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The evolution of employment costs in the private and public sectors


A couple of months ago, FRED added Bureau of Labor Statistics data on the costs of employment. You can dissect these data in many ways—for example, by sector, type of compensation, bargaining status, occupational group, or region. Here we do a high-level comparison of compensation between the public and private sectors. These data are available as indexes, which means they reveal something about their relative evolutions over time, but nothing about their relative levels at any moment in time. The graph above tells us that wages and salaries have increased faster in the private sector. But, as both series are normalized to 100 in 2007, we can’t say whether wages had been better in the public sector and the private sector is just now catching up.

Of course, wages and salaries are only part of compensation. There are also various benefits. Some of these are difficult to quantify (pension benefits, for example, are realized only at some point in the future), but the BLS makes the effort to quantify all this. The private/public sector comparison of benefits in the graph below shows more growth in the public sector. Again, this graph says nothing about the levels. However, the two graphs in combination do tell us something: Relatively speaking, compensation in the public sector is increasingly in the form of benefits, while compensation in the private sector is increasingly in the form of wages and salaries.

How this graph was created: Search among the release tables for the Employment Cost Index and explore the data. The two graphs were created by selecting the appropriate series from Tables 1 and 3.

Suggested by Christian Zimmermann

View on FRED, series used in this post: ECIBEN, ECIGVTBEN, ECIGVTWAG, ECIWAG


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