Estimation Methodology

The LAUS program is a hierarchy of non-survey methodologies for producing monthly estimates of civilian labor force, employment, unemployment, and the unemployment rate for approximately 7,500 subnational areas. Estimates for states are derived from signal-plus-noise models that use the monthly employment and unemployment measures tabulated from the Current Population Survey (CPS) as the primary inputs. Payroll employment estimates from the Current Employment Statistics (CES) survey of establishments and unemployment insurance (UI) claims counts from the state workforce agencies are also used as model inputs to help mitigate volatility in the monthly state-level CPS estimates. These models are controlled, or forced to sum, to the national not-seasonally-adjusted employment and unemployment estimates from the CPS. They furthermore serve as controls for substate areas, so that the monthly estimates are additive and comparable across geographic levels.

LAUS data for counties (or cities and towns in the New England states) are developed through a building-block approach known as the Handbook method. For Handbook employment, establishment data from either the CES or Quarterly Census of Employment and Wages (QCEW) are adjusted from a place-of-work basis to a place-of-residence basis using commutation factors calculated from the Census Bureauís American Community Survey (ACS). These are added to synthetically-developed components for employment not represented in the establishment series, including agricultural workers, self-employed and unpaid family workers, and private household workers. The two broad categories of unemployed persons for the Handbook method are those who were last employed in industries covered by state UI laws and those who either entered the labor force for the first time (new entrants) or reentered after a period of separation (reentrants). The "covered" unemployed category further consists of individuals currently receiving UI benefits and those who have exhausted their benefits. The number of people currently receiving benefits is obtained directly from an actual count of UI claimants for the reference week. The estimate of persons who have exhausted their benefits is based on the number actually exhausting their benefits in previous periods "survived" using a conditional probability approach. New entrants and reentrants to the labor force are allocated from CPS-based totals for states to Handbook areas using age-group population shares from the Census Bureauís Population Estimates Program. Handbook-based total employment and unemployment estimates finally are controlled to the statewide model-based totals.

For multi-county areas, such as many of the metropolitan areas delineated by the Office of Management and Budget, LAUS estimates are summed from the Handbook-based data for their component counties (or component cities and towns in the New England states).

LAUS estimates for cities outside of New England are produced through a disaggregation technique using Census Bureau employment and population data and UI claims counts.

Four measures are produced for each geographic area: civilian labor force, employment unemployment, and the unemployment rate. Employment and unemployment are independently estimated. Civilian labor force is then summed from the employed and unemployed, while the unemployment rate is calculated as the unemployed percent of the civilian labor force.

Annual Activities

At the beginning of each calendar year, the LAUS program revises up to five years of previous data to incorporate new inputs and population data. At the state level, LAUS receives new population controls from the Census Bureau, as well as updated CES and UI claims inputs. State models then are re-estimated to incorporate these changes, using all data in the series. Revised statewide estimates are controlled to updated census division and national totals reflecting the new population controls.

Substate estimates subsequently are revised to incorporate any changes in the inputs, such as revisions in the place-of-work-based employment estimates, revisions to UI claims data, and updated historical relationships. Local area Handbook estimates then are revised and re-adjusted to sum to the revised state estimates of employment and unemployment. Estimates for disaggregated cities are revised using updated population and UI claims data.

 

Last Modified Date: March 10, 2016