Implementing the New Sample Design for the Current Employment Statistics Survey

Business Economics, Oct, 2000 by Patricia M. Getz

In June 1995, the Bureau of Labor Statistics (BLS) announced plans for a comprehensive sample redesign of its monthly payroll survey--the first one ever undertaken in the program's long history, which dates back over sixty years. In June 2000, following completion of the research and production test phases of the project, the first estimates from the redesigned sample were published by BLS for the wholesale trade industry. Publication for the remaining industry divisions will be phased in between 2001 and 2003. The completion of the phase-in for the redesign in June 2003 will coincide with the conversion of the Current Employment Statistics (CES) series from industry coding based on the 1987 Standard Industrial Classification (SIC) system to industry coding based on the North American Industrial Classification System (NAICS).

Background

The CES survey is a federal/state cooperative program that provides monthly estimates of nonfarm payroll jobs and the hours and earnings of workers, derived from a sample of over 350,000 business establishments nationwide. These data are some of the most closely watched and widely used economic indicators among public and private policy makers. In addition to serving as major economic indicators in their own right, CES data series are also inputs to several other key economic statistics including the indexes of leading and coincident indicators, the national income and product accounts, productivity measures, and indexes of industrial production. The CES program offers several important attributes to its users: timely release of data, an abundance of industry and geographic detail, and an annual benchmark to full population counts from state unemployment insurance (UI) tax records, which helps to maintain overall survey accuracy.

However, the CES program also has faced with some serious limitations. Most significantly, the CES survey has been based on a quota sample since its inception, which predated the introduction of probability sampling as the internationally recognized standard for sample surveys. Quota samples are known to be at risk for potentially significant biases. Thus, the sample redesign, which introduces a probability-based design for CES, more effectively insures a proper representation of the universe of nonfarm business establishments through randomized selection techniques and improved estimation methodology.

In addition, the CES sample redesign addresses a second critical limitation in the program--lack of timely sample-based representation of employment from new business births. Procedures have been developed for regular sample updates that ensure better representation of new units in the CES sample. Time-series modeling techniques are used to estimate the residual portion of employment from business births that are not accounted for through improved sampling techniques.

Introduction of a probability-based sample for the CES survey also allows for the publication of sampling errors and confidence intervals--standard survey accuracy measures not directly applicable to the quota design.

Summary of Sample Redesign Implementation Plans

Initial implementation in June 2000

BLS began a phased-in implementation of the new CES sample design in June 2000, coincident with the publication of the March 1999 CES national benchmark revisions. The major effects from this introduction were:

* The wholesale trade industry series for CES national estimates were converted to the new probability-based procedures, and estimates for April 1998 forward were revised to incorporate these changes.

* Net birth/death modeling replaced bias adjustment for wholesale trade series.

* There were no series breaks in the wholesale trade estimates.

* There were no changes to the wholesale trade publication levels.

* Publication of sampling errors and confidence intervals for wholesale trade series began.

* There were no methodology changes to any industry series beyond the national wholesale trade estimates in June 2000.

Further implementation plans

Probability-based estimates for state and area wholesale trade series are targeted for introduction in March 2001 with the next state benchmark revision. After the initial conversion of wholesale trade, BLS will continue a phase-in of the new design by major industry division. Implementation of the new sample and estimators for major divisions are scheduled to coincide with the publication of benchmark revisions in order not to disrupt published over-the-month changes for current month estimates with a continually changing sample composition. The complete schedule for redesign implementation for the national, state, and metropolitan area CES series is shown the table.

Publication and error measurement

Initial implementation for each major industry division will preserve existing publication levels for the majority of series. There are no major changes planned to publication levels in any industry divisions until the introduction of NAICS-based series in 2003.

The benchmark revision will continue to be the most comprehensive error measure for the all-employee estimates, but a measure of sampling error also will be available. Sampling errors will be calculated for hours and earnings estimates as well. This allows for the first time the calculation of standard confidence intervals for CES estimates.