Technical Notes

Data Sources

According to federal law, virtually all employers in the U.S. are required to file tax reports that list the total compensation paid to each person they employed. State unemployment insurance (UI) offices use these reports—also referred to as wage records—to assess both liability for unemployment taxes and eligibility for unemployment benefits.

Coverage

Most employers are covered by state UI tax law. Covered employers are required to file wage records for their employees, even if wages for some of those employees are not subject to UI tax in the latter part of the year.

An individual may have more than one wage record in the same quarter. If a person has more than one job covered by UI during the quarter, each of their employers will file a wage record listing the total compensation they have paid to the employee. Likewise, a person who changed employers during the quarter will have multiple wage records because each employer will file a report.

Some types of employees are not covered by state UI tax law, though coverage varies by state. States do not receive wage reports for people who are not covered by UI. Individuals who are not covered include:

• Self-employed workers. UI covers people who perform services for an employer in an employer-employee relationship and receive wages for those services. Therefore, it does not cover self-employed people.
• Federal workers. Federal workers may be eligible for UI benefits but are covered under the Federal Employee Unemployment Compensation Program.
• Railroad workers. Unemployment benefits for railroad workers, which are covered through the Railroad Unemployment Insurance Act, are administered by the U.S. Railroad Retirement Board.
• Elected state and local government officials. Federal UI law allows for the exclusion of elected state and local government officials, members of legislative bodies, and members of the judiciary. Most state UI coverage provisions exclude these types of workers.
• Some agricultural workers. Federal UI law allows for the exclusion of certain agricultural workers. Most states cover only services performed on large farms.
• Some student workers. Federal UI law excludes services performed in the employ of a school, college, or university by students who are enrolled and regularly attending classes at the school.
• Some employees of nonprofit organizations. Under federal law, state UI coverage is required for services performed for religious, charitable, or educational nonprofit organizations, but only when such organizations employ four or more workers over 20 weeks during a specific year. However, some states have expanded their UI coverage provisions beyond federal requirements.

For more information about how state UI laws vary, see the Comparison of State UI Laws, which is prepared every year by the Department of Labor’s Employment and Training Administration.

Reference Period

In most states, covered employers report total compensation paid during the calendar quarter, regardless of when the services were performed. However, in a few states, the law specifies that wages be reported for, or be based on, the period during which services are performed rather than for the period during which compensation is paid.

Data Collection

Wage records are filed by employers after the completion of each reference quarter and are sent to their state’s unemployment insurance (UI) office, where they are used to administer state UI programs. The state UI tax departments supply wage records to their state labor market information (LMI) departments for statistical purposes. BLS receives preliminary data from state LMI departments approximately 6 months after the reference quarter and final data approximately 9 months after the reference quarter.

Information Collected

Total Wages

All wage records contain an employee’s total wages for the quarter. Under most state laws or regulations, total wages are defined as all compensation received by an employee, including salaries, hourly pay, piecework pay, bonuses, commissions, vacation and sick leave pay, severance pay, the cash value of meals and lodging, and tips and other gratuities.

Generally, total wages exclude employer contributions for old-age, survivors, and disability insurance; health insurance; UI; workers' compensation; and private pension and welfare funds. However, employee contributions for the same purposes are included, as is money withheld for income taxes, union dues, and so forth, even though they are deducted from the worker's gross pay. However, definitions of total wages can vary slightly by state. For example, in some states, employer contributions to certain deferred compensation plans, such as 401(k) plans, are included in total wages.

Other Information

Some states include additional information on their wage records. (Wage records with information beyond total wages are referred to as “enhanced wage records.”) This information may include:

• Occupation
• Hours worked
• Taxable wages
• Total out-of-state wages
• Work location
• Date of first employment
• Date of separation

There are significant differences in definitions of these additional items across states. For example, while multiple states collect occupation, the information is not comparable across states. Some states collect occupation based on Standard Occupational Classification (SOC) codes, while others collect job titles. Still other states do not collect occupation at all.

Confidentiality

In order to maintain credibility and trust, confidentiality protections for BLS data are essential. The BLS Wage Records Program architecture ensures that all data reside in a secure environment. Any data accessed by partnering state LMI agencies is encrypted, and individual wage records are anonymized.

In addition, the Confidential Information Protection and Statistical Efficiency Act (CIPSEA) (44 U.S.C. 3561 et seq.) states that information acquired by BLS for exclusively statistical purposes under a pledge of confidentiality must be used by BLS employees and agents for statistical purposes only. Any BLS employee or agent who knowingly and willfully discloses identifiable respondent information to someone not authorized to receive it is subject to imprisonment for not more than 5 years or fines of not more than $250,000, or both.

Users and uses of the data

BLS and its state partners use wage record data to conduct innovative research projects. State LMI agencies are required by law to evaluate their workforce programs to promote continuous improvement, research and test innovative services and strategies, and achieve high levels of performance. The Wage Records Program gives state LMI agencies a valuable tool to conduct analyses that include nearby state. In addition, BLS is using wage records to research ways to improve its existing surveys and other programs. For more information about BLS and state research that has used wage record data, see the Wage Records Program research page.