Employment Cost Index Rises 0.9% in March 2026, Annual Pace Holds at 3.4%

Compensation costs for civilian workers increased 0.9 percent, seasonally adjusted, for the three-month period ending in March 2026, up from the 0.7 percent pace recorded for the three months ending in December 2025. Over the 12 months ending in March 2026, compensation costs increased 3.4 percent, not seasonally adjusted — the same annual pace reported for the period ending in December 2025, and slower than the 3.6 percent reported a year earlier. The seasonally adjusted index for all civilian workers stood at 175.6 in March 2026, against 174.0 in December 2025.

Benefits Outpace Wages in the Quarter

The quarterly gain was not evenly distributed between the two halves of the compensation bill. For civilian workers over the three months ending in March 2026:

• Wages and salaries: increased 0.8 percent from December 2025
• Benefit costs: increased 1.2 percent from December 2025

The same ordering holds over the year. For the 12 months ending in March 2026, wages and salaries for civilian workers increased 3.4 percent while benefit costs increased 3.6 percent. Benefits have carried the faster annual pace, and the quarterly figures suggest that gap persisted into the first three months of 2026.

Private Industry and the Public Sector

Compensation costs increased in both private industry and state and local government during the quarter, but at different rates, though the two converged over the year.

For the three months ending in March 2026, seasonally adjusted:

• Private industry compensation: increased 0.9 percent, up from 0.7 percent in the three months ending December 2025
• Private industry wages and salaries: increased 0.7 percent
• Private industry benefits: increased 1.3 percent
• State and local government compensation: increased 1.0 percent, up from 0.8 percent
• State and local government wages and salaries: increased 1.0 percent
• State and local government benefits: increased 1.2 percent

Over the 12 months ending in March 2026, private industry compensation costs increased 3.4 percent and state and local government compensation costs increased 3.5 percent. The public-sector annual figure is worth reading in context: it stood at 4.3 percent for the 12 months ending March 2025 and 3.4 percent for the period ending December 2025. Wages and salaries increased 3.4 percent over the year in both sectors, and benefit costs increased 3.6 percent in both.

The Inflation-Adjusted Picture

The nominal figures overstate what workers actually gained. On a constant-dollar basis — the Bureau's own inflation-adjusted measure — the annual increases are far smaller.

For civilian workers, over the 12 months ending in March 2026:

• Compensation, constant dollar: increased 0.1 percent, against 0.7 percent for the period ending December 2025 and 1.2 percent for the period ending March 2025
• Wages and salaries, constant dollar: increased 0.1 percent, against 0.7 percent and 1.1 percent for those same earlier periods
• Benefits, constant dollar: increased 0.3 percent, against 0.8 percent and 1.4 percent

The same pattern holds within each sector — inflation-adjusted wages and salaries increased 0.1 percent over the year for private industry workers, and 0.1 percent over the year for state and local government workers. A 3.4 percent nominal annual gain and a 0.1 percent real one describe the same labor market — the difference is what consumer prices absorbed.

Industry Detail

Within private industry, the three-month gains ending in March 2026 varied widely by sector:

• Aircraft manufacturing: 3.4 percent
• Information: 1.4 percent
• Financial activities: 1.3 percent
• Transportation and warehousing: 1.3 percent
• Wholesale trade: 1.2 percent
• Utilities: 1.1 percent
• Manufacturing: 1.0 percent
• Retail trade: 0.9 percent
• Leisure and hospitality: 0.6 percent
• Professional and business services: 0.4 percent
• Other services, except public administration: 0.4 percent
• Construction: 0.3 percent

Health benefit costs for private industry workers increased 5.7 percent over the 12 months ending in March 2026, against 6.4 percent for the period ending December 2025 and 5.4 percent for the period ending March 2025. Health benefits continue to run well above the 3.6 percent pace of total private-industry benefit costs.

Revisions and Methodology

Two technical items in this release bear on how the numbers should be read.

First, the March release is the annual seasonal-adjustment release. Each year, with the publication of March data, seasonal adjustment factors are recalculated for the coming year and the preceding five years of seasonally adjusted history are revised. Every seasonally adjusted figure in this release — including the 0.9 percent quarterly headline and the comparison against December 2025 — sits on a freshly revised basis. The 12-month figures, which are not seasonally adjusted, are unaffected.

Second, the Bureau has announced that beginning with the publication of December 2026 data, the index will introduce updated employment weights and remove workers' compensation costs from its scope. That is a definitional break in the benefits series, and it will land well after the periods covered here.

The Long View and What Comes Next

The index for total compensation of civilian workers has risen 107.3 percent since the start of 2001, from 84.7 to 175.6 in the first quarter of 2026 — an increase of 90.9 index points. The quarterly series shows a pace that picked up from 0.7 percent to 0.9 percent between the periods ending December 2025 and March 2026.

The next Employment Cost Index release, covering June 2026, is scheduled for Friday, July 31, 2026. The figure that will confirm or contradict the picture here is the constant-dollar 12-month increase for civilian compensation. It has fallen from 1.2 percent to 0.7 percent to 0.1 percent across the last three annual readings. Another step down would leave real compensation growth essentially flat, and would matter more for household purchasing power than the nominal 3.4 percent headline that will lead the coverage.