Attachment G - Explanatory Note

Attachment G

From: Employment and Earnings, February 2004

Explanatory Notes and Estimates of Error

Introduction
The statistics in this periodical are compiled from two
major sources: (1) household interviews, and (2) reports
from employers.
Data based on household interviews are obtained from
the Current Population Survey (CPS), a sample survey of
the population 16 years of age and over. The survey is conducted each month by the U.S. Census Bureau for the
Bureau of Labor Statistics and provides comprehensive data
on the labor force, the employed, and the unemployed, classified by such characteristics as age, sex, race, family relationship, marital status, occupation, and industry attachment.
The survey also provides data on the characteristics and past
work experience of those not in the labor force. The information is collected by trained interviewers from a sample
of about 60,000 households (beginning with July 2001 data)
located in 754 sample areas. These areas are chosen to represent all counties and independent cities in the United
States, with coverage in 50 States and the District of
Columbia. The data collected are based on the activity or
status reported for the calendar week including the 12th of
the month.
Data based on establishment records are compiled each
month through the use of touchtone data entry, computerassisted telephone interviewing, and electronic data interchange, or by mail or fax, or on magnetic tape or computer
diskette. The Current Employment Statistics (CES) survey
is designed to provide industry information on nonfarm
wage and salary employment, average weekly hours, average hourly earnings, and average weekly earnings for the
Nation, States, and metropolitan areas. The employment,
hours, and earnings series are based on payroll reports from
a sample that includes about 160,000 businesses and government agencies covering approximately 400,000 individual worksites. The sample is drawn from a sampling frame
of over 8 million unemployment insurance tax accounts.
The active CES sample includes approximately one -third
of all nonfarm payroll workers. The data relate to all workers, full or part time, who receive pay during the payroll
period that includes the 12th of the month.

tics, for example, are obtained only from the household survey, whereas detailed industrial classifications are much more
reliably derived from establishment reports.
Data from these two sources differ from each other
because of variations in definitions and coverage, source of
information, methods of collection, and estimating procedures. Sampling variability and response errors are additional reasons for discrepancies. The major factors that have
a differential effect on the levels and trends of the two data
series are as follows.
Employment
Coverage. The household survey definition of employment
comprises wage and salary workers (including domestics
and other private household workers), self-employed persons, and unpaid workers who worked 15 hours or more
during the reference week in family-operated enterprises.
Employment in both agricultural and nonagricultural industries is included. The payroll survey covers only wage
and salary employees on the payrolls of nonfarm establishments.
Multiple jobholding. The household survey provides
information on the work status of the population without
duplication, because each person is classified as employed,
unemployed, or not in the labor force. Employed persons
holding more than one job are counted only once. In the
figures based on establishment reports, persons who worked
in more than one establishment during the reporting period
are counted each time their names appear on payrolls.

RELATIONSHIP BETWEEN THE HOUSEHOLD
AND ESTABLISHMENT SERIES

Unpaid absences from jobs. The household survey includes
among the employed all civilians who had jobs but were
not at work during the reference week—that is, were not
working but had jobs from which they were temporarily
absent because of illness, vacation, bad weather, childcare
problems, or labor-management disputes, or because they
were taking time off for various other reasons, even if they
were not paid by their employers for the time off. In the
figures based on payroll reports, persons on leave paid for
by the company are included, but those on leave without
pay for the entire payroll period are not.

The household and establishment data complement one
another, each providing significant types of information that
the other cannot suitably supply. Population characteris-

Hours of work
The household survey measures hours worked for all workers, whereas the payroll survey measures hours for
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private production or nonsupervisory workers paid for by
employers. In the household survey, all persons with a job
but not at work are excluded from the hours distributions
and the computations of average hours at work. In the payroll survey, production or nonsupervisory employees on paid
vacation, paid holiday, or paid sick leave are included and
assigned the number of hours for which they were paid
during the reporting period.

during the week are sometimes eligible for unemployment
compensation but are classified as employed, rather than
unemployed, in the household survey.
Agricultural employment estimates of the U.S. Department
of Agriculture. The principal differences in coverage are
the inclusion of persons under 16 in the National Agricultural Statistics Service series and the treatment of dual jobholders, who are counted more than once if they work on
more than one farm during the reporting period. There also
are wide differences in sampling techniques and data collecting and estimating methods, which cannot be readily
measured in terms of their impact on differences in the levels and trends of the two series.

Earnings
The household survey measures the earnings of wage and
salary workers in all occupations and industries in both the
private and public sectors. Data refer to the usual earnings
received from the worker’s sole or primary job. Data from
the establishment survey generally refer to average earnings of production and related workers in natural resources
and mining and manufacturing; construction workers in
construction; and nonsupervisory employees in private service-providing industries. For a comprehensive discussion
of the various earnings series available from the household
and establishment surveys, see BLS Measures of Compensation, Bulletin 2239 (Bureau of Labor Statistics, 1986).

COMPARABILITY OF PAYROLL EMPLOYMENT
DATA WITH OTHER SERIES
Statistics on manufacturers and business, U.S. Census
Bureau. BLS establishment statistics on employment differ
from employment counts derived by the U.S. Census Bureau
from its censuses or sample surveys of manufacturing and
business establishments. The major reasons for noncomparability are different treatment of business units
considered parts of an establishment, such as central
administrative offices and auxiliary units; the industrial
classification of establishments; and different reporting
patterns by multiunit companies. There also are differences
in the scope of the industries covered—for example, the
Census of Business excludes professional services, public
utilities, and financial establishments, whereas these are
included in the BLS statistics.

COMPARABILITY OF HOUSEHOLD DATA
WITH OTHER SERIES
Unemployment insurance data. The unemployed total from
the household survey includes all persons who did not have
a job during the reference week, were currently available
for a job, and were looking for work or were waiting to be
called back to a job from which they had been laid off,
whether or not they were eligible for unemployment insurance. Figures on unemployment insurance claims, prepared
by the Employment and Training Administration of the U.S.
Department of Labor, exclude, in addition to otherwise ineligible persons who do not file claims for benefits, persons who have exhausted their benefit rights, new workers
who have not earned rights to unemployment insurance,
and persons losing jobs not covered by unemployment insurance systems (some workers in agriculture, domestic
services, and religious organizations, and self-employed and
unpaid family workers).
In addition, the qualifications for drawing unemployment
compensation differ from the definition of unemployment
used in the household survey. For example, persons with a
job but not at work and persons working only a few hours

County Business Patterns, U.S. Census Bureau. Data in
County Business Patterns (CBP) differ from BLS establishment statistics in the treatment of central administrative offices and auxiliary units. Differences also may arise because
of industrial classification and reporting practices. In addition, CBP excludes interstate railroads and most of government, and coverage is incomplete for some of the nonprofit
agencies.
Employment covered by State unemployment insurance programs. Most nonfarm wage and salary workers are covered
by the unemployment insurance programs. However, some
employees, such as those working in parochial schools and
churches, are not covered by unemployment insurance, whereas
they are included in the BLS establishment statistics.

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