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  • Industry classification
  • Units of observation
  • Key estimates
  • Definitions for derivative series
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Handbook of Methods Current Employment Statistics - National Concepts

Current Employment Statistics - National: Concepts

The Current Employment Statistics-National (CES-N) program produces national estimates of employment, hours, and earnings of workers on nonfarm payrolls by detailed industry. The CES-N program is primarily known for its accurate, objective, and timely (monthly) production of federal economic indicators published in the Employment Situation and Real Earnings news releases. CES-N data provide policy makers, news agencies, and the public with extensive information for evaluating the U.S. economy. CES-N derives national estimates from payroll data reported through the CES survey. Monthly payroll estimates for states and metropolitan areas are produced by the Current Employment Statistics-State and Area (CES-SA) program (www.bls.gov/sae/home.htm). The CES-SA program uses the same sample and collection methods, thus references to CES apply to both CES-N and CES-SA programs.

The Bureau of Labor Statistics (BLS) conducts the CES survey, collecting data each month on employment, hours, and earnings from a sample of nonagricultural establishments. The sample includes about 131,000 businesses and government agencies, representing approximately 670,000 individual worksites drawn from a sampling frame of roughly 10.7 million unemployment insurance (UI) tax records. The active CES sample includes approximately one-third of all nonfarm payroll jobs. From these data, the CES-N program prepares and publishes a large number of employment, hours, and earnings series in considerable industry detail for the nation. CES-N data are available at www.bls.gov/ces/home.htm.

Industry classification

All CES-N data on employment, hours, and earnings are classified in accordance with the 2017 North American Industry Classification System (NAICS), specified by the U.S. Office of Management and Budget (OMB) through its Economic Classification Policy Committee, with representatives from the Bureau of Labor Statistics, the Bureau of the Census, and the Bureau of Economic Analysis. The committee, along with representatives from Canada and Mexico, reviews and updates the NAICS structure every 5 years. The shared classification system allows for direct comparisons of economic data by industry across the three countries.

Establishments are classified into industries on the basis of their primary activity. NAICS classifies together establishments that use comparable capital equipment, labor, and raw material inputs. BLS collects this information on a supplement to the quarterly unemployment insurance tax reports filed by employers.

NAICS is a 2- through 6-digit hierarchical classification system, offering five levels of detail. Each digit in the code is part of a series of progressively narrower categories, and the more digits in the code signify greater classification detail. The first two digits designate the economic sector, the third digit designates the subsector, the fourth digit designates the industry group, the fifth digit designates the NAICS industry, and the sixth digit designates the national industry. The 5-digit NAICS code is the level at which there is comparability in code and definitions for most of the NAICS sectors across the United States, Canada, and Mexico. The 6-digit level allows for the United States, Canada, and Mexico each to have country-specific detail.

More information about NAICS is available from the U.S. Census Bureau at www.census.gov/naics/.

CES-N may combine one or more NAICS industries into a single CES industry code to ensure complete coverage of all nonfarm businesses and government agencies and to prevent disclosure of payroll data for individual businesses and government agencies.

More information about the use of NAICS in CES industry classification is available at www.bls.gov/ces/naics/home.htm.

Units of observation

The CES survey collects data from respondents’ payroll records; ideally, each response represents an individual establishment or worksite, although some respondents report for multiple worksites in one report.

Examples of CES report forms for different industry groups are available at www.bls.gov/ces/report-forms/home.htm.

Definitions for units of observation

Establishment refers to an economic unit, such as a factory, mine, store, office, or government worksite that produces goods or provides services. Establishments generally operate at a single location and engage predominantly in one type of economic activity. Where a single location encompasses two or more distinct activities, these are treated as separate establishments, if separate payroll records are available, and the various activities are classified under different industry codes.

Employment refers to the number of persons on establishment payrolls who received pay for any part of the pay period that includes the 12th day of the month.

BLS collects the total number of all employees (AE) and of women employees (WE).

CES also collects data on production and related employees in manufacturing and in mining and logging, construction employees in construction, and nonsupervisory employees in private service-providing industries. Collectively, these data are known as production and nonsupervisory employees (PE).

Data exclude sole proprietors, the unincorporated self-employed, unpaid volunteer or family workers, farm workers, and domestic workers. Salaried officers of corporations are included. Government employment covers only civilian employees; military personnel are excluded. Employees of the Central Intelligence Agency, the National Security Agency, the National Imagery and Mapping Agency, and the Defense Intelligence Agency also are excluded.

Persons on establishment payrolls who are on paid sick leave (for cases in which pay is received directly from the firm), on paid holiday, or on paid vacation, or who work during a part of the pay period—even though they are unemployed or on strike during the rest of the period—are counted as employed. Not counted as employed are persons who are on layoff, on leave without pay, or on strike for the entire period, or who were hired but have not yet reported during the period.

Production and related employees in manufacturing and in mining and logging include working supervisors and all nonsupervisory employees (including group leaders and trainees) engaged in fabricating, processing, assembling, inspecting, receiving, storing, handling, packing, warehousing, shipping, trucking, hauling, maintenance, repair, janitorial, guard services, product development, auxiliary production for a plant’s own use (for example, power plant), recordkeeping, and other services closely associated with the above production operations.

Construction employees in the construction sector include working supervisors, qualified craft workers, mechanics, apprentices, helpers, laborers, and others engaged in new work, alterations, demolition, repair, maintenance, and similar activities, whether working at the site of construction or in shops or yards at jobs (such as precutting and preassembling) ordinarily performed by members of the construction trades.

Nonsupervisory employees include those individuals in private, service-providing industries who are not above the working-supervisor level. This group includes supervised individuals such as office and clerical workers, repairers, salespersons, operators, drivers, physicians, lawyers, accountants, nurses, social workers, research aides, teachers, drafters, photographers, beauticians, musicians, restaurant workers, custodial workers, attendants, line installers and repairers, laborers, janitors, guards, and other employees at similar occupational levels whose primary work is providing services closely associated with those of the employees listed and whose primary work is not supervision of employees or management.

Aggregate hours are the total hours for which employees are paid.

The concept of aggregate hours differs from those of scheduled hours and hours worked. For the reference pay period, aggregate hours include all hours worked (including overtime hours), hours paid for standby or reporting time, and equivalent hours for which employees received pay directly from the employer for sick leave, holidays, vacations, and other leave. Overtime and other premium pay hours are not converted to straight-time equivalent hours.

Aggregate hours are reported for both AE and PE.

Aggregate payroll include the total regular pay earned by employees during the reference pay period. Aggregate payroll refers to the total amount of money earned by full- and part-time employees who received pay for any part of the pay period that includes the 12th day of the month. The payroll is reported before deductions of any kind, such as those for old-age and unemployment insurance, group insurance, withholding tax, bonds, or union dues; also included are overtime pay, holiday and vacation pay, sick leave paid directly by the employer, and commissions paid at least monthly. Bonuses (unless earned and paid regularly each pay period), other pay not earned in the pay period reported (such as retroactive pay), and the value of free rent, fuel, meals, or other payment in kind are excluded. Employee benefits (such as health and other types of insurance, contributions to retirement, and so forth) paid by the employer also are excluded.

Aggregate payrolls are reported for both AE and PE.

Overtime hours are that portion of average weekly hours that exceeded regular hours and for which overtime premiums were paid.

CES collects overtime hours only from manufacturing establishments. Overtime hours are collected for both AE and PE.

If an employee were to work on a paid holiday at regular rates, receiving as total compensation his or her holiday pay plus straight-time pay for hours worked that day, no overtime hours would be reported.

Because overtime hours are premium hours by definition, weekly hours and overtime hours do not necessarily move in the same direction from month to month. Such factors as work stoppages, absenteeism, and labor turnover may not have the same influence on overtime hours as on average hours. Diverse trends at the industry group level also may be caused by a marked change in hours for a component industry in which little or no overtime was worked in both the previous and current months.

Key estimates

CES-N produces monthly estimates of all employees (AE), women employees (WE), production and nonsupervisory employees (PE), average weekly hours, and average hourly earnings from the payroll data provided by CES respondents. Hours and earnings estimates are for private-sector workers only and are produced for both AE and PE.

Definitions for key estimates

Employment benchmark is a complete count of employment used to adjust estimates derived from the CES sample.

The CES-N sample-based estimates are benchmarked annually. The primary source of employment benchmark data for the CES survey is the Quarterly Census of Employment and Wages (QCEW) program, which collects employment and wage data from each state’s unemployment insurance (UI) tax records. The QCEW provides approximately 97 percent of the total employment in the CES benchmark. The remaining 3.0 percent of employment is not subject to UI laws and is calculated from other sources. The benchmark process is explained in detail in the calculation section of this chapter.

Employment is the measure of the number of jobs, as opposed to the number of employees.

CES-N produces estimates of all employees (AE), women employees (WE), and, for the private sector, production and nonsupervisory employees (PE). Persons working at multiple worksites are counted as employed at each worksite.

Average weekly hours (AWH) aggregate weekly hours divided by the number of employees paid for those hours.

Average weekly hours differ from standard or scheduled hours. Factors such as unpaid absenteeism, labor turnover, part-time work, and stoppages cause average weekly hours to be lower than scheduled hours of work for an establishment. Group averages further reflect changes in the workweek of component industries.

Average hourly earnings (AHE) aggregate weekly payroll divided by aggregate weekly hours.

Average hourly earnings are on a gross basis and reflect not only changes in basic hourly and incentive wage rates, but also such variable factors as premium pay for overtime and late-shift work and changes in output of workers paid on an incentive plan. They also reflect shifts in the number of employees between relatively high-paid and low-paid work and changes in workers’ earnings in individual establishments.

Averages of hourly earnings differ from wage rates. Earnings are the actual return to the worker for a stated period; wage rates are the amount stipulated for a given unit of work or time. The earnings series do not measure the level of total labor costs on the part of the employer because the following are excluded: benefits, irregular bonuses, retroactive items, and payroll taxes paid by employers.

Average weekly overtime hours (AWOH) aggregate weekly overtime hours divided by the number of employees paid for those hours.

Average weekly overtime hours represent the average hours per worker for which premium pay was received. Group averages reflect changes in the workweek of component industries. Overtime hours are produced for manufacturing industries only.

Definitions for derivative series

Diffusion Indexes measure of dispersion of employment change across industries over a specified time span.

The reference point for diffusion analysis is 50—the value indicating that the same number of component industries had employment increases as had decreases. Index numbers above 50 show that more industries had increasing employment, and values below 50 indicate that more industries had decreasing employment. For example, an index of 65 indicates that 65 percent of industries had increasing employment and 35 percent (100-65) had decreasing employment. However, for dispersion analysis, the distance of the index number from the 50-percent reference point is the most significant observation.

Although diffusion indexes commonly are interpreted as showing the percent of components that increased over the time span, the index reflects half of the unchanged components as well. This is the effect of assigning a value of 50 percent to the unchanged components when computing the index.

The 1-, 3-, and 6-month diffusion indexes are calculated from seasonally adjusted employment series for all 4-digit CES industries in the private sector. The 12-month diffusion indexes are calculated using not seasonally adjusted employment series for the same set of industries. Diffusion indexes also are calculated for manufacturing.

Average weekly earnings (AWE) are the product of AWH and AHE estimates.

Average weekly earnings are affected not only by changes in AHE but also by changes in the length of the workweek and the number of employees. Monthly variations in such factors as the proportion of part-time workers, stoppages for varying reasons, labor turnover during the survey period, and absenteeism for which employees are not paid may cause the average workweek to fluctuate.

Long-term trends of AWE can be affected by structural changes in the makeup of the workforce. For example, persistent long-term increases in the proportion of part-time workers in retail trade and many of the services industries have reduced average workweeks in these industries and have affected the AWE series.

Real earnings are average hourly and weekly earnings adjusted for inflation.

Real earnings, expressed in constant 1982–84 dollars, result from the adjustment of average hourly and weekly earnings by the BLS Consumer Price Indexes. Real earnings for AE are deflated by the Consumer Price Index for All Urban Consumers (CPI-U), while real earnings for PE are deflated by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Real earnings indicate the purchasing power of earnings after adjustment for changes over time in the prices of consumer goods and services. These data cannot be used to measure changes in living standards as a whole, which are affected by other factors such as total family income, the extension and incidence of various social services and benefits, and the duration and extent of employment and unemployment. Changing mixes of full-time and part-time workers, high-paid and low-paid workers, and so on, also affect long-term trends of real earnings data.

Aggregate weekly hours are the product of AWH and employment of workers to which the hours apply (either AE or PE).

Index of aggregate weekly hours are aggregate weekly hours divided by the average of the 12 monthly aggregate hour figures for the base year.

Indexes of aggregate weekly hours are based on 2007 averages for AE and on 2002 averages for PE.

Aggregate weekly payrolls are the product of AHE and aggregate weekly hours.

Index of aggregate weekly payrolls are the aggregate weekly payroll divided by the average of the 12 monthly aggregate payroll figures for the base year.

Indexes of aggregate weekly payrolls are based on 2007 averages for AE and on 2002 averages for PE.