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ment" by Robert L. Stein in the February 1967 issue of Employment and Earnings and Monthly Report on the Labor Force. Reprints may be obtained upon request.
Noncomparability of labor force levels
Before the changes introduced in 1967, the labor force data were not comparable for three earlier periods: (1) Beginning 1953, as a result of the introduction of data from the 1950 census into the estimation procedure, population levels were raised by about 600,000; labor force, total employment, and agricultural employment by about 350,000, primarily affecting the figures for totals and males; other categories were relative unaffected; (2) beginning 1960, the inclusion of Alaska and Hawaii resulted in an increase of about 500,000 in the population and about 300,000 in the labor force, four-fifths of this in nonagricultural employment; other labor force categories were not appreciably affected; (3) beginning 1962, the introduction of figures from the 1960 census reduced the population by about 50,000, labor force and employment by about 200,000; unemployment totals were virtually unchanged. In addition, beginning 1972, information from the 1970 census was introduced into the estimation procedures, producing an increase in the civilian noninstitutional population of about 800,000; labor force and employment totals were raised by a little more than 300,000, and unemployment levels and rates were essentially unchanged. A subsequent population adjustment based on the 1970 census was introduced in March 1973. This adjustment affected the white and Negro and other races groups but had little effect on totals. The adjustment resulted in the reduction of nearly 300,000 in the white population and an increase of the same magnitude in the Negro and other races population. Civilian labor force and total employment figures were affected to a lesser degree; the white labor force was reduced by 150,000, and the Negro and other races labor force rose by about 210,000. Unemployment levels and rates were not affected significantly.
Beginning in January 1974, the methodology used to prepare independent estimates of the civilian noninstitutional population was modified to an "inflation-deflation" approach. This change in the derivation of the population estimates had its greatest impact on estimates of 20-24 year-old malesparticularly those of Negro and other races-but had little effect on 16 and over totals. Additional information on the adjustment procedure appears in "CPS Population Controls Derived from Inflation-Deflation Method of Estimation" in the February 1974 issue of Employment and Earnings.
Changes in occupational classification system
Beginning with 1971, the comparability of occupational employment data was affected as a result of changes in census Occupational classifications introduced into the Current Population Survey (CPS). These changes stemmed from an exhaustive review of the classification system to be used for the 1970 Census of Population. This review, the most comprehensive since the 1940 census, was to reduce the size of large groups, to be more specific about general and "not elsewhere classified" groups, and to provide information on emerging significant Occupations. Differences in March 1970 employment levels tabulated on both the 1960 and 1970 classification systems ranged from a drop of 650,000 in operatives to an increase of
between these two groups; the nonfarm laborers group increased by 420,000, and changes in other groups amounted to 220,000 or less.
An additional major group was created by splitting the operatives category into two: operatives, except transport, and transport equipment operatives. Separate data for these two groups first became available in January 1972. At the same time, several changes in titles, as well as in order of presentation, were introduced; for example, the title of the managers, officials, and proprietors group was changed to "managers and administrators, except farm," since only proprietors performing managerial duties are included in the category.
Apart from the effects of revisions in the occupational classification system beginning in 1971, comparability of occupational employment data was further affected in December 1971, when a question eliciting information on major activities or duties was added to the monthly CPS questionnaire in order to determine more precisely the occupational classification of individuals. This change resulted in several dramatic occupational shifts, particularly from managers and administrators to other groups. Thus, meaningful comparisons of occupational levels cannot be made between 1972 and earlier periods. However, revisions in the occupational classification system as well as in the CPS questionnaire are believed to have had but a negligible impact on unemployment rates.
Additional information on changes in the occupational classification system of the CPS appears in "Revisions in Occupational Classifications for 1971" and "Revisions in the Current Population Survey" in the February 1971 and February 1972 issues, respectively, of Employment and Earnings.
Under the estimation methods used in the CPS, all of the results for a given month become available simultaneously and are based on returns from the entire panel of respondents. There are no subsequent adjustments to independent benchmark data on labor force, employment, or unemployment. Therefore, revisions of the historical data are not an inherent feature of this statistical program.
1. Noninterview adjustment. The weights for all interviewed households are adjusted to the extent needed to account for occupied sample households for which no information was obtained because of absence, impassable roads, refusals, or unavailability of the respondent for other reasons. This adjustment is made separately by combinations of sample areas and, within these, for six groups-two race categories (white, and Negro and other races) within three residence categories. For sample areas which are standard metropolitan statistical areas (SMSA's), these residence categories are the central cities, and the urban and the rural balance of the SMSA's. For other sample areas, the residence categories are urban, rural nonfarm, and rural farm. The proportion of sample households not interviewed varies from 3 to 5 percent depending on weather, vacations, etc.
2. Ratio estimates. The distribution of the population selected for the sample may differ somewhat, by chance, from that of the Nation as a whole, in such characteristics as age, color, sex, and residence. Since these population characteristics are closely correlated with labor force participation and other principal measurements made from the sample, the latter estimates can be
known distribution of these population characteristics. This is accomplished through two stages of ratio estimates as follows:
a. First-stage ratio estimate. This is a procedure in which the sample proportions are weighted by the known 1970 Census data on the color-residence distribution of the population. This step takes into account the differences existing at the time of the 1970 Census between the color-residence distribution for the Nation and for the sample areas.
b. Second-stage ratio estimate. In this step, the sample proportions are applied to independent current estimates of the population by age, sex, and color. Prior to January 1974 these estimates were prepared by carrying forward the most recent census data (1970) after taking account of subsequent aging of the population, births, deaths, and migration between the United States and other countries.
Beginning in 1974, the "inflation-deflation" method of deriving independent population controls was introduced into the CPS estimation procedures. In this procedure, the most recent census population adjusted to include estimated net census undercount by age, sex, and color (i.e., "inflated") is carried forward to each subsequent month and later age by adding births, subtracting deaths, and adding net migration. These postcensal population estimates are then "deflated" to census level to reflect the pattern of net undercount in the most recent census by age, sex, and color. The actual percent change over time in the population in any age group is preserved. 3. Composite estimate procedure. In deriving statistics for a given month, a composite estimating procedure is used which takes account of net changes from the previous month for continuing parts of the sample (75 percent) as well as the sample results for the current month. This procedure reduces the sampling variability of month-to-month changes especially and of the levels for most items also.
Rounding of estimates
The sums of individual items may not always equal the totals shown in the same tables because of independent rounding of totals and components to the nearest thousand. Differences, however, are insignificant.
Table B. Standard error of level of monthly estimates [In thousands]
Reliability of the estimates
Since the estimates are based on a sample, they may differ from the figures that would have been obtained if it were possible to take a complete census using the same schedules and procedures.
The standard error is a measure of sampling variability, that is, the variations that might occur by chance because only a sample of the population is surveyed. The chances are about 2 out of 3 that an estimate from the sample would differ from a complete census by less than the standard error. The chances are about 19 out of 20 that the difference would be less than twice the standard error.
Table A shows the average standard error for the major employment status categories, by sex, computed from data for past months. Estimates of change derived from the survey are
to the next month is more closely related to the standard error of the monthly level for that item than to the size of the specific month-to-month change itself. Thus, in order to use the approximations to the standard errors of month-to-month changes as presented in table C, it is first necessary to obtain the standard error of the monthly level of the item in table B, and then find the standard error of the month-to-month change in table C corresponding to this standard error of level. It should be noted that table C applies to estimates of change between 2 consecutive months. For changes between the current month and the same month last year, the standard errors of level shown in table B are acceptable approximations.
Illustration. Assume that the tables showed the total number of persons working a specific number of hours as 15,000,000, an increase of 500,000 over the previous month. Linear interpolation in the first column of table B shows that the standard error of 15,000,000 is about 133,000. Consequently, the chances are about 68 out of 100 that the sample estimate differs by less than 133,000 from the figure which would have been obtained from a complete count of the number of persons working the given number of hours. Using the 133,000 as the standard error of the monthly level in table C, it may be seen that the standard error of the 500,000 increase is about 126,000.
may be used for percentages and base figures not shown in table D. As a general rule, percentages will not be published when the monthly base is less than 75,000 or the annual base is less than 35,000. Table E shows the standard error of percentage of monthly levels and consecutive month change for frequently analyzed unemployment rate series. These errors are computed from data for recent months. Errors on change for nonconsecutive months are slightly greater (by roughly a factor of 1.1 times the month-to-month error).
Table E. Standard error of percentage for major unemployment rates
Total (all civilian workers).....
Unemployed 15 weeks and
Labor force time lost
White-collar workers ...
(B, C, and D tables)
Payroll reports provide current information on wage and salary employment, hours, earnings, and labor turnover in nonagricultural establishments, by industry and geographic location.
Under cooperative arrangements with State agencies, the respondent fills out a single employment or labor turnover reporting form, which is then used for national, State, and area estimates. This eliminates duplicate reporting on the part of respondents and, together with the use of identical techniques at the national and State levels, insures maximum comparability of estimates.
State agencies mail the forms to the establishments and examine the returns for consistency, accuracy, and completeness. The States use the information to prepare State and area series and then send the establishment data to the BLS for use in preparing the national series.
Two types of data collection schedules are used: Form BLS 790-Monthly Report on Employment, Payroll, and Hours; and Form DL 1219-Monthly Report on Labor Turnover. These schedules are of the "shuttle" type, with space for each month of the calendar year. The collection agency returns the schedule to the respondent each month so that the next month's data can be entered. This procedure assures maximum comparability and accuracy of reporting, since the respondent can see the figures he has reported for previous months.
Form BLS 790 provides for entry of data on the number of full- and part-time workers on the payrolls of nonagricultural establishments and, for most industries, payroll and manhours of production and related workers or nonsupervisory workers for the pay period which includes the 12th of the month. Form DL 1219 provides for the collection of information on the total number of accessions and separations, by type, during the calendar month.
Establishments reporting on Form BLS 790 and Form DL 1219 are classified into industries on the basis of their principal product or activity determined from information on annual sales volume. This information is collected each year on a supplement to the monthly 790 or 1219 report. For an establishment making more than one product or engaging in more than one activity, the entire employment of the establishment is included under the industry indicated by the most important product or activity.
All national, State, and area employment, hours, earnings, and labor turnover series are classified in accordance with the Standard Industrial Classification Manual, Bureau of the Budget, 1967.
Employment data, except those for the Federal Government, refer to persons on establishment payrolls who received pay for any part of the pay period which includes the 12th of the month. For Federal Government establishments, employment figures represent the number of persons who occupied positions on the last day of the calendar month. Intermittent workers are counted if they performed any service during the month.
The data exclude proprietors, the self employed, unpaid volunteer or family workers, farm workers, and domestic workers in households. Salaried officers of corporations are included. Government employment covers only civilian employees; military personnel are excluded.
Persons on establishment payrolls who are on paid sick leave (when pay is received directly from the firm), on paid holiday or paid vacation, or who work during a part of the pay period and are unemployed or on strike during the rest of the period, are counted as employed. Not counted as employed are persons who are laid off, on leave without pay, or on strike for the entire period or who are hired but have not been paid during the period.
Industry hours and earnings
Hours and earnings data are derived from reports of payrolls and man-hours for production and related workers in manufacturing and mining, construction workers in contract construction, and nonsupervisory employees in the remaining private nonagricultural components. For Federal Government, hours and earnings relate to all employees, both supervisory and nonsupervisory. Terms are defined below. When the pay period reported is longer than 1 week, figures are reduced to a weekly basis.
Production and related workers include working foreman and all nonsupervisory workers (including lead men and trainees) engaged in fabricating, processing, assembling, inspection, receiving, storage, handling, packing, warehousing, shipping, maintenance, repair, janitorial and watchman services, product development, auxiliary production for plant's own use (e.g., power plant), and recordkeeping and other services closely associated with the above production operations.
Construction workers include the following employees in the contract construction division: Working foremen, journey. men, mechanic's apprentices, laborers, etc., 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 employees (not above the working supervisory level) such as office and clerical workers, repairmen, salespersons, operators, drivers, physicians, lawyers, accountants, nurses, social workers, research aids, teachers,
workers, custodial workers, attendants, linemen, laborers, janitors, watch men, and similar occupational levels, and other employees whose services are closely associated with those of the employees listed.
Payroll covers the payroll for full- and part-time production, construction, or nonsupervisory workers who received pay for any part of the pay period which includes the 12th of the month. The payroll is reported before deductions of any kind, e.g., for old age and unemployment insurance, group insurance, withholding tax, bonds or union dues; also included is pay for overtime, holidays, vacations, and sick leave paid directly by the firm. Bonuses (unless earned and paid regularly each pay period), other pay not earned in the pay period reported (e.g., retroactive pay), tips, and the value of free rent, fuel, meals, or other payment in kind are excluded. "Fringe benefits" (such as health and other types of insurance, contributions to retirement, etc. paid by the employer) are also excluded.
Man-hours cover man-hours paid for, during the pay period which includes the 12th of the month, for production, construction, or nonsupervisory workers. The man-hours include hours paid for holidays and vacations, and for sick leave when pay is received directly from the firm.
Overtime hours cover hours worked by production or related workers for which overtime premiums were paid because the hours were in excess of the number of hours of either the straight-time workday or the workweek during the pay period which includes the 12th of the month. Weekend and holiday hours are included only if overtime premiums were paid. Hours for which only shift differential, hazard, incentive, or other similar types of premiums were paid are excluded.
Gross average hourly and weekly earnings
Average hourly earnings are on a "gross" basis, reflecting 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. Shifts in the volume of employment between relatively high-paid and low-paid work and changes in workers' earnings in individual establishments also affect the general earnings averages. Averages for groups and divisions further reflect changes in average hourly earnings for individual industries.
Averages of hourly earnings differ from wage rates. Earnings are the actual return to the worker for a stated period of time; rates are the amounts stipulated for a given unit of work or time. The earnings series does not measure the level of total labor costs on the part of the employer since the following are excluded: Irregular bonuses, retroactive items, payments of various welfare benefits, payroll taxes paid by employers, and earnings for those employees not covered under the production-worker, construction-worker, or nonsupervisory employee definitions.
Gross average weekly earnings are derived by multiplying average weekly hours by average hourly earnings. Therefore, weekly earnings are affected not only by changes in gross average hourly earnings but also by changes in the length of the workweek. Monthly variations in such factors as proportion of part-time workers, stoppages for varying causes, labor turnover during the survey period, and absenteeism for which employees are not paid may cause the average workweek to fluctuate.
Long-term trends of gross average weekly earnings can be affected by structural changes in the makeup of the work force. For example, persistent long-term increases in the proportion of
industries have reduced average workweeks in these industries and have affected the average weekly earnings series.
Average weekly hours
The workweek information relates to the average hours for which pay was received and is different from standard or scheduled hours. Such factors 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 overtime hours
The overtime hours represent the portion of the gross average weekly hours which were in excess of regular hours and for which overtime premiums were paid. If an employee worked on a paid holiday at regular rates, receiving as total compensation his holiday pay plus straight-time pay for hours worked that day, no overtime hours would be reported.
Since overtime hours are premium hours by definition, gross weekly hours and overtime hours do not necessarily move in the same direction from month-to-month; for example, overtime premiums may be paid for hours in excess of the straight-time workday although less than a full week is worked. Diverse trends at the industry group level also may be caused by a marked change in gross hours for a component industry where little or no overtime was worked in both the previous and current months. In addition, such factors as stoppages, absenteeism, and labor turnover may not have the same influence on overtime hours as on gross hours.
Hours and earnings for total private nonagricultural industries
This series covers all nonagricultural industry divisions except government. The principal source of payroll data is Form BLS 790. Secondary source material such as the Bureau's Employ ment and Wages, County Business Patterns of the Bureau of the Census, and additional supporting information such as The Hospital Guide, Part II, of the American Hospital Association and special studies by the National Council of Churches supplement data for certain industry groups within the service division.
For a technical description of this series, see the article, "Hours and Earnings for Workers in Private Nonagricultural Industries," published in the May 1967 issue of Employment and Earnings and Monthly Report on the Labor Force. Reprints are available upon request.
Railroad hours and earnings
The figures for class I railroads (excluding switching and terminal companies) are based on monthly data summarized in the M-300 report of the Interstate Commerce Commission and relate to all employees except executives, officials, and staff assistants (ICC group 1) who received pay during the month Gross average hourly earnings are computed by dividing total compensation by total hours paid for. Average weekly hours are