ECI fixes the occupational and industry weights, which removes the composition problem that plagues average-hourly-earnings. It also includes benefits, which matter because employers often shift compensation between pay and health coverage.
Its weakness is timeliness: four releases a year, each covering a three-month window, published a month after the quarter ends. Fed officials cite it as the most reliable wage series, so a surprise can move the rates market despite the lag.
Example: ECI rises 0.9% in the quarter, or roughly 3.6% annualised, against 1.1% expected. Even though AHE has been decelerating, the cleaner measure says wage pressure is intact and the front end sells off.
Related: average-hourly-earnings, unit-labour-costs, productivity, core-pce, phillips-curve