Experimental Size Class Employment, Hours, and Earnings Series from the Current Employment Statistics Survey

Background

The Current Employment Statistics (CES) program is examining the feasibility of publishing monthly CES employment, hours, and earnings estimates by firm size. Currently, BLS publishes the first preliminary CES employment estimates for a given month at selected industry detail. Subsequent estimates for that month are published in more industry detail with the following month's first estimates. Research suggests that the available sample may make it feasible to publish monthly size-class employment estimates by major industry sector together with the first preliminary estimates. Employment change by firm size would add a valuable dimension of detail to understanding current employment trends.

Experimental Designation

CES has designated these new employment series by firm size as experimental because the research to date has been completed in an environment outside of the normal monthly production process.

Experimental Data Availability

CES data users interested in the experimental size class data can download it as a compressed .zip file (ftp://ftp.bls.gov/pub/special.requests/ee/ces.sizeclass.zip). BLS welcomes user comments and inquiries on these data or methodologies via email or phone at 202-691-6555.

On February 14, 2012, BLS released experimental size class data from the Current Employment Statistics (CES) program; these data include National level estimates by major industry sector from April 1990 through March 2011. At present, estimates of all employees by firm size are available on a not seasonally adjusted and on a seasonally adjusted basis. Since the February release, BLS has received a substantial number of questions and comments about the experimental data. Based on this input, BLS is considering refinements to the initial methodology. BLS plans to produce additional CES size class data after these refinements have been evaluated.

 

Overview of Size Class Data

Total Private Employment by Size Class

Since 1990, firms with 500 or more employees have accounted for more than 40 percent of Total private employment. The percentage of private employment accounted for by each size class has remained quite stable over time. Employment trends in small firms, those with 1-49 employees, have led larger firms at cyclical turning points.

Chart 1: Total private employment by firm size

 

Definitions and Methodology

Sizing Basis

CES relies on the Employer Identification Number (EIN) as reported with Unemployment Insurance (UI) filings to define a firm and to determine its size. Use of the EIN is consistent with other BLS data that are based on firm size and allows comparability with other size-based statistics. The definition for identifying firms by size differs from official CES sample stratification methodology, which defines businesses by UI numbers. The EIN allows BLS to identify firms across state lines, while UI numbers are unique to each state where a firm does business.

Size Groupings

CES groups firms into three size classes. These three sizes ensure adequate sample coverage while providing analytical detail.

 

Size Class Definitions
Size Employees

1

 1 - 49

2

 50 - 499

3

 500 +

Determining Firm Size

CES sample selection methodology measures size using a 12-month maximum employment level. The size class of a firm (EIN) is determined using the same 12-month maximum employment criteria. The firm size is attributed to all establishments in the firm. Given that the CES sample is selected at the UI account level, not all establishments in a firm may be selected as part of the CES sample. This methodology results in stable sample allocation for three size classes.

Industry Detail

In order to provide industry detail for analysis while ensuring adequate sample coverage, CES produced experimental estimates by size class for major industry sectors (generally 2-digit NAICS). The following table shows the industry detail for which size-based estimates are available.

Size Class Industry Detail
Industry Title CES Industry Code

Total private (1)

 05-000000

Mining and logging

 10-000000

Construction

 20-000000

Manufacturing (1)

 30-000000

Durable goods

 31-000000

Nondurable goods

 32-000000

Trade, transportation, and utilities (1)

 40-000000

Wholesale trade

 41-420000

Retail trade

 42-000000

Transportation and warehousing

 43-000000

Utilities

 44-220000

Information

 50-000000

Financial activities

 55-000000

Professional and business services

 60-000000

Education and health services

 65-000000

Leisure and hospitality

 70-000000

Other services

 80-000000
(1) Aggregate Sector

 

Industry Allocation

Individual firms may have establishments in several different industry groups. For example, a large firm that makes and distributes a product may have parts of its employment represented in the large size class of several industries like Manufacturing, Transportation and warehousing, and Retail trade.

For estimation purposes, data are placed in the industry of the individual establishments. That is, a firm's employment is distributed among the industries of its various establishments in the size class of all establishments combined.

Benchmark Levels

On an annual basis, BLS realigns the CES sample-based employment estimates for March of each year with UI-based population counts or benchmarks for March. Employment by size must be further reconciled to account for employment in establishments not classified by industry and in establishments uncovered by UI. Ratios of industry employment by size to total industry employment in all three size classes are calculated and multiplied against the official industry employment that includes non-covered and unclassified employment.

Birth/Death Model

CES uses a birth/death model to adjust monthly estimates by adding a net birth/death residual to the estimate. This reduces a primary source of non-sampling error which is the inability of the sample to capture, on a timely basis, employment growth generated by new business formations.

For estimating size class employment, size-based birth/death residuals are used. These size-based residuals are additively controlled on a monthly basis to the birth/death residual at the industry level before being included in the employment estimate.

Estimate Consistency

CES industry estimates are made at a detailed level and aggregated to higher summary levels. Size-class estimates are made at a higher industry level than industry estimates. Because these different groupings of sample have differing sample variances, the resulting summary levels of estimates by size class may not be exactly the same as the total industry estimate. To ensure that the sum of the three size-class pieces is equal to the industry total, size-class estimates are calibrated on a monthly basis to the industry level.

Seasonal Adjustment

Seasonal adjustment is the process of estimating and removing periodic fluctuations caused by events such as weather, holidays, and the beginning and ending of the school year. Seasonal adjustment makes it easier to observe fundamental changes in the level of the series, particularly those associated with general economic expansions and contractions. Size class estimates, after they have been calibrated, are seasonally adjusted using X-12 ARIMA. The seasonally adjusted values are then calibrated to the seasonally adjusted industry level.

Historical Data

The research series from March 2006 were estimated using collected CES sample following standard CES estimation methodology (www.bls.gov/web/empsit/cestn1.htm) and the methods described on this page. However, because it was not feasible to reliably allocate firm size to sample before March 2006, an alternative approach was necessary.

A two-step process was used to create historical size class series from April 1990 to March 2006. First, monthly industry size class ratios were calculated using data from Quarterly Census of Employment and Wages (QCEW). Then, these ratios were applied to published CES levels. This process provides an extended history of size class employment levels while accounting for differences between CES and QCEW in scope and seasonality.

Last Modified Date: July 26, 2012