Global| Jan 29 2021Employment Cost Growth Ticks Up in Q4
Summary
• Overall compensation increased 0.7% in Q4; year-on-year growth accelerates slightly to 2.5%. • Wages and salaries up 0.9% (2.6% y/y) while benefits gain 0.6% (2.3% y/y). The employment cost index (ECI) for civilian workers rose 0.7% [...]
• Overall compensation increased 0.7% in Q4; year-on-year growth accelerates slightly to 2.5%.
• Wages and salaries up 0.9% (2.6% y/y) while benefits gain 0.6% (2.3% y/y).
The employment cost index (ECI) for civilian workers rose 0.7% in the fourth quarter of 2020, faster than the 0.5% consensus from the Action Economics Forecast Survey. Year-on-year growth of total compensation ticked up to 2.5% in Q4 from 2.4% in Q3. The third quarter year-on-year growth was the slowest in three years. Compensation increased 2.8% y/y in 2020Q1; the previous cycle high was 2.9% in 2018Q4.
Wage and salaries increased 0.9% in 2020Q4 (2.6% y/y), a slight acceleration from the 2.5% y/y gain in Q3. Benefits grew 0.6% (2.3% y/y), the same y/y growth as Q3. Benefits increased 2.1% y/y in Q1, the slowest growth since the end of 2016.
Private sector compensation, wages and salaries, as well as benefits showed a similar pattern to all civilian workers (see table and graphs below). Compensation in goods- and service-producing industries grew 0.7% and 0.8% respectively in Q4 (2.4% and 2.6% y/y), a pickup from the year-on-year growth experienced in Q3. Overall pay for non-incentive paid occupations increased 0.6% (not seasonally adjusted) and 2.5% y/y, slightly higher than the 2.4% y/y in Q3.
The employment cost index, which measures the change in the cost of labor, free from the influence of employment shifts among occupations and industries, is available in Haver's USECON database. Consensus estimates from the Action Economics survey are in Haver's AS1REPNA database.
Gerald D. Cohen
AuthorMore in Author Profile »Gerald Cohen provides strategic vision and leadership of the translational economic research and policy initiatives at the Kenan Institute of Private Enterprise.
He has worked in both the public and private sectors focusing on the intersection between financial markets and economic fundamentals. He was a Senior Economist at Haver Analytics from January 2019 to February 2021. During the Obama Administration Gerald was Deputy Assistant Secretary for Macroeconomic Analysis at the U.S. Department of Treasury where he helped formulate and evaluate the impact of policy proposals on the U.S. economy. Prior to Treasury, he co-managed a global macro fund at Ziff Brothers Investments.
Gerald holds a bachelor’s of science from the Massachusetts Institute of Technology and a Ph.D. in Economics from Harvard University and is a contributing author to 30-Second Money as well as a co-author of Political Cycles and the Macroeconomy.
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