By Brai Odion-Esene and Ian McKendry

WASHINGTON (MNI) – Compensation costs for civilian workers —
excluding federal workers — increased slightly by 0.6% seasonally
adjusted for the first quarter, with state and local governments lagging
behind private industry, the Bureau of Labor Statistics reported Friday.

For the 12-month period ending March 2011, the Employment Cost
Index rose by 2.0%, the same rate of growth seen in the fourth quarter
of last year.

Overall wages and salaries rose 0.4% in the latest quarter, the
same pace reported in the fourth quarter. The 1.6% increase over the
year matched the +1.6% reported for the fourth quarter.

Overall benefits costs rose to 1.1% in the first quarter, forging
ahead of the +0.5% pace set in the previous quarter, and a 3.0% increase
in a year. That annual gain was above the 2.9% increase in a year
through the third quarter.

Expectations in a Market News International survey of economists
was for the Employment Cost Index to rise by 0.5% in Q1, with responses
ranging from +0.4% to +0.6%.

The fourth quarter’s increase of 0.4% remained unchanged because
the ECI report’s numbers are never revised due to there being no more
accurate subsequent data for this series.

The report also does not cover federal workers, due to a decision
made when the series was inaugurated by BLS to use existing budget money
to perfect the non-federal portion of the survey. And the report
measures only compensation per hour, so any cutback in hours overall —
something that characterizes the post-crisis jobs market — is not
reflected.

The first quarter results for private industry alone showed total
compensation up 0.5% vs. +0.5% in the fourth quarter and a 2.0% increase
from the previous year. Private industry benefits rose 1.2%, exceeding
by a significant margin the 0.5% rise in Q4, with a 3.0% increase over
the year.

Within that, the BLS noted the pace of growth in employer costs for
health benefits moderated in Q1, rising 3.4% for the year vs. +4.5% in
Q1 2010.

Given the fiscal struggles of state and local governments, and the
rise in the number of measures introduced to cut spending, it was no
surprise that the increase in compensation for state and local
government workers was the same for the first quarter compared to the
previous, up 0.5%.

Over a year, state and local government compensation was up 1.8%,
the same rate of increase seen in Q4 and Q3. Wages and salaries rose
+0.4% in Q1 and +1.2 y/y. That annual change was the lowest increase on
record, matching the increases reported for the previous two quarters.

The ECI is based on a sample of about 13,000 private establishments
and about 1,800 state and local government offices coverage a range of
geographic areas.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: MAUDS$,M$U$$$]