Benefit costs increased 1.4 percent and continued to substantially outpace the 0.6 percent gain in wages and salaries for civilian workers in June. The Employment Cost Index (ECI), a component of the National Compensation Survey, measures quarterly changes in compensation costs, which include wages, salaries, and employer costs for employee benefits, for nonfarm private and state and local government workers.

Employer costs for wages and salaries, accounting for over 70 percent of compensation costs, rose 2.7 percent for the year ending June 2003. Year ending wage and salary increases from June 1983 through June 2003 have ranged from 2.8 in June 1993 to 5.7 percent in June 1983. Benefit costs rose 6.3 percent for the year ending June 2003. Much of the increase in benefit costs again stemmed from the continuing rise in the costs for health insurance. Year-ending benefit increases from June 1993 through June 2003 have ranged from 1.8 percent in June 1996 to 5.5 percent in June 1993.

Compensation costs for private sector workers rose 0.8 from March to June, after jumping 1.4 percent in the prior quarter. Gains in private sector compensation costs were led by large increases in nondurable manufacturing; transportation and public utilities; and construction. Private sector compensation gains were dampened by retail trade and wholesale trade.

In the private sector, benefit costs rose 1.3 percent for the June quarter, slowing significantly from the 2.4 percent gain of the previous quarter. By contrast, the increase for state and local governments was 1.3 percent in the June quarter, following a 1.5 percent increase in March 2003.

Private sector wage gains were led by construction and nondurable manufacturing industries. Wage and salaries in the private sector were slowed by wholesale trade and retail trade, and service workers.