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Handbook of Methods Quarterly Census of Employment and Wages Concepts

Quarterly Census of Employment and Wages: Concepts

The Quarterly Census of Employment and Wages (QCEW) consists of a monthly count of employment, quarterly counts of wage levels and business establishments, and a count of workers’ average weekly wages at multiple levels of geographic and industrial detail for use by academic researchers, local governments and other federal agencies, and the public in general. An establishment is commonly understood as a single economic unit, such as a farm, a mine, a factory, or a store, that produces goods or services. Establishments are typically at one physical location and engaged in one, or predominantly one, type of economic activity for which a single industrial classification may be applied. An establishment is in contrast to a firm, or a company, which is a business and may consist of one or more establishments, where each establishment may participate in a different predominant economic activity. The QCEW provides an employment benchmark and sample frames for other Bureau of Labor Statistics (BLS) programs, as well as a basis of estimation of the wage and salary component for the Bureau of Economic Analysis Personal Income statistic. Standard sources used by the QCEW program are the North American Industry Classification System (NAICS, which replaced the Standard Industrial Classification system in the fall of 2002 and was first used in the publication of 2001 QCEW data), for industry detail; Federal Information Processing Standards, for geographic area codes; and the Office of Management and Budget, for size classes.

The QCEW makes use of a number of key variables:

• Establishment count. Aggregation of establishments in a given geographic area, in a given industry, with a given ownership status (that is, private or public), or any combination of the three.
• Employment. Counts only filled jobs, whether full or part time, and temporary or permanent, by place of work. The quarterly reports include the establishment's monthly employment levels for the pay periods that include the 12th of the month.
• Wages. Total compensation paid, including bonuses, stock options, severance pay, profit distributions, the cash value of meals and lodging, tips and other gratuities, and, in some states, employer contributions to certain deferred compensation plans (such as 401(k) plans), during the calendar quarter, regardless of when the services were performed.
• Establishment size. Classification of an establishment on the basis of the number of employees reported.
• Industry. Classification applied to each establishment on the basis of its primary economic activity.
• County. The primary local geographic designation for an establishment. It is assigned based on physical location.
• Township. A secondary local geographic designation, used primarily in the New England states and New Jersey.
• Geocode. A set of longitudinal and latitudinal coordinates identifying the location of the establishment.

Establishments are asked to provide physical addresses for their business activities. The addresses are then converted into geocodes by the BLS Office of Technology and Survey Processing and are provided to the states to add to the data. The geocodes are entered into Geographic Information Software to create detailed maps of the locations of establishments and their economic and administrative attributes.

Scope and exclusions

Private-industry employment. QCEW monthly employment data represent the number of covered workers who worked during, or received pay for, the pay period that included the 12th day of the month. Covered private-industry employees include most corporate officials, all executives, all supervisory personnel, all professionals, all clerical workers, many farmworkers, all wage earners, all piece workers, and all part-time workers. Workers on paid sick leave, paid holiday, paid vacation, and the like are also covered. Workers on the payroll of more than one firm during the period are counted by each employer that is subject to UI, as long as those workers satisfy the preceding definition of employment. Workers are counted even though their wages may not be subject to UI tax in the latter months of the year. In this regard, the federal UI taxable wage base is the first $7,000 paid in wages to each employee during a calendar year. Thus, at whatever point in the year an employee reaches that accumulation of wages, he or she is no longer taxed in the months remaining.

Government employment. Employment at all federal agencies for any given month is based on the number of people who worked during, or received pay for, the pay period that included the 12th of the month. Employment data reported for federal civilian employees are a byproduct of the operations of state workforce agencies in administering the provisions of Title XV of the Social Security Act the UCFE program. Federal employment data are based reports of monthly employment and reports of quarterly wages, both submitted quarterly to state agencies. Reports are submitted for all federal installations with employees covered by the act, except for certain national security agencies, which are excluded for security reasons.

Besides excluding the aforementioned national security agencies, QCEW excludes proprietors, the unincorporated self-employed, unpaid family members, certain farm and domestic workers from having to report employment data, and railroad workers covered by the railroad unemployment insurance system. Excluded as well are workers who earned no wages during the entire applicable pay period because of work stoppages, temporary layoffs, illness, or unpaid vacations. Excluded from QCEW federal government employment are elected officials in the executive or legislative branch, members of the armed forces or the Commissioned Corps of the National Oceanic and Atmospheric Administration, individuals serving on a temporary basis in case of fire, storm, earthquake, or other similar emergency, and individuals employed under a Federal relief program to relieve them from unemployment. For a complete list of federal government exclusions, see Appendix A of the UCFE Instructions for Federal Agencies. Excluded from QCEW state and local government employment are elected officials, members of a legislative body or members of the judiciary, members of the state National Guard or Air National Guard, and employees serving on a temporary basis in case of fire, storm, snow, earthquake, flood or similar declared emergency. For a complete list of state and local governments excluded services, see the coverage section of the most recent Comparison of State UI Laws.

Wages. In most states, covered employers report total compensation paid during the calendar quarter, regardless of when the services were performed. A few state laws, however, specify that wages be reported for or be based on the period during which services are performed rather than the period during which compensation is paid. Under most state laws or regulations, wages include bonuses, stock options, severance pay, the cash value of meals and lodging, tips and other gratuities. In some states, wages also include employer contributions to certain deferred compensation plans, such as 401(k) plans.

Covered employers’ contributions to old-age, survivors, and disability insurance; health insurance; UI; workers’ compensation; and private pension and welfare funds are not reported as wages. Employee contributions for the same purposes, however, as well as money withheld for income taxes, union dues, and so forth, are reported, even though they are deducted from the worker’s gross pay.

Comparisons of related data series

For any given quarter, BLS publishes three different establishment-based employment measures. Each of the three measures—the QCEW, Business Employment Dynamics (BED), and Current Employment Statistics (CES)—is based on  QCEW establishment reports, which are an enhanced and corrected version of quarterly unemployment insurance (UI) employment reports. Each measure has a somewhat different universe of coverage, estimation procedure, and publication product.

Differences in coverage and estimation methods can result in somewhat different measures of employment change over time. It is important to understand program differences and the intended uses of the program products. Exhibit 1 presents important differences among the three BLS employment measures.