The FRED^® Blog

The takeaway

Labor is used in production, and measuring the costs of that labor is important for business decisionmaking. There are several ways to measure these costs, and it’s important to know their differences.

Three forms of labor cost data

To understand the changes in the cost of labor, researchers commonly use one of three time series: hourly wages, the employment cost index, and unit labor cost.

Average hourly wage of workers is the first and most obvious, shown by the solid blue line in our FRED graph above. It’s the percent change from a year ago of average hourly earnings for all private employees. The line generally hovers around 2.5%, but it sharply increased in early 2020 at the time of the COVID-19 recession. In recent quarters, the line has been between 3.5% and 4%.

This series has two drawbacks. First, it doesn’t account for compositional changes that occur when the economy slows. Research from the St. Louis Fed showed that low-wage workers have been more likely to lose their jobs than high-wage workers; average hourly earnings drastically shifts up as the economy loses lower-wage workers. Second, average hourly earnings doesn’t consider other employment benefits such as healthcare, pensions, and bonuses.

The Employment Cost Index (ECI) doesn’t have these drawbacks. It’s the change in hourly labor cost to employers, shown by the solid green line in our FRED graph. According to the BLS, “The ECI uses a fixed ‘basket’ of labor to produce a pure cost change, free from the effects of workers moving between occupations and industries.” By including both wages and benefits in its calculation, the ECI gives us a better picture of total compensation as well. During the COVID-19 recession, the ECI trends downward, as it does not suffer from the compositional changes noted previously.

Unit labor cost (ULC) is our third measure, shown by the dashed orange line. It measures the ratio of hourly compensation to labor productivity, capturing how much it costs employers to produce a unit of output. Like the ECI, it includes both wages and benefits. It also accounts for productivity changes: When workers produce more output per hour, labor costs effectively decline. In the graph, we see ULC is more variable over time than the other two measures. In recent quarters, ULC growth has fallen below the other measures because of solid labor productivity growth.

How this graph was created: Search FRED for and select “Average Hourly Earnings of All Employees, Total Private.” Click “Edit Graph,” adjust units to “Percent Change from Year Ago,” and change frequency to “Quarterly.” Click “Add Line,” search for “Employment Cost Index: Total compensation,” and select the private industry series. Click “Add Line” again and search for “Unit Labor Costs for All Workers” in the nonfarm business sector. Change the start date of the graph to January 2002. Click “Format” to change line styles: Line 2 “solid,” Line 3 “dash,” and all line widths 2.

Suggested by Serdar Birinci and Gus Gerlach.

U.S. employment growth in the first quarter of 2026 accelerated slightly to 0.2% relative to one year ago. However, the national average masks significant variation in job growth across the 50 states: 21 of the 50 states had job growth, 28 had job losses, and 1 state (Delaware) had no change relative to one year ago. The median state had a slight job loss of 0.05%.

The FRED map above shows the percent change from a year ago in employment in each state during the first quarter. Nevada and North Carolina showed signs of resilient growth, with the top net job gains of 2.1% and 0.9%, respectively. In stark contrast, the District of Columbia and Maryland had the largest net job loss at 5.2% and 1.7%, respectively.

Metro-level job growth had similar trends as we see in the state-level data, with the median MSA also experiencing no change in employment in the first quarter of 2026 relative to one year ago. The Sierra Vista-Douglas MSA in Arizona had the largest net job loss at -4.6%. In contrast, the Merced MSA in California had the strongest job growth at 3.3%. These numbers tend to vary greatly from quarter to quarter, with even greater sampling errors than the errors at the state and national levels. So, be careful not to read too much into these data.

How these maps were created: Search FRED for “total nonfarm employees in Missouri” (or any other state). Click “View Map” and then “Edit Map.” Change the units to “Percent Change from Year Ago” and the frequency to quarterly with aggregation method “End of Period.” Under “Format,” select “User Defined Method” for how to group the data: Switch the number of color groups to 3 and change the colors to red for states that shed jobs (or a value less than or equal to -0.4), light yellow for states with modest job growth (or less than 0.4), and dark green for states with strong growth (or a value large enough to incorporate the rest of the states). For the second map, repeat the process with an MSA—St. Louis, for example.

Suggested by Charles Gascon and Rehann Silvanus.

The takeaway

The market value of US Treasury securities is considered a benchmark for setting other borrowing costs, such as mortgages. It’s considered a benchmark because the US government has not failed to make good on its Treasury debt obligations. So it serves as a baseline for determining the value of other types of securities with higher default risks.

Defining the value of Treasury securities

Because of its importance to financial markets, the “market yield on US Treasury securities at 10-year constant maturity, quoted on an investment basis” is one of the most popular series in FRED. Let’s break down what these data measure, piece by piece.

• US Treasury securities are debt obligations issued by the US government. In this case, it is a Treasury note that pays a fixed rate of interest every six months for 10 years. Because it’s backed by the US government, it’s considered a very safe asset to own.
• Market yield is the return you’d earn if you bought the security today at its current market price and held it until you receive its last interest payment. Although the paid interest rate is constant, economic conditions change over time and the daily price of the security changes, too.
• The label “10-year constant maturity” is a way of reporting what a 10-year note, if issued today, would yield. It is calculated using the yields of other actively traded notes.
• “Quoted on an investment basis” means that the yield is reported as an annualized percentage return. That makes it easier to compare with other investments, such as corporate bonds or certificates of deposit.

Recent behavior of the 10-year Treasury yield

Our FRED graph plots data between May 2021 and May 2026. During that time, the lowest yield value was 1.19%, in early August 2021. Since then, yields have risen as high as 4.98% in October 2023, partly reflecting the more-restrictive monetary policy stance adopted by the Federal Reserve and a generally higher interest rate environment. Check out this recent FEDs note by Daniel Covitz and Eric Engstrom to learn more about the factors that shape long-term Treasury yields.

Want to explore more financial data? Check the Board of Governors of the Federal Reserve System H.15 Selected Interest Rates release in FRED.

How this graph was created: Search FRED for and select “Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis.”
Suggested by Diego Mendez-Carbajo.