BLS Handbook of Methods

Chapter 2.
Employment, Hours, and Earnings from the Establishment Survey

Uses
Data from the CES program, along with the CPS data, are the first major economic indicators released each month. As such, they are used in the formulation of fiscal and economic policy. CES employment estimates are a primary component of the Index of Coincident Economic Indicators and have proved to be an extremely reliable measure of current economic activity. The manufacturing average weekly hours series is used in the Index of Leading Economic Indicators, which forecasts changes in the business cycle.

Aggregate earnings data are the major component of the preliminary Personal Income estimates in the National Income and Product Accounts. Productivity measures (chapters 12 and 13) and the Industrial Production Index are based on the aggregate hours data. Employment series are a basic input for employment projections by BLS (chapter 15) and State Employment Security Agencies.

The series also are used in the private sector by business firms, labor unions, universities, trade associations, and private research organizations to study economic conditions and to develop plans for the future. Business firms, for example, use the employment, hours, and earnings data for guidance in plant location, sales, and purchases. In addition, firms negotiating long-term purchase contracts often use escalation clauses based on the average hourly earnings series as an aid to adjust payments for changes in wages. Escalation clauses permit an adjustment of the contract price of the products or services being purchased depending on the movement of average hourly earnings in a selected industry.

Both labor and business have shown wide need for industry series on hourly earnings and weekly hours to provide a basis for labor-management negotiations. They not only furnish current and historical information on a given industry but also provide comparative data on related industries.

Next: Reliability of Estimates