CPI)], which is also prepared by the BLS. While the CPI is a measure of inflation
in consumer prices, the ECI is vital in that it gives an indication of whether employment cost changes are rising or falling, thus measuring inflation of wages, and employer-paid benefits. Former Chairman of the Federal Reserve Alan Greenspan
said of the ECI, "The Employment Cost Index is indispensable to understanding America's economy. It ensures the accuracy of the statistics on employers' compensation costs that we rely on for economic policy making and for successful business planning." In making decisions to adjust the prime interest rate, the Federal Reserve often cites shifts in the ECI as having an effect on their decision-making process. The index is also used in determining annual US government-employee salary adjustments through across-the-board General Schedule
adjustments.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
economy. The ECI is prepared by the Bureau of Labor Statistics
Bureau of Labor Statistics
The Bureau of Labor Statistics is a unit of the United States Department of Labor. It is the principal fact-finding agency for the U.S. government in the broad field of labor economics and statistics. The BLS is a governmental statistical agency that collects, processes, analyzes, and...
(BLS), in the U.S. Department of Labor.
Applications
It is a widely watched series by the financial sector, yet the ECI gets less press coverage than the more commonly quoted Consumer Price IndexConsumer price index
A consumer price index measures changes in the price level of consumer goods and services purchased by households. The CPI, in the United States is defined by the Bureau of Labor Statistics as "a measure of the average change over time in the prices paid by urban consumers for a market basket of...
(CPI)], which is also prepared by the BLS. While the CPI is a measure of inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
in consumer prices, the ECI is vital in that it gives an indication of whether employment cost changes are rising or falling, thus measuring inflation of wages, and employer-paid benefits. Former Chairman of the Federal Reserve Alan Greenspan
Alan Greenspan
Alan Greenspan is an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006. He currently works as a private advisor and provides consulting for firms through his company, Greenspan Associates LLC...
said of the ECI, "The Employment Cost Index is indispensable to understanding America's economy. It ensures the accuracy of the statistics on employers' compensation costs that we rely on for economic policy making and for successful business planning." In making decisions to adjust the prime interest rate, the Federal Reserve often cites shifts in the ECI as having an effect on their decision-making process. The index is also used in determining annual US government-employee salary adjustments through across-the-board General Schedule
General Schedule
The General Schedule is the predominant pay scale within the United States civil service. The GS includes the majority of white collar personnel positions...
adjustments.