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Labor Department: Error Could Cause 3 Quarters of Compensation Data to Be Wrong

Source: WSJ

Posted on 30 Apr 2013 by Neilson

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Dept of LaborThe U.S. Labor Department said that an error in measuring benefits for sales and office workers could cause the previous three quarters of employment compensation data to be inaccurate.

The Labor Department issued its first quarter employment cost index Tuesday with a warning that it discovered a data error.

The error forced the agency to remove benefits figures for private-sector office workers from the wider report. As a result, benefit data and overall compensation figures could be skewed for the first quarter of 2013 and the last two quarters of 2012.

A technical mistake in the collection of data from several companies "caused the amount spent on benefits to be wrong," said Labor Department economist Wayne Shelly.

The department will publish corrected data online sometime before the next employment cost index release, scheduled for July 31.The corrected data will be available at:

The data released Tuesday showed the employment cost index increased 0.3% from January through March. Benefits rose just 0.1%, the weakest gain since the first quarter of 1999.

The department said the error could be a factor in that historically weak increase, but it wasn't the only cause for the small gain.

The release of the faulty numbers was a "why did they bother moment" for the Labor Department, said Joshua Shapiro, chief U.S. economist at MFR, Inc.

Though, he said the available data showed the trend of little pressure on compensation costs continuing.

"Even if recent data get revised up a bit when the results are corrected, the ECI shows labor cost increases remaining pretty stable," he said.

Wages and salaries, which account for about 70% of the index, advanced 0.5% during the first quarter. That number should be not be affected by the error.

In the prior quarter, total compensation costs rose a revised 0.4% and benefit costs advanced 0.6%. Those numbers and the third quarter data are subject to further revisions.

Wages and salaries were up 0.3%, in the final three months of 2012.