US Labor Cost Growth Eases to 0.8% in Third Quarter

Growth in the cost of employing American workers eased in the third quarter. The Employment Cost Index rose 0.8 percent in the three months from June through September, the Bureau of Labor Statistics reported on Friday, smaller than the 0.9 percent increase in the second quarter and in line with economists’ expectations, according to Reuters. From a year earlier, total compensation was up 3.4 percent, the same 12-month pace as through June.

The Employment Cost Index measures what employers pay for an hour of labor, combining wages and salaries with benefit costs. Unlike average hourly earnings, it adjusts for shifts in the mix of occupations and industries, which is why the Federal Reserve watches it as a gauge of wage-driven inflation pressure.

Benefits rose a little faster than wages in the quarter. Wages and salaries rose 0.7 percent, down from 0.9 percent in the second quarter, while benefit costs rose 0.9 percent, down from 1.0 percent. Over 12 months, wages were up 3.1 percent and benefit costs 3.9 percent.

Private industry compensation rose 0.8 percent in the quarter and 3.4 percent from a year earlier. Compensation for state and local government workers rose 0.6 percent in the quarter and 3.5 percent over the year.