State Employment and Unemployment Technical Note

Technical Note

This release presents civilian labor force and unemployment data for states and
selected substate areas from the Local Area Unemployment Statistics (LAUS) program
(tables 1 and 2). Also presented are nonfarm payroll employment estimates by state
and industry supersector from the Current Employment Statistics (CES) program
(tables 3 and 4). The LAUS and CES programs are both federal-state cooperative
endeavors.

Civilian labor force and unemployment--from the LAUS program

Definitions. The civilian labor force and unemployment data are based on the same
concepts and definitions as those used for the official national estimates obtained
from the Current Population Survey (CPS), a sample survey of households that is
conducted for the Bureau of Labor Statistics (BLS) by the U.S. Census Bureau. The
LAUS program measures employed persons and unemployed persons on a place-of-residence
basis. The universe for each is the civilian noninstitutional population 16 years of
age and older. Employed persons are those who did any work at all for pay or profit
in the reference week (typically the week including the 12th of the month) or worked
15 hours or more without pay in a family business or farm, plus those not working who
had a job from which they were temporarily absent, whether or not paid, for such
reasons as bad weather, labor-management dispute, illness, or vacation.

Unemployed persons are those who were not employed during the reference week (based
on the definition above), had actively looked for a job sometime in the 4-week period
ending with the reference week, and were currently available for work; persons on
layoff expecting recall need not be looking for work to be counted as unemployed. The
civilian labor force is the sum of employed and unemployed persons. The unemployment
rate is the number of unemployed as a percent of the civilian labor force.

Method of estimation. Estimates for 48 states, the District of Columbia, the Los
Angeles-Long Beach-Glendale metropolitan division, New York City, and the balances
of California and New York state are produced using time-series models. This method,
which underwent substantial enhancement at the beginning of 2015, utilizes data from
several sources, including the CPS, the CES, and state unemployment insurance (UI)
programs. Estimates for the state of California are derived by summing the estimates
for the Los Angeles-Long Beach-Glendale metropolitan division and the balance of
California. Similarly, estimates for New York state are derived by summing the
estimates for New York City and the balance of New York state. Estimates for the 
five additional substate areas contained in this release (the Cleveland-Elyria and
Detroit-Warren-Dearborn metropolitan areas and the Chicago-Naperville-Arlington
Heights, Miami-Miami Beach-Kendall, and Seattle-Bellevue-Everett metropolitan
divisions) and their respective balances of state are produced using a similar
model-based approach.

Each month, estimates for the nine census divisions first are modeled using inputs
from the CPS only and controlled to the national totals. State estimates then are
controlled to their respective census division totals. Substate and balance-of-state
estimates for the five areas noted above also are controlled to their respective 
state totals. This tiered process of controlling model-based estimates to the U.S.
totals is called real-time benchmarking. Estimates for Puerto Rico are derived from
a monthly household survey similar to the CPS. A more detailed description of the
estimation procedures is available from BLS upon request.

Annual revisions. Civilian labor force and unemployment data for prior years reflect
adjustments made after the end of each year. The adjusted estimates reflect updated
population data from the U.S. Census Bureau, any revisions in the other data sources,
and model re-estimation. In most years, historical data for the most recent five years
are revised near the beginning of each calendar year, prior to the release of January
estimates. With the introduction of a new generation of times-series models in early
2015, historical data were re-estimated back to the series beginnings in 1976, 1990,
or 1994.

Seasonal adjustment. The LAUS models decompose the estimates of employed and unemployed
persons into trend, seasonal, and irregular components. The trend component of each
measure is then smoothed using a Trend-Cycle Cascade Filter, which combines the Henderson
trend filter with a seasonal filter. This combined filter suppresses variability due to
real-time benchmarking while simultaneously removing any residual seasonality that may
be present in the series. The resulting smoothed-seasonally adjusted unemployment rate
estimates are analyzed in this news release and published on the BLS website. During
estimation for the current year, the smoothed-seasonally adjusted estimates for a given
month are created using an asymmetric filter that incorporates information from previous
observations only. For annual revisions, historical data are smoothed using a two-sided
filter. 

Area definitions. The substate area data published in this release reflect the
delineations that were issued by the U.S. Office of Management and Budget on
July 15, 2015. A detailed list of the geographic definitions is available online at
www.bls.gov/lau/lausmsa.htm. 

Employment--from the CES program

Definitions. Employment data refer to persons on establishment payrolls who receive pay
for any part of the pay period that includes the 12th of the month. Persons are counted
at their place of work rather than at their place of residence; those appearing on more
than one payroll are counted on each payroll. Industries are classified on the basis of
their principal activity in accordance with the 2012 version of the North American
Industry Classification System.

Method of estimation. CES State and Area employment data are produced using several
estimation procedures. Where possible these data are produced using a "weighted link
relative" estimation technique in which a ratio of current month weighted employment
to that of the previous-month weighted employment is computed from a sample of
establishments reporting for both months. The estimates of employment for the current
month are then obtained by multiplying these ratios by the previous month’s employment
estimates. The weighted link relative technique is utilized for data series where the
sample size meets certain statistical criteria.

For some employment series, the sample of establishments is very small or highly
variable. In these cases, a model-based approach is used in estimation. These models
use the direct sample estimates (described above), combined with forecasts of
historical (benchmarked) data to decrease volatility in estimation. Two different
models (Fay-Herriot Model and Small Domain Model) are used depending on the industry
level being estimated. For more detailed information about each model, refer to the
BLS Handbook of Methods.

Annual revisions. Employment estimates are adjusted annually to a complete count of
jobs, called benchmarks, derived principally from tax reports that are submitted by
employers who are covered under state unemployment insurance (UI) laws. The benchmark
information is used to adjust the monthly estimates between the new benchmark and the
preceding one and also to establish the level of employment for the new benchmark
month. Thus, the benchmarking process establishes the level of employment, and the
sample is used to measure the month-to-month changes in the level for the subsequent
months. Information on recent benchmark revisions is available online at
www.bls.gov/sae/benchmark2017.pdf.

Seasonal adjustment. Payroll employment data are seasonally adjusted at the statewide
supersector level. In some states, the seasonally adjusted payroll employment total is
computed by aggregating the independently adjusted supersector series. In other states,
the seasonally adjusted payroll employment total is independently adjusted. Revisions
to historical data for the most recent 5 years are made once a year, coincident with
annual benchmark adjustments.

Caution on aggregating state data. State estimation procedures are designed to produce
accurate data for each individual state. BLS independently develops a national employment
series; state estimates are not forced to sum to national totals. Because each state
series is subject to larger sampling and nonsampling errors than the national series,
summing them cumulates individual state-level errors and can cause significant distortions
at an aggregate level. Due to these statistical limitations, BLS does not compile a
"sum-of-states" employment series, and cautions users that such a series is subject to a
relatively large and volatile error structure.

Reliability of the estimates

The estimates presented in this release are based on sample surveys, administrative data,
and modeling and, thus, are subject to sampling and other types of errors. Sampling error
is a measure of sampling variability--that is, variation that occurs by chance because a
sample rather than the entire population is surveyed. Survey data also are subject to
nonsampling errors, such as those which can be introduced into the data collection and
processing operations. Estimates not directly derived from sample surveys are subject to
additional errors resulting from the specific estimation processes used.

Use of error measures. Changes in state unemployment rates and state nonfarm payroll
employment are cited in the analysis of this release only if they have been determined
to be statistically significant at the 90-percent confidence level. Furthermore,
state unemployment rates for the current month generally are cited only if they have
been determined to be significantly different from the U.S. rate at the 90-percent
confidence level. The underlying model-based standard error measures for unemployment
rates and over-the-month and over-the-year changes in rates are available at
www.bls.gov/lau/lastderr.htm. The underlying standard error measures for over-the-
month and over-the-year changes in state payroll employment data at the total nonfarm
and supersector levels are available at www.bls.gov/sae/790stderr.htm. Measures of
nonsampling error are not available.

Additional information

Estimates of civilian labor force and unemployment from the LAUS program, as well as
nonfarm payroll employment from the CES program, for metropolitan areas and metropolitan
divisions are available in the news release Metropolitan Area Employment and Unemployment.
Estimates of civilian labor force, employed persons, unemployed persons, and unemployment
rates for approximately 7,500 subnational areas are available online at www.bls.gov/lau/.
Employment data from the CES program for states and metropolitan areas are available
online at www.bls.gov/sae/. Information in this release will be made available to
sensory impaired individuals upon request. Voice phone: (202) 691-5200; Federal Relay 
Service: (800) 877-8339.



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Last Modified Date: March 24, 2017