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Technical Note
This news release presents statistics from two major surveys, the Current
Population Survey (household survey) and the Current Employment Statistics
survey (establishment survey). The household survey provides the information
on the labor force, employment, and unemployment that appears in the A tables,
marked HOUSEHOLD DATA. It is a sample survey of about 60,000 households con-
ducted by the U.S. Census Bureau for the Bureau of Labor Statistics (BLS).
The establishment survey provides the information on the employment, hours,
and earnings of workers on nonfarm payrolls that appears in the B tables, marked
ESTABLISHMENT DATA. This information is collected from payroll records by BLS
in cooperation with state agencies. The sample includes about 160,000 businesses
and government agencies covering approximately 400,000 individual worksites.
The active sample includes about one-third of all nonfarm payroll workers. The
sample is drawn from a sampling frame of unemployment insurance tax accounts.
For both surveys, the data for a given month relate to a particular week or
pay period. In the household survey, the reference week is generally the calen-
dar week that contains the 12th day of the month. In the establishment survey,
the reference period is the pay period including the 12th, which may or may not
correspond directly to the calendar week.
Coverage, definitions, and differences between surveys
Household survey. The sample is selected to reflect the entire civilian
noninstitutional population. Based on responses to a series of questions on work
and job search activities, each person 16 years and over in a sample household
is classified as employed, unemployed, or not in the labor force.
People are classified as employed if they did any work at all as paid employees
during the reference week; worked in their own business, profession, or on their
own farm; or worked without pay at least 15 hours in a family business or farm.
People are also counted as employed if they were temporarily absent from their
jobs because of illness, bad weather, vacation, labor-management disputes, or
personal reasons.
People are classified as unemployed if they meet all of the following criteria:
They had no employment during the reference week; they were available for work at
that time; and they made specific efforts to find employment sometime during the
4-week period ending with the reference week. Persons laid off from a job and
expecting recall need not be looking for work to be counted as unemployed. The
unemployment data derived from the household survey in no way depend upon the
eligibility for or receipt of unemployment insurance benefits.
The civilian labor force is the sum of employed and unemployed persons. Those
not classified as employed or unemployed are not in the labor force. The unemploy-
ment rate is the number unemployed as a percent of the labor force. The labor
force participation rate is the labor force as a percent of the population, and the
employment-population ratio is the employed as a percent of the population.
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Establishment survey. The sample establishments are drawn from private nonfarm
businesses such as factories, offices, and stores, as well as federal, state, and
local government entities. Employees on nonfarm payrolls are those who received pay
for any part of the reference pay period, including persons on paid leave. Persons
are counted in each job they hold. Hours and earnings data are for private busi-
nesses and relate only to production workers in the goods-producing sector and non-
supervisory workers in the service-providing sector. Industries are classified on
the basis of their principal activity in accordance with the 2007 version of the
North American Industry Classification System.
Differences in employment estimates. The numerous conceptual and methodological
differences between the household and establishment surveys result in important dis-
tinctions in the employment estimates derived from the surveys. Among these are:
--The household survey includes agricultural workers, the self-employed, unpaid
family workers, and private household workers among the employed. These groups are
excluded from the establishment survey.
--The household survey includes people on unpaid leave among the employed. The
establishment survey does not.
--The household survey is limited to workers 16 years of age and older. The
establishment survey is not limited by age.
--The household survey has no duplication of individuals, because individuals
are counted only once, even if they hold more than one job. In the establishment
survey, employees working at more than one job and thus appearing on more than
one payroll would be counted separately for each appearance.
Seasonal adjustment
Over the course of a year, the size of the nation's labor force and the levels of
employment and unemployment undergo sharp fluctuations due to such seasonal events as
changes in weather, reduced or expanded production, harvests, major holidays, and the
opening and closing of schools. The effect of such seasonal variation can be very
large; seasonal fluctuations may account for as much as 95 percent of the month-to-
month changes in unemployment.
Because these seasonal events follow a more or less regular pattern each year,
their influence on statistical trends can be eliminated by adjusting the statistics
from month to month. These adjustments make nonseasonal developments, such as de-
clines in economic activity or increases in the participation of women in the labor
force, easier to spot. For example, the large number of youth entering the labor
force each June is likely to obscure any other changes that have taken place rela-
tive to May, making it difficult to determine if the level of economic activity has
risen or declined. However, because the effect of students finishing school in pre-
vious years is known, the statistics for the current year can be adjusted to allow
for a comparable change. Insofar as the seasonal adjustment is made correctly, the
adjusted figure provides a more useful tool with which to analyze changes in economic
activity.
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Most seasonally adjusted series are independently adjusted in both the household
and establishment surveys. However, the adjusted series for many major estimates,
such as total payroll employment, employment in most supersectors, total employment,
and unemployment are computed by aggregating independently adjusted component series.
For example, total unemployment is derived by summing the adjusted series for four
major age-sex components; this differs from the unemployment estimate that would be
obtained by directly adjusting the total or by combining the duration, reasons, or
more detailed age categories.
For both the household and establishment surveys, a concurrent seasonal adjustment
methodology is used in which new seasonal factors are calculated each month, using all
relevant data, up to and including the data for the current month. In the household
survey, new seasonal factors are used to adjust only the current month's data. In the
establishment survey, however, new seasonal factors are used each month to adjust the
three most recent monthly estimates. In both surveys, revisions to historical data
are made once a year.
Reliability of the estimates
Statistics based on the household and establishment surveys are subject to both
sampling and nonsampling error. When a sample rather than the entire population is
surveyed, there is a chance that the sample estimates may differ from the "true"
population values they represent. The exact difference, or sampling error, varies
depending on the particular sample selected, and this variability is measured by the
standard error of the estimate. There is about a 90-percent chance, or level of con-
fidence, that an estimate based on a sample will differ by no more than 1.6 standard
errors from the "true" population value because of sampling error. BLS analyses are
generally conducted at the 90-percent level of confidence.
For example, the confidence interval for the monthly change in total employment
from the household survey is on the order of plus or minus 430,000. Suppose the
estimate of total employment increases by 100,000 from one month to the next. The
90-percent confidence interval on the monthly change would range from -330,000 to
530,000 (100,000 +/- 430,000). These figures do not mean that the sample results are
off by these magnitudes, but rather that there is about a 90-percent chance that the
"true" over-the-month change lies within this interval. Since this range includes
values of less than zero, we could not say with confidence that employment had, in
fact, increased. If, however, the reported employment rise was half a million, then
all of the values within the 90-percent confidence interval would be greater than zero.
In this case, it is likely (at least a 90-percent chance) that an employment rise had,
in fact, occurred. At an unemployment rate of around 5.5 percent, the 90-percent con-
fidence interval for the monthly change in unemployment is about +/- 280,000, and for
the monthly change in the unemployment rate it is about +/- .19 percentage point.
In general, estimates involving many individuals or establishments have lower stan-
dard errors (relative to the size of the estimate) than estimates which are based on a
small number of observations. The precision of estimates is also improved when the
data are cumulated over time such as for quarterly and annual averages. The seasonal
adjustment process can also improve the stability of the monthly estimates.
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The household and establishment surveys are also affected by nonsampling error.
Nonsampling errors can occur for many reasons, including the failure to sample a seg-
ment of the population, inability to obtain information for all respondents in the
sample, inability or unwillingness of respondents to provide correct information on a
timely basis, mistakes made by respondents, and errors made in the collection or pro-
cessing of the data.
For example, in the establishment survey, estimates for the most recent 2 months are
based on substantially incomplete returns; for this reason, these estimates are labeled
preliminary in the tables. It is only after two successive revisions to a monthly esti-
mate, when nearly all sample reports have been received, that the estimate is considered
final.
Another major source of nonsampling error in the establishment survey is the inabil-
ity to capture, on a timely basis, employment generated by new firms. To correct for
this systematic underestimation of employment growth, an estimation procedure with two
components is used to account for business births. The first component uses business
deaths to impute employment for business births. This is incorporated into the sample-
based link relative estimate procedure by simply not reflecting sample units going out
of business, but imputing to them the same trend as the other firms in the sample. The
second component is an ARIMA time series model designed to estimate the residual net
birth/death employment not accounted for by the imputation. The historical time series
used to create and test the ARIMA model was derived from the unemployment insurance uni-
verse micro-level database, and reflects the actual residual net of births and deaths
over the past five years.
The sample-based estimates from the establishment survey are adjusted once a year
(on a lagged basis) to universe counts of payroll employment obtained from administra-
tive records of the unemployment insurance program. The difference between the March
sample-based employment estimates and the March universe counts is known as a benchmark
revision, and serves as a rough proxy for total survey error. The new benchmarks also
incorporate changes in the classification of industries. Over the past decade, absolute
benchmark revisions for total nonfarm employment have averaged 0.2 percent, with a range
from 0.1 percent to 0.6 percent.
Other information
Information in this release will be made available to sensory impaired individuals upon
request. Voice phone: (202) 691-5200; TDD message referral phone: 1-800-877-8339.
