What Is the Employment Cost Index?

What Is the Employment Cost Index?

For years, the Bureau of Labor statistics
has provided businesses with important pieces of information. One of these is the cost of employees to their
employers, and it’s called the Employment Cost Index, or ECI. The ECI is a Principal Federal Economic Indicator
Which simply put, means it’s widely-used data on how labor costs are changing and how
the economy is performing. Here’s why the ECI is important. It shows how the cost of compensating employees
changes over time. It does that by measuring the cost of wages,
as well as the cost of benefits. Many people think that when they get paid,
they’re just getting paid their wage – their paycheck. However, their paycheck is typically only
around two-thirds of their compensation. The remainder is the benefits the company
provides to them. Like what employers pay for health insurance,
for retirement plans, and their cost to provide paid time off. So you can see how the ECI measures the whole
cost for an employer to compensate their employees. This information is incredibly helpful when
employers are determining how much of a raise to give their employees and how to stay competitive
in the labor market. It’s also useful when employers are thinking
about how pay and benefits affect their bottom line, and when they are considering starting
new businesses or moving to new areas. To find out how the ECI can help you visit
us at bls.gov/eci

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