Survey Methodology

The sample for the National Compensation Survey (NCS) (Wages, Benefits, Employment Cost Trends —Employment Cost Index (ECI) and Employment Costs for Employee Compensation (ECEC)) is selected using a three-stage design. The first stage involves the selection of areas. The State and local government sample consists of 152 areas that represent the Nation's 361 metropolitan statistical areas and 573 micropolitan statistical areas as defined by the Office of Management and Budget (OMB) in December 2003 and the remaining portions of the 50 States. The private industry sample consists of 151 metropolitan areas and nonmetropolitan areas that represent the Nation's 326 metropolitan statistical areas as defined by OMB in 1994 and the remaining portions of the 50 States. Metropolitan areas are defined as Metropolitan Statistical Areas (MSAs) or Consolidated Metropolitan Statistical Areas (CMSAs). Nonmetropolitan areas are counties and other geographic designations that do not fit the metropolitan area definition. The private industry estimates will begin the conversion to December 2003 OMB area definitions in December 2008.

In the second stage, the sample of establishments is drawn by dividing the sample by industry and ownership. Each sample establishment is selected using a method of sampling called probability proportional to employment size. (See Chapter 8 of the Handbook of Methods.) Use of this technique means that the larger an establishment's employment, the greatest chance of selection.

The third stage of sampling is a probability sample of occupations within a sampled establishment. This step is performed by the field economist during an interview with the respondent using a method called Probability Selection of Occupations (PSO). During this process, the field economist obtains a complete list of employees with each selected employee representing a job within the establishment. As with establishment selection, the selection of a job is based on probability proportional to its size in the establishment. The greater the number of people working in a particular job, the greater the job's chance of selection. The field economist selects a certain number of sample occupations depending on the size of the establishment.

After job selection is complete, the field economist classifies each occupation under its corresponding major occupational group and occupational classification. Currently, NCS uses the 2000 Standard Occupational Classification (SOC) system.

Standard procedures are used to collect and tabulate all NCS data. The methodology and procedures used to estimate vary by product line. Wage series are computed by combining the wages for individual establishment/occupations. Before being combined, individual wage rates are weighted by: number of workers; the sample weight, adjusted for nonresponding establishments and other factors; and the occupation work schedule, which varies depending on whether hourly, weekly, or annual rates are being calculated.

Percentiles are calculated from average hourly wages for sampled establishment jobs with each occupation. The percentiles describe the distribution of an occupation's employment by the average wage rates for its jobs. For example, at the 10th percentile hourly wage for an occupation, one-tenth of the occupation's employment are found in sampled establishment jobs whose average wages are the same or less and nine-tenths are in jobs averaging the same or more. The calculations of the 25th, 50th, 75th, and 90th percentiles follow the same logic.

Benefit series have four weight-adjustment factors applied to the data. The first factor is introduced to account for establishment nonresponse. The second factor accounts for occupational nonresponse, and the third factor adjusts for any special situations that have occurred during data collection. The fourth factor, poststratification, also called benchmarking, is introduced to adjust the estimated employment totals to actual counts of employment by industry for the survey reference date. Appropriate employment or establishment totals are used to calculate the proportion, mean, or percentage that is desired.

To measure compensation costs free from the influence of employment shifts among occupations and industries, the ECI is calculated with fixed employment weights unlike the method with which wage series and benefit series are calculated. Since March 2006 estimates, 2002 fixed employment weights from the Bureau's Occupational Employment Statistics survey (OES) program have been used. The ECI is a standard Laspeyres fixed-weighted index.

The ECEC estimates are based on data collected for the ECI. Unlike the ECI, current employment weights are used to calculate cost levels. These weights are derived from two BLS programs: the Quarterly Census of Employment and Wages and the Current Employment Statistics.

Last Modified Date: June 17, 2008