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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 nonsupervisoryemployee 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, part-time work, stoppages for varying causes, labor turnover, and absenteeism,

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 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 that 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-tomonth; 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 Employment and Wages (Bureau of Employment Security), County Business Patterns (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.

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 I) 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 obtained by dividing the total number of hours paid for reduced to a weekly basis, by the number of employees, as defined above. Gross average weekly earnings are derived by multiplying average weekly hours by average hourly earnings.

Spendable Average Weekly Earnings

Spendable average weekly earnings in current dollars are obtained by deducting estimated Federal social security and income taxes from gross weekly earnings. The amount of income tax liability depends on the number of dependents supported by the worker and his marital status, as well as on the level of his gross income. To reflect these variables, spendable earnings are computed for a worker with no dependents, and a married worker with three dependents. The computations are based on the gross average weekly earnings for all production or nonsupervisory workers in the industry division without regard to total family income.

"Real" earnings are computed by dividing the current Consumer Price Index into the earnings averages for the current month. The level of earnings is thus adjusted for changes in purchasing power since the base period (1957-59).

Average Hourly Earnings Excluding Overtime

Average hourly earnings excluding overtime premium pay are computed by dividing the total productionworker payroll for the industry group by the sum of total production-worker man-hours and one-half of total overtime man-hours. Prior to January 1956, these data were based on the application of adjustment factors to gross average hourly earnings (as described in the Monthly Labor Review, May 1950, pp. 537-540). Both methods eliminate only the earnings due to overtime paid for at 11⁄2 times the straight-time rates. No adjustment is made for other premium payment provisions, such as holiday work, late-shift work, and overtime rates other than time and one-half.

Indexes of Aggregate Weekly Payrolls and Man-Hours

The indexes of aggregate weekly payrolls and manhours are prepared by dividing the current month's aggregate by the monthly average for the 1957-59 period. The man-hour aggregates are the product of average weekly hours and production-worker employment, and the payroll aggregates are the product of gross average weekly earnings and production-worker employment.

Labor turnover is the gross movement of wage and salary workers into and out of employed status with respect to individual establishments. This movement, which relates to a calendar month, is divided into two broad types: Accessions (new hires and rehires) and separations (terminations of employment initiated by either employer or employee). Each type of action is cumulated for a calendar month and expressed as a rate per 100 employees. The data relate to all employees, whether full- or part-time, permanent or temporary, including executive, office, sales, other salaried personnel, and production workers. Transfers to another establishment of the company are included, beginning with January 1959.

Accessions are the total number of permanent and temporary additions to the employment roll, including both new and rehired employees.

New hires are temporary or permanent additions to the employment roll of persons who have never before been employed in the establishment (except employees transferring from another establishment of the same company) or of former employees not recalled by the employer.

Other accessions, which are not published separately but are included in total accessions, are all additions to the employment roll which are not classified as new hires, including transfers from another establishment of the company.

Separations are terminations of employment during the calendar month and are classified according to cause: Quits, layoffs, and other separations, are defined as follows:

Quits are terminations of employment initiated by employees, failure to report after being hired, and unauthorized absences, if on the last day of the month the person has been absent more than 7 consecutive calendar days.

Layoffs are suspensions without pay lasting or expected to last more than 7 consecutive calendar days, initiated by the employer without prejudice to the worker.

Other separations, which are not published separately but are included in total separations, are terminations of employment because of discharge, permanent disability, death, retirement, transfers to another establishment of the company, and entrance into the Armed Forces for a period expected to last more than 30 consecutive calendar days.

Comparability With Employment Series

Month-to-month changes in total employment in manufacturing industries reflected by labor turnover rates are not comparable with the changes shown in the Bureau's employment series for the following reasons: (1) Accessions and separations are computed for the entire calendar month; the employment reports refer to the pay period which includes the 12th of the month; and (2) employees on strike are not counted as turnover actions although such employees are excluded from the employment estimates if the work stoppage extends through the report period,

The principal features of the procedure used to estimate employment for the industry statistics are (1) the use of the "link relative" technique, which is a form of ratio estimation, (2) periodic adjustment of employment levels to new benchmarks, and (3) the use of size and regional stratification.

The 'Link Relative" Technique

From a sample composed of establishments reporting for both the previous and current months, the ratio of current month employment to that of the previous month is computed. This is called a link relative. The estimates of employment (all employees, including production and nonproduction workers together) for the current month are obtained by multiplying the estimates for the previous month by these "link relatives." Other features of the general procedures are described later in the table, Summary of Methods for Computing Industry Statistics on Employment, Hours, Earnings, and Labor Turnover. Further details are given in the technical notes on Measurement of Employment, Hours, and Earnings in Nonagricultural Industries and on Measurement of Labor Turnover, which are available upon request.

Size and Regional Stratification

A number of industries are stratified by size of establishment and/or by region, and the stratified production- or nonsupervisory-worker data are used to weight the hours and earnings into broader industry groupings. Accordingly, the basic estimating cell for an employment, hours, or earnings series, as the term is used in the summary of computational methods may be a whole industry or a size stratum, a region stratum, or a size stratum of a region within an industry.

Benchmark Adjustments

Employment estimates are compared periodically with comprehensive counts of employment which provide "benchmarks" for the various nonagricultural industries, and appropriate adjustments are made as indicated. The industry estimates are currently projected from March 1966 levels. Normally, benchmark adjustments are made annually.

The primary source of benchmark information is the employment data, by industry, compiled quarterly by State agencies from reports of establishments covered under State unemployment insurance laws. These tabulations, covering three-fourths of the total nonfarm employment in the United States, are prepared under the direction of the Bureau of Employment Security. Benchmark data for the residual are obtained from the records of the Social Security Administration, the Interstate Commerce Commission, and a number of other agencies in private industry or government.

The estimates relating to the benchmark month are compared with new benchmark levels, industry by industry. If revisions are necessary, the monthly series of estimates are adjusted between the new benchmark and the preceding one, and the new benchmark for each industry then is carried forward progressively to the current month by use of the sample trends. Thus, under

this procedure, the benchmark is used to establish the level of employment; the sample is used to measure the month-to-month changes in the level.

Data for all months since the last benchmark to which the series has been adjusted are subject therefore to revision. To provide users of the data with a convenient reference source for the revised data, the BLS publishes as soon as possible after each benchmark revision a summary volume of employment, hours, earnings, and labor turnover statistics.

THE SAMPLE

Design

The sampling plan used in the current employment statistics program is an optimum allocation design known as "sampling proportionate to average size of establishment. "The universe of establishments is stratified first by industry and then within each industry by size of establishment in terms of employment. For each industry the total size of the sample is distributed among the size class cells on the basis of average employment per establishment in each cell. In practice, this is equivalent to distributing the predetermined total number of establishments required in the sample among the cells on the basis of the ratio of employment in each cell to total employment in the industry. Within each stratum the sample members are selected at random.

Under this type of design, large establishments fall into the sample with certainty. The size of the samples for the various industries is determined empirically on the basis of experience and of cost considerations. In a manufacturing industry in which a high proportion of total employment is concentrated in relatively few establishments, a large percentage of total employment is included in the sample. Consequently, the sample design for such industries provides for a complete census of the larger establishments with only a few chosen from among the smaller establishments or none at all if the concentration of employment is great enough. On the other hand, in an industry in which a large proportion of total employment is in small establishments, the sample design calls for inclusion of all large establishments, and also for a substantial number of the smaller ones. Many industries in the trade and service divisions fall into this category. To keep the sample to a size which can be handled by available resources, it is necessary to accept samples in these divisions with a smaller proportion of universe employment than is the case for most manufacturing industries. Since individual establishments in these nonmanufacturing divisions generally show less fluctuation from regular cyclical or seasonal patterns than establishments in manufacturing industries, these smaller samples (in terms of employment) generally produce reliable estimates.

In the context of the BLS employment and labor turnover statistics programs, with their emphasis on pro

ducing timely data at minimum cost, a sample must be obtained which will provide coverage of a sufficiently large segment of the universe to provide reasonably reliable estimates that can be published promptly and regularly. The present sample meets these specifications for most industries. With its use, the BLS is able to produce preliminary estimates each month for many industries and for many geographic levels within a few weeks after reports are mailed by respondents, and at a somewhat later date, statistics in considerably greater industrial detail. The tendency of such a sample to produce biased estimates of the level of earnings for certain industries is counteracted by the stratified estimating procedure described under "Estimating Methods."

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Reliability of the Employment Estimates

The estimates derived from the establishment survey 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 relatively large size of the BLS establishment sample assures a high degree of accuracy. However, since the link relative technique requires the use of the previous month's estimate as the base in computing the current month's estimate, small sampling and response errors may cumulate over several months. To remove this accumulated error, the estimates are adjusted annually to new benchmarks. In addition to the sampling and response errors, the benchmark revision adjusts the estimates for changes in the industrial classification of individual establishments (resulting from changes in their product which are not reflected in the levels of estimates until the data are adjusted to new benchmarks). In fact, at the more detailed industry levels, particularly within manufacturing, changes in classification are the major cause of benchmark adjustments. Another cause of differences, generally minor, arises from improvements in the quality of the benchmark data. (A detailed description of the March 1966 benchmark is available from the Bureau upon request.)

The entire difference between the estimate and benchmarks is assumed to have accumulated at a regular rate. Accordingly, the all employee series are adjusted by tapering out the differences for months between the current and the previous benchmark. The series for months subsequent to the benchmark month are revised by projecting the level of the new benchmark by the trend of the unadjusted series.

For the most recent months, national, State, and area estimates are preliminary and are so footnoted in the tables. These figures are based on less than the total sample and are revised when all the reports in the sample design have been received.

Approximations of the standard deviations (based on the experience of the last several years) of revisions

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A comparison of the actual amounts of revisions made in the last 3 benchmark years follows:

Total.
Mining
Contract construction
Manufacturing . . . .

Transportation and public
utilities. . . .

Wholesale and retail trade. Finance, insurance, and

real estate. Services. Government.

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Preliminary

Nonagricultural payroll employment estimates, by industry division, as a percentage of the benchmark for 1964-66

Industry division

500

1,000

1,500

3,000

3,600

1964

1965

99.5

99.9

100.0 100.0 99.5 100.5 101.5 100.9 100.2 99.8

99.7 99.4

100.4 100.1 100.4 99.4

1966

99.4 100.7 99.7

99.0

99.7

100.1

99.5

97.9 100.3 99.8 100.0

STATISTICS FOR STATES AND AREAS

State and area employment, hours, earnings, and labor turnover data are collected and prepared by State agencies in cooperation with BLS. The area statistics relate to metropolitan areas. Definitions for all areas are published each year in the issue of Employment ana Earnings and Monthly Report on the Labor Force that contains State and area annual averages. Changes in definitions are noted as they occur. Additional industry detail may be obtained from the State agencies listed on the inside back cover of each issue. These statistics are based on the same establishment reports used by

BLS for preparing national estimates. For employment, the sum of the State figures may differ slightly from the equivalent official U.S. totals on a national basis, because some States have more recent benchmarks than others and because of the effects of differing industrial and geographic stratification.

UNEMPLOYMENT INSURANCE DATA

Insured unemployment represents the number of persons reporting a week of unemployment under an unemployment insurance program. It includes some persons who are working part time who would be counted as employed in the payroll and household surveys. Excluded are 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 (agriculture, State and local government, domestic service, self-employment, unpaid family work, nonprofit organizations, and firms below a minimum size). The rate of insured unemployment is the number of insured unemployed expressed as a percent of average covered employment in a 12-month period ending 6 to 8 months prior to the week of reference. Initial

Many economic statistics reflect a regularly recurring seasonal movement which can be estimated on the basis of past experience. By eliminating that part of the change which can be ascribed to usual seasonal variation, it is possible to observe the cyclical and other nonseasonal movements in the series. However, in evaluating deviations from the seasonal pattern--that is, changes in a seasonally adjusted series--it is important to note that seasonal adjustment is merely an approximation based on past experience. Seasonally adjusted estimates have a broader margin of possible error than the original data on which they are based, since they are subject not only to sampling and other errors but, in addition, are affected by the uncertainties of the seasonal adjustment process itself. Seasonally adjusted series for selected labor force and establishment data are published regularly in Employment and Earnings and Monthly Report on the Labor Force.

The seasonal adjustment method used for these series is an adaptation of the standard ratio-to-moving average method, with a provision for "moving" adjustment factors to take account of changing seasonal patterns. A detailed description of the method is given in the booklet, The BLS Seasonal Factor Method (1966), which may be obtained from the Bureau on request.

For the States and the areas shown in the B and C sections of this periodical, all the annual average data for the detailed industry statistics currently published by each cooperating State agency are presented (from the earliest date of availability of each series) in a summary volume published annually by the BLS.

SEASONAL ADJUSTMENT

For establishment data, the seasonally adjusted series on weekly hours and labor turnover rates for industry groupings are computed by applying factors directly to the corresponding unadjusted series. However, seasonally adjusted employment totals for all

claims are notices filed by those losing jobs covered by an unemployment insurance program that they are starting a period of unemployment. A claimant who continues to be unemployed a full week is then counted in the insured unemployment figure.

Because of differences in State laws and procedures under which unemployment insurance programs are operated, State unemployment rates generally indicate, but do not precisely measure, differences among the individual States. Persons wishing to receive a detailed description of the nature, sources, inclusions and exclusions, and limitations of unemployment insurance data should address their inquiries to Bureau of Employment Security, Washington, D.C.

employees and production workers by industry division are obtained by summing seasonally adjusted data for the component industries. Indexes of aggregate weekly man-hours, seasonally adjusted, for mining, contract construction, and the major industries in manufacturing are obtained by multiplying average weekly hours, seasonally adjusted, by production workers, seasonally adjusted, and dividing by the 1957-59 base. For total, manufacturing, and durable and nondurable goods, the indexes of aggregate weekly man-hours, seasonally adjusted, are obtained by summing the aggregate weekly man-hours, seasonally adjusted, for the appropriate component industries and dividing by the 1957-59 base.

The seasonally adjusted establishment data for Federal Government are based on a series which excludes the Christmas temporary help employed by the Post Office Department in December. The employment of these workers constitutes the only significant seasonal change in Federal Government employment during the winter months. Furthermore, the volume of such employment may change substantially from year to year because of administrative decisions by the Post Office Department. Hence, it was considered desirable to exclude this group from the data upon which the seasonally adjusted series is based. Factors currently in use for the establishment data are shown in the September 1967 Employment and Earnings and Monthly Report on the Labor Force, and revisions will be made coincidental with the adjustment of series to new benchmark levels.

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