Title of the survey
Hourly Compensation Costs for Production Workers in Manufacturing (as part of the International comparisons of Hourly Compensation Costs in Manufacturing)
Organization responsible
Department of Labor, Bureau of Labor Statistics (BLS)
Periodicity of the survey
Annual.
Objectives of the survey
To assess international differences in employer labour costs and to evaluate the competitive position of the United States in international trade. Measures of pay for time worked, other direct pay and social insurance are also prepared for manufacturing as a whole, to provide a comparable basis for analysing the main components of total compensation.
Main labour topics covered by the survey
Compensation for production workers and its main components per hour actually worked.
Reference period
The calendar year. All data are annual averages.
Coverage of the survey
Geographical
The whole country.
Industrial
Manufacturing.
Establishments
All types and sizes of establishments which have paid employees.
Persons
Production workers.
Occupations
Not relevant.
Concepts and definitions
Employment
Production workers include working supervisors and all non-supervisory workers (including group leaders and trainees) engaged in fabricating, processing, assembling, inspecting, receiving, storing, handling, packing, warehousing, shipping, trucking, hauling, maintenance, repair, janitorial, guard services, auxiliary production for plant's own use (e.g. power plant) and other services closely associated with the above production operations.
Compensation of employees
Hourly compensation is defined as:
o all payments made directly to the worker (defined as hourly direct pay): pay for time worked (basic time and piece rates plus overtime premiums, shift differentials, other premiums and bonuses paid regularly each pay period and cost-of-living adjustments), pay for time not worked (vacations, holidays and other leave, except sick leave), seasonal or irregular bonuses and other special payments, and selected social allowances - before payroll deductions of any kind; and
o employer expenditures for legally required insurance programmes and contractual and private benefit plans
o taxes on payrolls or employment (or reductions to reflect subsidies)
Hourly direct pay and hourly compensation are measured on the basis of hours worked. Pay for time worked is a more restrictive concept which includes only basic time and piece rates, overtime premiums, shift differentials, other premiums and bonuses paid regularly each pay period, and cost-of-living adjustments (COLA). Pay for time worked is measured on an hours worked basis.
International recommendations
The definition of hourly compensation costs corresponds to that of compensation of employees contained in the System of National Accounts (SNA), with this exception: pay in kind, which is not a typical benefit in manufacturing in the United States, is not covered. It does not include all items of labour cost. The cost of recruitment and employee training, and the cost of plant facilities and services, such as cafeterias and medical clinics, are not included because data are not available. However, the items omitted would represent a very small proportion of total labour cost.
Classifications
Components of labour cost / compensation of employees
Total hourly compensation includes:
o hourly direct pay, of which
o social insurance expenditure
o labour related taxes and subsidies.
Industrial
Hourly compensation costs are available at the three-digit and some four-digit levels of the 2007 North American Industrial Classification System and at the two-digit and some three-digit levels of the International Standard Industrial Classification of all economic activities (ISIC), Rev. 3, 1989.
Occupational
Not relevant.
Others
None.
Source of the estimates
The estimates of hourly compensation costs are derived from earnings data from the Current Employment Statistics (CES) survey adjusted for other items of compensation costs primarily on the basis of data from the Censuses and Annual Surveys of Manufactures.
Types of estimates
At the national level:
o average hourly compensation costs, total and by components, for total manufacturing, beginning 1975;
o average hourly compensation costs, total, by sub-manufacturing industry, beginning 1992.
For international comparisons:
o level comparisons of total hourly compensation costs, direct pay and pay for time worked, for total manufacturing, in US dollars and in national currencies;
o information on the structure of compensation in selected countries;
o index of hourly compensation costs on the basis of United States=100;
o hourly compensation costs, in US dollars and in national currencies, by sub-manufacturing industry, beginning 1992.
Estimation procedure
Earnings: Hours and earnings data from the CES (which includes average weekly hours, and average hourly and weekly earnings) are based on monthly reports of gross payrolls and the corresponding hours paid for, for production workers. For most establishments, the data refer to persons who worked or who received pay for any part of the pay period that included the 12th of the month. Average hourly earnings are computed from aggregate payrolls divided by hours paid for. The figures used for the calculations are annual averages. The earnings data from the CES include basic time and piece rates, overtime premiums, shift premiums, cost-of-living adjustments, and holiday, vacation and sick leave paid directly to the employee by the employer for the pay period reported. These earnings exclude bonuses, commissions and other lump-sum payments (unless earned and paid regularly every month) and other pay not earned during the pay period under consideration. Tips and the value of free rent, fuel, meals and other payments in kind are also excluded. Hours paid for refer to all hours for which payment is received from the employer, including all paid leave (paid vacation days, paid sick leave, paid holidays, and other paid personal or administrative leave). Adjustment to an hours worked basis: Ratios of hours worked to hours paid for are obtained from the BLS Survey of Employer Costs for Employee Compensation (ECEC). Adjustment to total compensation: Adjustment rates for irregular bonuses are computed from ECEC data. For total manufacturing, this adjustment factor is benchmarked to 1986 and trended to the most recent year. Adjustment factors for legally required and contractual and private social insurance are computed using the Census and Annual Survey of Manufactures (CM and ASM), conducted by the Census Bureau. They provide data on supplemental labour costs, divided into legally required expenditures and payments for voluntary programmes. The legally required portion mainly consists of federal Old Age and Survivors' Insurance (Social Security), Unemployment Insurance and workers' compensation. Payments to voluntary programmes include all programmes not specifically required by legislation. These benefits include the employer portion of insurance premiums, premiums for supplemental accident and sickness insurance, pension plans, supplemental unemployment compensation, welfare plans, stock purchase plans on which the employer payment is not subject to withholding tax, and deferred profit sharing plans. For total manufacturing, adjustment factors computed from the CM or ASM payroll and supplemental labour cost data, which relate to all employees, are benchmarked to adjustment factors computed from the ECEC data for 1986. Because the ASM provides data by detailed industrial classification, adjustment factors can be computed for all component industries.
Construction of indices
For international comparison purposes, national indices of hourly compensation costs, hourly direct pay and pay for time worked for 32 countries are calculated, with base United States=100.
Adjustments
For international comparison purposes, total compensation is computed for the 32 countries covered by adjusting each country's average earnings series for items of direct pay not included in earnings and for employer expenditure for legally required insurance, contractual and private benefit plans, and other labour taxes. Earnings statistics are obtained from surveys or censuses of manufacturers or from administrative data sources. Adjustment factors are obtained from periodic labor cost surveys or censuses of manufacturers; the adjustment factors are interpolated or projected to non-survey years on the basis of other information. The statistics are also adjusted, where necessary, to account for major differences in worker coverage, differences in industrial classification systems, and changes over time in survey coverage, sample benchmarks or the frequency of surveys. Hourly compensation costs, hourly direct pay and pay for time worked are converted to US dollars using the average daily exchange rate for the reference period. Changes in hourly compensation in US dollars from one period to another are therefore affected by changes in currency exchange rates as well as by changes in compensation. The exchange rates used are prevailing commercial market exchange rates as published by either the US Federal Reserve Board or the International Monetary Fund.
Indicators of reliability of the estimates
Hourly compensation costs are partly estimated, and should not be considered as precise measures of hourly compensation. These measures are prepared specifically for the BLS programme of international comparisons of employer labour costs in manufacturing. The method used, as well as the results, differ somewhat from other BLS series on US compensation costs (such as the Employment Cost Index (ECI) or the Employer Costs for Employee Compensation). In international comparisons, the national statistics are adjusted by the BLS to take account of major differences in components of earnings, worker coverage, etc. In spite of these adjustments, there are still a few exceptions, in a few countries, to the definitions and standard industrial coverage. In addition, the figures are subject to revision as the results of new labour cost surveys or other data used to estimate compensation costs become available.
Available series
o Average hourly compensation costs of production workers in manufacturing, all industries and by main industry group, in US dollars, national currencies and on the basis of United States=100.
o Average hourly direct pay and pay for time worked, in US dollars, national currencies and on the basis of United States=100, for total manufacturing only.
o Total direct pay, pay for time worked, other direct pay and social insurance expenditure and other labour taxes as a percent of total hourly compensation costs, for total manufacturing only.
o Exchange rates.
History of the survey
The international comparisons of hourly compensation series presents labor costs adjusted for cross country comparability for 36 countries. Hourly compensation refers to employers’ total expenditure on labor per hour worked, and includes wages and salaries, direct benefits, and contributions to social security schemes. The ILC compensation series covers all employees and production workers in manufacturing and 22 sub-manufacturing industries, such as apparel, motor vehicles, and computer and electronics. In general, the beginning date for the series is 1975.
Documentation
US Department of Labor, Bureau of Labor Statistics, Office of Productivity and Technology: International Comparisons of Hourly Compensation Costs in Manufacturing (annual, Washington). The total manufacturing figures are published in annual BLS Reports. The sub-manufacturing industry measures are published on an irregular basis.
Confidentiality / Reliability criteria
Not applicable.
Other information
Data supplied to the ILO for publication
Statistics of average hourly compensation of production workers in manufacturing are published in Tables 22A and 22B of the Yearbook of Labour Statistics.