Regional and State Employment and Unemployment Technical Note

Technical Note
 
   This release presents labor force and unemployment data for census regions and
divisions, states, and selected substate areas from the Local Area Unemployment
Statistics (LAUS) program (tables 1 to 4). Also presented are nonfarm payroll
employment estimates by state and industry supersector from the Current Employment
Statistics (CES) program (tables 5 and 6). The LAUS and CES programs are both
federal-state cooperative endeavors.

Labor force and unemployment--from the LAUS program

   Definitions. The 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 employment and unemployment on a place-of-residence basis.
The universe for each is the civilian noninstitutional population 16 years of age
and over. Employed persons are those who did any work at all for pay or profit in
the reference week (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 labor force is the sum of
employed and unemployed persons. The unemployment rate is the number of unemployed as
a percent of the labor force.

   Method of estimation. Estimates for 48 of the 50 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 nine
census divisions, as well as 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 based on similar
model-based approaches. Estimates for census regions are obtained by summing the
model-based estimates for the component divisions. Each month, census division estimates
are controlled to the national totals; state estimates are then controlled to their
respective 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 detailed description of the estimation procedures is available from BLS upon request.

   Annual revisions. 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 issued by the U.S. Office of Management and Budget on February 28, 2013. 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/benchmark2016.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 of 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 regional and 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, regional and 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 labor force and unemployment from the LAUS program, as well as nonfarm
employment from the CES program, for 394 metropolitan areas and metropolitan New England
City and Town Areas (NECTAs) are available in the news release, Metropolitan Area
Employment and Unemployment. Estimates of labor force, employment, and unemployment 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: November 18, 2016