Total compensation costs for civilian workers increased 0.3 percent from December 2008 to March 2009, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This follows a 0.6 percent increase for the September to December 2008 period. In March 2009, wages and salaries also rose 0.3 percent, while benefits rose 0.5 percent.The Employment Cost Index (ECI), a product of the National Compensation Survey, measures changes in compensation costs for civilian workers (nonfarm private industry and state and local government workers).The employment cost index is rather new, dating back to 2001. However, spanning 2001-Q12009, which includes the Greenspan era of record productivity growth, the ECI continues to hit new lows, slowing to 2.1% over the year. I expect that we will see further weakness in this measure of compensation, as the job loss mounts further and the economic slack builds.
Wages are not yet falling, the Q1 ECI grew at a 0.3% pace, but they growth in wages is slowing quickly. This fits the "deflation is a bigger threat" story (see my post yesterday for a similar take on wages and inflation).