Which index measures the cost of labor for U.S. employers, including wages and benefits?

The Employment Cost Index measures changes in U.S. employers’ labor costs, including wages, salaries, and employee benefits.

The Bureau of Labor Statistics produces the ECI as part of the National Compensation Survey. Unlike a simple wage measure, it tracks total compensation costs and separates wage-and-salary changes from benefit-cost changes. Benefits can include paid leave, insurance, retirement plans, and legally required programs, so the index captures more of an employer’s compensation burden than pay alone.

The ECI is released quarterly and is closely watched by economists, businesses, and the Federal Reserve. Persistent increases can signal stronger compensation pressure and may contribute to inflation in labor-intensive industries. The series is designed to reduce the distortion caused by changes in the mix of occupations or industries being observed.

The ECI is often confused with the Consumer Price Index. CPI measures prices paid by households for goods and services; ECI measures changes in compensation costs paid by employers. The Producer Price Index measures selling prices received by producers, making it a different kind of indicator.