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Handbook of Methods Modeled Wage Estimates Concepts

Modeled Wage Estimates: Concepts

The purpose of the Modeled Wage Estimates (MWE) is to publish average hourly wages for occupations and occupational groups by job characteristics within geographical locations across work levels. The MWE combines data from the Occupational Employment and Wage Statistics (OEWS) and National Compensation Survey (NCS) programs to produce the estimates. Borrowing from the strengths of the NCS, information on job characteristics and work levels, and from the OEWS, occupational and geographic detail, the modeled wage estimates provide more detail on occupational average hourly wages than either program can provide separately.

The Handbook of Methods for the OEWS and NCS provide current information on the classification systems in use, wage components in-scope for each survey, as well as concepts and technical information about the surveys and outputs. The MWE are published for the geographic locations published by the OEWS, which include national, state, metropolitan, and nonmetropolitan areas. The MWE are not produced for Guam, Puerto Rico, and the Virgin Islands, as these territories are out-of-scope for the NCS. The Design section covers additional criteria for producing the MWE.

Key concepts and definitions

Bargaining status. Workers are classified as union workers when all these conditions are met: 1) a labor organization is recognized as the bargaining agent for all workers in the occupation, 2) wage and salary rates are determined through collective bargaining or negotiations, and 3) settlement terms, which must include earnings provisions and may include benefit provisions that are embodied in a signed, mutually binding collective bargaining agreement. When these conditions are not met, workers are classified as nonunion.

Civilian workers. Those employed by private industry as well as state and local government establishments. Major exclusions from the NCS are workers in federal and quasi-federal agencies (examples include the U.S. Military, U.S. Postal Service, and Federal Reserve); workers in the agriculture, forestry, fishing, and hunting industry sector; workers employed by private households; contractors (onsite workers at the surveyed establishment but paid by another party are not included in data collection from the surveyed establishment); the self-employed; volunteers; unpaid workers; individuals receiving long-term disability compensation; and those working overseas. Individuals who set their own pay, such as business owners and family members who are paid token wages, are also excluded. Employees in sampled jobs must receive payments (cash, check, or direct deposit) from the establishment for services performed and the establishment must pay the employer’s portion of Medicare taxes on the worker’s wages.

Establishment. A single economic unit that engages in one, or predominantly one, type of economic activity. For private industries, the establishment is usually a single physical location, such as a mine, a factory, an office, or a store, where they produce goods or provide services. The number of workers in an establishment includes workers on paid vacation or other types of leave; salaried officers, executives, and staff members of incorporated firms; employees temporarily assigned to other units; and noncontract employees for whom the reporting unit is the permanent duty station, regardless of whether that unit issues their paychecks.

  • For private industry, if a sampled establishment is owned by a larger entity with many locations, only the employment and characteristics of the establishment selected for the sample are considered.

  • For state and local governments, an establishment can include more than one physical location, such as a school district or a police department.

Incentive-based pay. Wages and salaries that are at least partially based on productivity payments, such as production bonuses, commissions, piece-rates, or other types of incentives based on production, sales, or output. Nonproduction bonuses such as end-of-year, retention, signing, or holiday are not included in wages and salaries.

Industry group. Establishments are classified into industries using the North American Industry Classification System (NAICS). The agriculture, forestry, fishing, and hunting (sector 11) is excluded.

Job characteristics. The attributes of workers within an occupation, such as worker bargaining status (union and nonunion), work status (full- and part-time), basis of pay (time or incentive), and work level (1–15, and not able to be leveled).

Nonunion workers. Employees that do not meet all the conditions for union coverage. (See bargaining status.) 

Occupational group. Workers are classified into occupations using the Standard Occupational Classification (SOC). The military-specific occupations (group 55) are excluded.

Time-based pay. Wages and salaries that are solely based on a unit of time, such as an hourly rate or an annual salary. Straight-time (time-based) wages rates are commonly referred to as base rates or base wages.

Union workers. Workers are classified as union workers when all the conditions of bargaining status are met. Union membership is not necessary to be classified as union workers.

Wages and salaries. Because the MWE program combines data from the OEWS and NCS, average hourly wages are based on definitions from both programs. The differentials associated with job characteristics are derived from the components included within the scope of the NCS (see National Compensation Measures Concepts section) while the overall wage for the geographic and occupational domain is determined by the components included within the scope of the OEWS. (See Frequently Asked Questions and Definitions, concepts, and classifications section D question 3.) See the Design and Calculation sections for an explanation and example of how the wage data are combined.

Work levels. Work levels provide insight into the range of duties and responsibilities for jobs and are determined by assessing four factors: knowledge, controls and complexity, contacts (nature and purpose), and the physical environment. During data collection, points are assigned for each of the four factors and then totaled to determine the work levels of the occupation. There are up to 15 work levels; however not all levels are attainable for occupations. That is, occupations may have a more narrow or broad span of work levels based on the points assigned for the four factors. Some jobs cannot be leveled either due to the occupation (such as athletes, legislators, and judges) or because there are instances where respondents are not able or unwilling to define the specific duties and responsibilities of the job. The point factor leveling process is used to categorize jobs to specific work levels (1 to 15).

Work status. Workers are classified as part- or full-time based on the responding establishments’ definition of those terms. The work status is not determined by the work schedule, and there is no specific threshold for hours worked when classifying workers.

Last Modified Date: October 05, 2022