Relative importance: putting the Employment Cost Index (ECI) into perspective

The U.S. Bureau of Labor Statistics (BLS) publishes the Employment Cost Index (ECI), which measures changes in the cost of labor services, including wages, salaries, and benefits. The ECI uses a fixed-weight formulation that offers a “pure” price-of-labor interpretation of its estimates. However, it can be challenging to understand how changes for subgroups (for example, by industry group or occupation group) contribute to the aggregate trends and fluctuations revealed by headline ECI figures. This article discusses relative importance (RI) percentages, which describe how labor cost expenditures are distributed across job types in the ECI’s weight structure. These percentages offer insight into the factors driving changes in employer labor costs in the United States. The Employment Cost Index (ECI) is a Principal Federal Economic Indicator (PFEI) published by the U.S.