📊 Summary of the Employment Cost Index Report

The Employment Cost Index (ECI) is a key measure of changes in the cost of labor in the United States, tracking wages, salaries, and benefits for civilian workers. The latest report covers data through September 2025 and provides insight into compensation trends across the public and private sectors.

Key Findings from the September 2025 ECI Report:

  • 🟢 Overall Compensation Growth: Compensation costs for civilian workers increased by 0.8% (seasonally adjusted) in the third quarter of 2025 (July–September). Over the past 12 months, compensation costs rose by 3.5% (not seasonally adjusted).
  • 💵 Wages and Salaries: Wages and salaries for civilian workers increased by 0.8% in the third quarter and 3.5% over the year.
  • 🏥 Benefits: Benefit costs also rose by 0.8% in the third quarter and 3.5% over the year.
  • 🏢 Private Industry: For private industry workers, compensation costs increased by 3.5% over the year. Wages and salaries rose by 3.6%, and benefits by 3.5%.
  • 🏛️ State and Local Government: Compensation costs for state and local government workers increased by 3.6% over the year. Wages and salaries were up 3.5%, and benefits rose 3.8%.
  • 📈 Inflation-Adjusted Growth: After adjusting for inflation, real (constant dollar) wages and salaries for private industry workers increased by 0.6% over the year. For state and local government workers, real wages and salaries increased by 0.5%.
  • ⚠️ Context: The release of this report was delayed due to a federal government shutdown, which also led to a lower survey response rate for September.

Additional Insights:

  1. 🕒 Wage Growth Trend: Wage growth has slowed from its peak in 2022 but remains above pre-pandemic (2019) levels. This suggests the labor market is still relatively strong, even as overall tightness has eased.
  2. 🏭 Industry Differences: Service occupations and public administration saw some of the highest annual compensation increases (over 4%). Education and health services also posted solid gains.
  3. 💡 Purchasing Power: With inflation moderating, most workers have seen modest increases in the purchasing power of their wages over the past year.

Summary

The latest ECI report shows that compensation costs in the U.S. continue to rise at a moderate pace. Wage and benefit growth has slowed from the highs seen in 2022 but remains solid, especially compared to pre-pandemic years. Importantly, real wage growth is positive, meaning workers’ earnings are outpacing inflation, albeit modestly. This trend supports continued consumer spending and economic stability, but the pace of wage growth is now more in line with a cooling labor market.

References: 

Employment Cost Index, US Bureau of Labor Statistics

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