In 2007, the CES sample includes about 150,000 businesses and government
agencies drawn from a sampling frame of Unemployment Insurance tax accounts
which cover approximately 390,000 individual worksites. The active CES sample
includes approximately one-third of all nonfarm payroll workers. The
sample-based estimates are adjusted each month by a statistical model designed
to reduce a primary source of non-sampling error, which is the inability of
the sample to capture, on a timely basis, employment growth generated by new
business formations.
There is an unavoidable lag between an establishment opening for business
and its appearing on the sample frame and being available for sampling.
Because new firm births generate a portion of employment growth each month,
non-sampling methods must be used to estimate this growth.
Earlier research indicated that while both the business birth and death
portions of total employment are generally significant, the net contribution
is relatively small and stable. To account for this net birth/death portion of
total employment, BLS uses an estimation procedure with two
components: the first component uses business deaths to impute employment for
business births. This is incorporated into the sample-based estimate procedure by simply not reflecting sample units going out of
business, but imputing to them the same trend as the other firms in the
sample.
The second component is an ARIMA time series model designed to estimate
the residual net birth/death employment not accounted for by the imputation.
The historical time series used to create and test the ARIMA model was derived
from the UI universe micro level database, and reflects the actual residual
net of births and deaths over the past five years.
The net birth/death model component figures are unique to each month and
exhibit a seasonal pattern that can result in negative adjustments in some
months. These models do not attempt to correct for any other potential error
sources in the CES estimates such as sampling error or design
limitations.
Note that the net birth/death figures are not seasonally adjusted, and are
applied to the not seasonally adjusted monthly employment estimates to derive the final CES employment estimates.
The table below shows the net birth/death model adjustment used in the
published CES estimates since the establishment of the most recent benchmark
level for March 2007.
Technical information on the estimation methods used to account for employment in business births and deaths is available at www.bls.gov/ces/cesbdtech.htm.
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