Handbook of Methods Current Employment Statistics - State and Metro Area Concepts
Current Employment Statistics - State and Metro Area: Concepts
The Current Employment Statistics-State and Area (CES-SA) program produces estimates of employment, hours, and earnings of workers on nonfarm payrolls by industry for all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and about 450 metropolitan areas and divisions. The CES-SA program is primarily known for its accurate, objective, and timely (monthly) production of economic indicators published in the State Employment and Unemployment and Metropolitan Area Employment and Unemployment news releases. CES-SA data provide policy makers, news agencies, and the public with extensive information for evaluating state and local economies. CES-SA derives state and local estimates from payroll data reported through the CES survey. Monthly payroll estimates for the nation as a whole are produced by the Current Employment Statistics National (CES-N) program. For more information on CES-N data, visit www.bls.gov/ces/home.htm.
The Bureau of Labor Statistics (BLS) conducts the CES survey, collecting data each month on employment, hours, and earnings from a sample of nonagricultural establishments. The sample includes about 122,000 businesses and government agencies, representing approximately 666,000 individual worksites drawn from a sampling frame of roughly 10.4 million unemployment insurance (UI) tax accounts. The active CES sample includes approximately one-third of all nonfarm payroll jobs. From these data, the CES-SA program prepares and publishes a large number of employment, hours, and earnings series for subnational areas at varying levels of geographic detail. CES-SA data are available at www.bls.gov/sae/home.htm.
Industry classification
All CES-SA data on employment, hours, and earnings are classified in accordance with the 2022 North American Industry Classification System (NAICS), specified by the U.S. Office of Management and Budget (OMB) through its Economic Classification Policy Committee, with representatives from the Bureau of Labor Statistics, the Bureau of the Census, and the Bureau of Economic Analysis. The committee, along with representatives from Canada and Mexico, reviews and updates the NAICS structure every 5 years. The shared classification system allows for direct comparisons of economic data by industry across the three countries.
Establishments are classified into industries based on their primary activity. NAICS classifies together establishments that use comparable capital equipment, labor, and raw material inputs. BLS collects this information on a supplement to the quarterly unemployment insurance tax reports filed by employers.
NAICS is a 2- through 6-digit hierarchical classification system, offering five levels of detail. Each digit in the code is part of a series of progressively narrower categories, and the more digits in the code signify greater classification detail. The first 2 digits designate the economic sector, the 3rd digit designates the subsector, the 4th digit designates the industry group, the 5th digit designates the NAICS industry, and the 6th digit designates the national industry. The 5-digit NAICS code is the level at which there is comparability in code and definitions for most of the NAICS industries across the United States, Canada, and Mexico. The 6-digit level allows for the United States, Canada, and Mexico each to have country-specific detail.
More information about NAICS is available from the U.S. Census Bureau at www.census.gov/naics/.
CES-SA may combine one or more NAICS industries into a single CES industry code to ensure complete coverage of all nonfarm businesses and government agencies and to prevent disclosure of payroll data for individual businesses and government agencies.
More information about the use of NAICS in CES-SA industry classification is available at https://www.bls.gov/sae/additional-resources/state-and-area-ces-series-code-structure-under-naics.htm.
Geographic classification
CES-SA data are published at the statewide level for all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands; for metropolitan statistical areas (MSAs) and divisions thereof; for New England city and town areas (NECTAs) and divisions thereof; and for a small number of nonstandard areas.
OMB delineates MSAs and NECTAs according to published standards that are applied to Census Bureau data. The general concept of a metropolitan or micropolitan statistical area is that of a core area containing a substantial population nucleus, together with adjacent communities having a high degree of economic and social integration with that core. Current area delineations are based on OMB Bulletin No. 18-03 (effective April 2018), available at https://www.bls.gov/bls/omb-bulletin-18-03-revised-delineations-of-metropolitan-statistical-areas.pdf.
Defining metropolitan statistical areas
The 2018 standards provide that each metropolitan statistical area must have at least one urbanized area of 50,000 or more inhabitants.
Under the standards, the county (or counties) in which at least 50 percent of the population resides within urban areas of 10,000 or more population, or that contain at least 5,000 people residing within a single urban area of 10,000 or more population, is identified as a "central county" (counties). Additional "outlying counties" are included in the MSA if they meet specified requirements of commuting to or from the central counties. Counties or equivalent entities form the geographic "building blocks" for metropolitan statistical areas throughout the United States and Puerto Rico.
If specified criteria are met, a metropolitan statistical area containing a single core with a population of 2.5 million or more may be subdivided to form smaller groupings of counties referred to as "metropolitan divisions."
As of April 2018, there are 383 metropolitan statistical areas in the United States. In addition, there are 7 metropolitan statistical areas in Puerto Rico.
Defining New England city and town areas
In view of the importance of cities and towns in New England, the 2018 standards also provide for a set of geographic areas that are delineated using cities and towns in the six New England states. The New England city and town areas (NECTAs) are delineated using the same criteria as metropolitan statistical areas and are identified on the presence of either an urbanized area of 50,000 or more population. If the specified criteria are met, a NECTA containing a single core with a population of at least 2.5 million may be subdivided to form smaller groupings of cities and towns referred to as New England city and town area divisions.
Defining nonstandard areas
In addition to MSAs and NECTAs, CES-SA publishes data on 11 other substate areas that represent portions of standard MSAs (and divisions). These include some large cities and geographic regions (such as Northern Virginia), as well as segments of cross-state areas divided along state lines. (For example, the Kansas City, MO-KS MSA is divided into Missouri and Kansas areas.)
More information about metropolitan area definitions in the CE-SA program is available at https://www.bls.gov/sae/additional-resources/metropolitan-statistical-area-definitions.htm.
Units of observation
The CES survey collects data from respondents’ payroll records; ideally, each response represents an individual establishment or worksite, although some respondents report for multiple worksites in one report.
Examples of CES report forms for different industry groups are available at www.bls.gov/ces/report-forms/home.htm.
Establishment refers to an economic unit, such as a factory, mine, store, office, or government worksite that produces goods or provides services.
Establishments generally operate at a single location and engage predominantly in one type of economic activity. Where a single location encompasses two or more distinct activities, these are treated as separate establishments, if separate payroll records are available, and the various activities are classified under different industry codes.
Employment refers to the number of people on establishment payrolls who received pay for any part of the pay period that includes the 12th day of the month.
BLS collects the total number of all employees (AE).
CES also collects data on production and related employees in manufacturing and in mining and logging, construction employees in construction, and nonsupervisory employees in private service-providing industries. Collectively, these workers are known as production and nonsupervisory employees (PE).
Data exclude sole proprietors, the unincorporated self-employed, unpaid volunteer or family workers, farm workers, and domestic workers. Salaried officers of corporations are included. Government employment covers only civilian employees; military personnel are excluded. Employees of the Central Intelligence Agency, the National Security Agency, the National Imagery and Mapping Agency, and the Defense Intelligence Agency also are excluded.
People on establishment payrolls who are on paid sick leave (for cases in which pay is received directly from the firm), on paid holiday, or on paid vacation, or who work during a part of the pay period—even though they are unemployed or on strike during the rest of the period—are counted as employed. Not counted as employed are people who are on layoff, on leave without pay, or on strike for the entire period, or who were hired but have not yet reported during the period.
Production and related employees in manufacturing and in mining and logging include working supervisors and all nonsupervisory employees (including group leaders and trainees) engaged in fabricating, processing, assembling, inspecting, receiving, storing, handling, packing, warehousing, shipping, trucking, hauling, maintenance, repair, janitorial, guard services, product development, auxiliary production for a plant’s own use (for example, power plant), recordkeeping, and other services closely associated with the above production operations.
Construction employees in the construction sector include working supervisors, qualified craft workers, mechanics, apprentices, helpers, laborers, and others engaged in new work, alterations, demolition, repair, maintenance, and similar activities, whether working at the site of construction or in shops or yards at jobs (such as precutting and preassembling) ordinarily performed by members of the construction trades.
Nonsupervisory employees include those individuals in private, service-providing industries who are not above the working-supervisor level. This group includes supervised individuals such as office and clerical workers, repairers, salespersons, operators, drivers, physicians, lawyers, accountants, nurses, social workers, research aides, teachers, drafters, photographers, beauticians, musicians, restaurant workers, custodial workers, attendants, line installers and repairers, laborers, janitors, guards, and other employees at similar occupational levels whose primary work is providing services closely associated with those of the employees listed and whose primary work is not supervision of employees or management.
Aggregate hours are the total hours for which employees are paid.
The concept of aggregate hours differs from those of scheduled hours and hours worked. For the reference pay period, aggregate hours include all hours worked (including overtime hours), hours paid for standby or reporting time, and equivalent hours for which employees received pay directly from the employer for sick leave, holidays, vacations, and other leave. Overtime and other premium pay hours are not converted to straight-time equivalent hours.
Aggregate hours are reported for both AE and PE.
Aggregate payroll includes the total regular pay earned by employees during the reference pay period.
Aggregate payroll refers to the total amount of money earned by full- and part-time employees who received pay for any part of the pay period that includes the 12th day of the month. The payroll is reported before deductions of any kind, such as those for old-age and unemployment insurance, group insurance, withholding tax, bonds, or union dues; also included are overtime pay, holiday and vacation pay, sick leave paid directly by the employer, and commissions paid at least monthly. Bonuses (unless earned and paid regularly each pay period), other pay not earned in the pay period reported (such as retroactive pay), and the value of free rent, fuel, meals, or other payment in kind are excluded. Employee benefits (such as health and other types of insurance, contributions to retirement, and so forth) paid by the employer also are excluded.
Aggregate payrolls are reported for both AE and PE.
Additional information on the number of women employees and overtime hours are collected by CES, and used in forming national estimates, but are not used by the CES-SA program.
Estimates
CES-SA produces monthly estimates of all employees (AE), production and nonsupervisory employees (PE), hours, and earnings from the payroll data provided by CES respondents. Hours and earnings estimates are for private-sector workers only and are produced for AE and PE.
Employment benchmark are a complete count of employment used to adjust estimates derived from the CES sample.
The CES-SA sample-based estimates are benchmarked annually. The primary source of employment benchmark data for the CES survey is the Quarterly Census of Employment and Wages (QCEW) program, which collects employment and wage data from states’ unemployment insurance (UI) tax records. The QCEW provides 97 percent of the total employment in the CES benchmark. The remaining 3 percent of employment is not subject to UI laws and is calculated from other sources. (The benchmark process is explained in detail in later sections of this chapter.)
Employment is a measure of the number of jobs, as opposed to the number of employees, reported by respondents.
CES-SA produces estimates of AE, and, for the select private sector industries, PE. People working at multiple worksites are counted as employed by each employer.
Average weekly hours (AWH) are the reported aggregate hours normalized to a weekly equivalent divided by the number of employees paid for those hours.
Average weekly hours differ from standard or scheduled hours. Factors such as unpaid absenteeism, labor turnover, part-time work, and stoppages cause average weekly hours to be lower than scheduled hours of work for an establishment. Group averages further reflect changes in the workweek of component industries.
Average hourly earnings (AHE) are the reported aggregate payroll normalized to a weekly equivalent divided by aggregate weekly hours.
Average hourly earnings are on a “gross” basis and reflect not only changes in basic hourly and incentive wage rates, but also such variable factors as premium pay for overtime and late-shift work and changes in output of workers paid on an incentive plan. They also reflect shifts in the number of employees between relatively high-paid and low-paid work and changes in workers’ earnings in individual establishments.
Averages of hourly earnings differ from wage rates. Earnings are the actual return to the worker for a stated period; wage rates are the amount stipulated for a given unit of work or time. The earnings series do not measure the level of total labor costs on the part of the employer because the following are excluded: benefits, irregular bonuses, retroactive items, and payroll taxes paid by employers.
Definitions for derivative series
Diffusion indexes measure of dispersion of employment change across components (either states or metropolitan areas) over a specified time span.
The reference point for diffusion analysis is 50—the value indicating that the same number of component areas had employment increases as had decreases. Index numbers above 50 show that more industries had increasing employment, and values below 50 indicate that more had decreasing employment. For example, if not areas are unchanged, an index of 65 means 65 percent of areas had increasing employment and 35 percent (100-65) had decreasing employment. However, for dispersion analysis, the distance of the index number from the 50-percent reference point is the most significant observation.
Although diffusion indexes commonly are interpreted as showing the percent of components that increased over the time span, the index reflects half of the unchanged components as well. This is the effect of assigning a value of 50 percent to the unchanged components when computing the index.
The 1-, 3-, 6-, and 12-month diffusion indexes are calculated with seasonally adjusted statewide total nonfarm employment series for all 50 states and the District of Columbia. Diffusion indexes also are calculated with seasonally adjusted total nonfarm employment series from 387 metropolitan areas.
Average weekly earnings (AWE) are the product of AWH estimates and AHE estimates.
Average weekly earnings are affected not only by changes in AHE but also by changes in the length of the workweek. Monthly variations in such factors as the proportion of part-time workers, stoppages for varying reasons, labor turnover during the survey period, and absenteeism for which employees are not paid may cause the average workweek to fluctuate.
Last Modified Date: October 27, 2023
United States Department of Labor
