Hospital Labor Costs Inch Up in Q1

Total compensation costs for hospital employees rose 0.5% in the first quarter of 2011, slightly below the 0.7% rise in total compensation costs for all workers in private industry, the Bureau of Labor Statistics' Employment Cost Index shows.

For the 12-month period ending March 31, total compensation -- wages, salaries, and benefits -- grew by 2% for the hospital sector, which matches the pace of total compensation cost growth for all private industry workers for the same period, ECI data show.

In the 12-month period ending in March 2011, the Consumer Price Index rose by 2.7%, BLS data show.

A further breakdown of ECI data show that wages and salaries for the hospital sector—which generally make up about 70% of total compensation costs—increased 0.3% in the first quarter of 2011, and 1.7% in the 12-month period ending March 31, slightly above the 1.6% increase in wage and salary growth seen in the larger private industry workforce.

The ECI does not provide a separate breakdown on hospital benefits costs. However, benefits cost growth for all private industry workers grew by 1.6% in the first quarter of 2011, and 3% for the 12-month period ending March 31, ECI data show.

In 2009, hospital total compensation costs rose 2%, including a 2.1% increase in wages and salaries costs. In 2008, hospital total compensation rose 3.2%, and wages and salaries rose 3.6%, ECI data show.

Even with a general slowing trend in compensation costs, hospitals created 19,600 new jobs in the first quarter of 2011, and 50,100 jobs in 2010, nearly double the rate of job creation from 2009. The entire healthcare sector -- everything from allergists to X-ray technicians -- created 265,800 jobs in 2010, Bureau of Labor Statistics preliminary data shows.

In the overall economy, total compensation costsfor private industry workers increased 2% over the year ending March 31, compared to the 1.6% increase for the12-month period ending in March 2010. Wages and salaries increased 1.6% for the March 2011 12-month period, up slightly from the1.5% growth seen in March 2010.

ECI data for the March report were collected from 63,000 occupational observations selected from 12,900 private sector businesses, and 11,500 occupations from 1,800 establishments in state and local governments. The full report may be viewed here.