US Employment Costs Rise 0.8% in Third Quarter, Matching Forecasts: Pay Up 3.4% Over the Year but Real Wages Still Down 0.6%
The U.S. Bureau of Labor Statistics (BLS) published its Employment Cost Index (ECI) for the third quarter on October 30. Compensation costs for civilian workers rose 0.8 percent, seasonally adjusted, in the three months ending in September 2026, a touch below the second quarter's 0.9 percent and in line with economists' forecasts. Wages and salaries rose 0.7 percent on the quarter, and benefit costs rose 0.9 percent.
Over the 12 months ending in September, compensation costs rose 3.4 percent, wages and salaries 3.1 percent, and benefit costs 3.9 percent. Adjusted for inflation, however, real wages and salaries fell 0.6 percent over the year and real compensation fell 0.4 percent, meaning nominal pay gains still lagged prices.
Private industry figures tracked the overall picture: compensation rose 0.8 percent on the quarter, with wages up 0.8 percent and benefits up 0.9 percent; over 12 months the increases were 3.4, 3.1 and 3.9 percent respectively. The fastest-rising benefit was health care, up 6.4 percent over the year for private industry workers, accelerating from 6.0 percent in June.
The union gap widened further. Compensation for union workers in private industry rose 4.3 percent over the year, with wages also up 4.3 percent, against 3.3 percent compensation growth and 3.0 percent wage growth for nonunion workers.
State and local government workers saw milder increases: compensation rose 0.6 percent on the quarter, wages 0.6 percent and benefits 0.7 percent; over 12 months compensation rose 3.5 percent, wages 3.2 percent and benefits 3.8 percent.
The ECI is one of the Federal Reserve's core gauges of wage-driven inflation pressure because it is not distorted by shifts in employment between occupations and industries. The third quarter's 0.8 percent quarterly pace annualizes to roughly 3.2 percent, near the edge of the range consistent with the 2 percent inflation target, but accelerating benefit costs — health benefits above all — remain the main pressure point on employers' cost side. The next release, covering December 2026, is scheduled for January 29, 2027, when the index will introduce updated employment weights and remove workers' compensation costs. The full release is available from the Bureau of Labor Statistics, Employment Cost Index, third quarter 2026.
Source: GSM · USA (original Chinese edition)
Photo: 图：美国劳工部 Frances Perkins 大楼外景（华盛顿）。ajay_suresh 摄，CC BY 2.0，经 Wikimedia Commons。 / The Frances Perkins Building, headquarters of the U.S. Department of Labor in Washington. Photo by ajay_suresh, CC BY 2.0, via Wikimedia Commons.
