Pay for civilian workers rose 3.1% in the 12 months ending in September, but inflation-adjusted wages and salaries for private industry workers fell 0.6%, the Bureau of Labor Statistics said in its Employment Cost Index release on Oct. 30.
The employment cost index measures what employers pay, not what workers keep, and the split inside it explains the gap. Benefits rose 3.9% against pay’s 3.1%, and health benefits in private industry rose 6.4%, about twice the pace of wages. Employers spent more on workers than the paycheck shows.
How Pay and Benefits Moved in 12 Months
Compensation costs for civilian workers increased 3.4% over the 12 months ending in September, the bureau said. Wages and salaries rose 3.1% and benefit costs rose 3.9%. The bureau’s release says “compensation costs for private industry workers increased 3.4 percent” over the same period.
Benefits grew 0.8 percentage points faster than wages over the year, a calculation from the bureau’s 3.9% and 3.1%. State and local government compensation rose 3.5%, with wages up 3.2% and benefits up 3.8%. In the quarter ending in September, civilian compensation rose 0.8%, wages 0.7% and benefits 0.9%, on a seasonally adjusted basis, and private industry compensation also rose 0.8%. The pattern held in both measures: benefit costs outran pay.
Why Inflation-Adjusted Wages Fell
Inflation-adjusted wages and salaries for private industry workers fell 0.6% over the year, and for state and local government workers they fell 0.5%, according to the bureau. A 3.1% raise that still leaves workers 0.6% behind implies the price measure the bureau used rose about 3.7%, a calculation from the two figures.
Health benefits explain part of the difference between what employers pay and what workers feel. Private industry health benefit costs rose 6.4% over the year ending in September, up from 6.0% in the year ending in June, the bureau said. Those costs raise the total an employer spends without raising a worker’s take-home pay.
The Union and Nonunion Pay Gap
Union workers in private industry saw compensation costs rise 4.3% over the year, while nonunion workers saw 3.3%. Wages rose 4.3% for union workers and 3.0% for nonunion workers, a gap of 1.3 percentage points, and benefits rose 4.3% for union workers and 3.9% for nonunion workers. Union workers’ 4.3% wage increase is above the roughly 3.7% price measure implied by the bureau’s inflation-adjusted figure, a calculation from the bureau’s numbers. Nonunion wages rose 3.0%, below it.
The best case for the 3.4% figure is that it counts benefits workers use. A person who needs medical care gets value from health coverage that never shows up in a paycheck, and the index counts it. The release shows the cost of that coverage grew faster than any other component it reports. Image: Federal government data from the Bureau of Labor Statistics (public domain); no photograph needed.
