Employment costs for 4Q comes in at 0.9%
  • Prior quarter 1.1%
  • employment cost index for Q4 0.9% vs 1.0% expected. Lowest since the 2nd quarter of 2021.
  • Wages Q4 0.9% vs 1.2% last quarter
  • Benefits Q4 0.7% vs 0.9% last quarter

Down across the board is good news for inflation. However, pre-covid the data was mostly below the 1.0% level. So although lower, it is still near the highs of pre-Covid levels.NOTE: Private industry data was up 0.7%. That is within the pre-covid levels (see chart below)


Summary of Compensation Costs Trends

Overall Civilian Workers Compensation (3-month and 12-month Period Ending December 2023)

  • 3-month Period: Compensation costs increased by 0.9%, with wages and salaries up 0.9% and benefit costs up 0.7% from September 2023.
  • 12-month Period: Compensation costs rose 4.2% (down from 5.1% in December 2022). Wages and salaries increased by 4.3% (down from 5.1%), and benefit costs went up by 3.8% (down from 4.9%). Trend is lower

Private Industry Workers Compensation (12-month Period Ending December 2023)

  • Overall Increase: 4.1% (down from 5.1% in December 2022). Wages and salaries up 4.3% (consistent with December 2022), benefit costs up 3.6% (down from 4.8%). Trend is lower in private sector.
  • Inflation-Adjusted Compensation: Overall compensation up 0.7%, wages and salaries up 0.9%, benefit costs up 0.2%.

Union vs. Non-Union Workers Compensation (12-month Period Ending December 2023)

  • Union Workers: Compensation costs increased by 4.5%, with wages and salaries up 5.4% and benefit costs up 3.4%.
  • Non-Union Workers: Compensation costs up 4.0%, wages and salaries up 4.2%, and benefit costs up 3.6%.

State and Local Government Workers Compensation (12-month Period Ending December 2023)

  • Compensation costs increased by 4.6% (down from 4.8% in December 2022), with wages and salaries up 4.7% (steady from the previous year) and benefit costs also up 4.6% (down from 5.0%).

This summary outlines key trends in compensation costs across different sectors, highlighting overall growth rates, comparisons with previous periods, and distinctions between union and non-union workers, as well as between private industry and government sectors.

Nick Timiraos from the WSJ and Fed watcher, points out that the ECI is seen by the Fed as the highest quality measure of compensation growth and the data showed the labor market continued to cool. He points out that the wage data from the private sector showed a sharp fall to 0.7%. That rise is within the pre-Covid levels (see red lines on the chart from the tweet below).

ECI for private industry comes in lower at 0.7%