US labour costs, third quarter 2026: compensation growth eases to 0.8%, wages to 0.7%
Total compensation for US civilian workers rose 0.8% in July-September 2026 from the prior quarter, after 0.9%. Adjusted for inflation, it fell 0.4% from a year earlier, so prices are rising faster than pay.
A data update from FactIQ, written from Bureau of Labor Statistics figures. What is FactIQ?
Key figures
- US civilian total compensation growth, third quarter 2026, quarter on quarter
- 0.8%after 0.9% in both the first and second quarters2014-10-012026-07-01The three month percent change in total compensation for all civilian workers in the United States
- US civilian wages and salaries growth, third quarter 2026, quarter on quarter
- 0.7%down from 0.9%2014-10-012026-07-01The three month percent change in wages and salaries for all civilian workers in the United States
- US civilian total compensation adjusted for inflation, third quarter 2026, year on year
- -0.4%after -0.1% in the second quarter and +0.7% in the fourth quarter of 20252014-10-012026-07-01The twelve month percentage change in total compensation for all civilian workers adjusted for inflation
- US private-industry benefit costs, third quarter 2026, year on year
- 3.9%up from 3.4% a year ago2014-10-012026-07-01The twelve month percent change in total benefits for all private industry workers in current dollars
Pay growth held steady or eased slightly in the third quarter
The Employment Cost Index from the Bureau of Labor Statistics (BLS) tracks what employers spend on wages, salaries and benefits. It matters because rising labour costs can push up inflation. The quarterly figures below are seasonally adjusted and compare each quarter with the one before.
- Total compensation for civilian workers rose 0.8%. It rose 0.9% in both the first and second quarters.
- Wages and salaries rose 0.7%, down from 0.9%.
- Private-industry wages rose 0.8%, down from 0.9% in the second quarter.
- State and local government compensation rose 0.6%, down from 1.0%.
Prices are rising faster than pay
After adjusting for inflation, civilian compensation is down 0.4% from a year earlier. It was down 0.1% in the second quarter and up 0.7% in the fourth quarter of 2025. Before adjusting for inflation, civilian compensation is up 3.4% over 12 months, the same rate for a fourth straight quarter. Private wages are up 3.1% over 12 months. That is the same as in the second quarter and down from 3.6% a year earlier.
Benefit costs are the firm part of labour costs
Civilian benefit costs rose 0.9% from the previous quarter. Private-sector benefit costs are up 3.9% from a year earlier, compared with 3.4% a year ago.
The data show little sign of wages pushing inflation higher
The Federal Reserve held interest rates in October. Markets price the chance of a December rate increase at more than 90%. This report does not show wages driving inflation up. The pressure comes from prices rising faster than pay, not from pay pushing prices up.
Source: Bureau of Labor Statistics. See all BLS data in FactIQ.