Economics
U.S. Q2 Employment Cost Index Rises 0.9%, Exceeding Expectations
The U.S. Employment Cost Index for the second quarter of 2026 revealed a 0.9% increase in total compensation for civilian workers, matching the prior quarter's growth. Wages and salaries also rose by 0.9%, while benefit costs increased by 1.0%. Year-over-year, total compensation grew by 3.4%, although inflation-adjusted wages fell by 0.4%.
Labor costs continue to show steady growth amidst inflationary pressures.
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Executive summary
The U.S. Employment Cost Index for the second quarter of 2026 revealed a 0.9% increase in total compensation for civilian workers, matching the prior quarter's growth. Wages and salaries also rose by 0.9%, while benefit costs increased by 1.0%. Year-over-year, total compensation grew by 3.4%, although inflation-adjusted wages fell by 0.4%.
The U.S. Employment Cost Index (ECI) indicated that labor costs maintained a steady upward trajectory in the second quarter of 2026. Total compensation for all civilian workers rose by 0.9% from March to June, consistent with the previous quarter's increase. Wages and salaries saw a similar rise of 0.9%, while benefit costs experienced a slightly higher increase of 1.0%.
On a year-over-year basis, total compensation grew by 3.4%, driven by a 3.2% increase in wages and salaries and a 3.8% rise in benefits. Within the private sector, compensation also advanced by 0.9% during the quarter, with both wages and salaries and benefits reflecting the same percentage increase.
Despite the nominal wage growth, inflation-adjusted wages and salaries for private-industry workers decreased by 0.4% over the year, suggesting that consumer price increases have outpaced wage gains. This trend raises concerns about the purchasing power of workers amidst ongoing inflationary pressures.
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