Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/177115 
Year of Publication: 
2018
Series/Report no.: 
IZA Discussion Papers No. 11311
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Employer-provided nonwage benefit expenditures now account for one-third of U.S. firms' labor costs. We show that a broad measure of real labor costs including such benefit expenditures has become countercyclical during 1982-2014, contrary to the conventional view that labor costs are procyclical. Using BLS establishment-job data, we find that even real wages, the main focus of prior literature, have become countercyclical. Benefit expenditures are less rigid than nominal wages, although both components of labor costs have become more rigid. These rigidities, along with the rising relative importance of aggregate demand shocks (including the financial crisis), help explain countercyclical labor costs.
Subjects: 
wages
benefits
compensation
economic fluctuations
cyclicality
JEL: 
E24
J32
E32
Document Type: 
Working Paper

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