Real Earnings technical note

Explanatory Note





	The earnings series presented in this release 
are derived from the Bureau of Labor Statistics’ 
Current Employment Statistics (CES) survey, a 
monthly establishment survey of employment, 
payroll, and hours.  The deflators used for constant-
dollar earnings series presented in this release come 
from the Consumer Price Indexes Programs.  The 
Consumer Price Index for All Urban Consumers (CPI-
U) is used to deflate the all employees series, while the 
Consumer Price Index for Urban Wage Earners and 
Clerical Workers (CPI-W) is used to deflate the 
production employees series.
	Seasonally adjusted data are used for 
estimates of percent change from the same month a 
year ago for current and constant average hourly and 
weekly earnings.  Special techniques are applied to the 
CES hours and earnings data in the seasonal 
adjustment process to mitigate the effect of certain 
calendar-related fluctuations.  Thus, over-the-year 
changes of these hours and earnings are best measured 
using seasonally adjusted series.  A discussion of the 
calendar-related fluctuations in the hours and earnings 
data and the special techniques to remove them is 
available in the February 2004 issue of Employment 
and Earnings or on the Internet under ‘Technical 
Notes’ (http://www.bls.gov/ces/). 
	Earnings series from the monthly 
establishment series are estimated arithmetic averages 
(means) of the hourly and weekly earnings of all jobs 
in the private nonfarm sector of the economy, as well 
as of all production and nonsupervisory jobs in the 
private nonfarm sector of the economy.  Average 
hourly earnings estimates are derived by dividing the 
estimated industry payroll by the corresponding paid 
hours.  Average weekly hours estimates are similarly 
derived by dividing estimated aggregate hours by the 
corresponding number of jobs.  Average weekly 
earnings estimates are derived by multiplying the 
average hourly earnings and the average weekly hours 
estimates.  This is equivalent to dividing the estimated 
payroll by the corresponding  number of jobs  The 
weekly and hourly earnings estimates for aggregate 
industries, such as the major industry sector and the 
total private sector averages printed in this release, are 
derived by summing the corresponding payroll, hours, 
and employment estimates of the component 
industries.  As a result, each industry receives a 
"weight" in the published averages that corresponds to 
its current level of activity (employment or total 
hours).  This further implies that fluctuations and 
varying trends in employment in high-wage versus low-
wage industries as well as wage rate changes influence 
the earnings averages.
	There are several characteristics of the series 
presented in this release that limit their suitability for 
some types of economic analyses. (1) The 
denominator for the all employee weekly earnings 
series is the number of private nonfarm jobs.  
Similarly, the denominator of the production 
employee weekly earnings series is the number of 
private nonfarm production and nonsupervisory 
employee jobs.  This number includes full-time and 
part-time jobs as well as the jobs held by multiple 
jobholders in the private nonfarm sector.  These 
factors tend to result in weekly earnings averages 
significantly lower than the corresponding numbers for 
full-time jobs.  (2) Annual earnings averages can differ 
significantly from the result obtained by multiplying 
average weekly earnings times 52 weeks.  The 
difference may be due to factors such as turnovers 
and layoffs.  (3) The series are the average earnings of 
all employees or all production and nonsupervisory 
jobs, not the earnings average of "typical" jobs or jobs 
held by "typical" workers.  Specifically, there are no 
adjustments for occupational, age, or schooling 
variations or for household type or location.  Many 
studies have established the significance of these 
factors and that their impact varies over time.
	Seasonally adjusted data are preferred by 
some users for analyzing general earnings trends in the 
economy since they eliminate the effect of changes 
that normally occur at the same time and in about the 
same magnitude each year and, therefore, reveal the 
underlying trends and cyclical movements.  Changes 
in average earnings may be due to seasonal changes in 
the proportion of workers in high-wage and low-wage 
industries or occupations or to seasonal changes in the 
amount of overtime work, and so on.
	For more information, see Thomas Gavett, 
"Measures of Change in Real Wages and Earnings," 
Monthly Labor Review, February 1972.
	Information in this release will be made 
available to sensory impaired individuals upon 
request.  Voice phone:  202-691-5200; TDD Message 
Referral Phone Number: 1-800-877-8339.

Table of Contents

Last Modified Date: August 19, 2014