Measuring labor dynamics: the next generation in labor market information: the Quarterly Census of Employment and Wages provides the core of BLS business statistics; now, new data linkages between the QCEW and unemployment insurance wage records enable economists to better understand the complex job dynamics taking place in the national and local economy

Monthly Labor Review, May, 2004 by Richard L. Clayton, Jay A. Mousa

In recent years, a growing number of researchers have begun to explore the potential for using existing sources of information to address both longstanding and emerging issues in national and local labor markets. One of the main sources of information for these analysts is the Unemployment Insurance (UI) program's administrative records, which provide information about employers and employees.

This issue of the Monthly Labor Review profiles the wide range of uses being made of microdata flowing from the UI system. The articles illustrate the innovative research and the relatively untapped potential for harnessing these administrative records that, together with sophisticated matching techniques, can develop new products and insights.

This article presents an overview of the data, their source, and their current and potential uses. The articles that follow were chosen because they provide a broad profile of many applications already instituted at local levels in a growing number of States. Many States beyond those mentioned in the articles are using these data sets in research projects.

New challenges and data gaps

The forces of globalization, technological change, and changes in the labor force are more important than ever. Relevant, timely, detailed information is needed to capture the impact of these forces and to understand the inherent dynamic qualities of the current labor market.

The existing array of Federal and State survey-based data series provides key economic information on a timely basis, but does not fully portray the dynamic nature of today's job market. The chief difficulties are that the various series do not provide adequate detail, often are not available longitudinally, and cannot illuminate crosscutting issues. Also, surveys are expensive and frequently are limited in industrial and geographic detail. The development of new approaches that take advantage of existing, already-collected administrative data is a response to the challenge of dealing with these problems.

At both State and national levels, an increasing number of economists have begun to harness a range of existing administrative data sets to fill gaps in the data and to provide important information to improve decisionmaking. One of these efforts is the BLS release of business employment dynamics data on gross job gains and losses. The data are drawn from the existing Quarterly Census of Employment and Wages (QCEW) files that have been linked longitudinally. (1)

Related administrative records, such as those on employee wages, also can be linked to the QCEW records. The linked employer-employee file then becomes a powerful tool for understanding the workings of the economy and the job market.

A tale of two files

All of the basic information sources for the BLS business dynamics data flow from the State UI systems. Under UI laws, each business is required to provide two sets of information each quarter: one at the employer level, the other at the employee level.

The QCEW. At the employer level, statistics on the number of employees for each month of the quarter, the total wages, and the contributions to the UI system are generated from Quarterly Contribution Reports submitted by businesses to State Workforce Agencies. The employer-level records contained in these reports are tabulated, reviewed, and edited, and the statistics that are thereby produced provide the core of much of the BLS establishment programs--as they have for more than 30 years since 1972. Also known as the ES-202 series, these quarterly business data constitute the QCEW. (2) The results of this Federal-State cooperative program are published about 6 months after each quarter is over. The basic UI data are augmented by two important supplementary data sources that ensure the accuracy of detailed industry codes, as well as a quarterly Multiple Worksite Report that provides information on employment and wages for each individual business location. Together with the UI data, these three data sources, which cover the private and public sectors, allow detailed industry data to be tabulated and published for the Nation, States, Metropolitan Statistical Areas, and counties. Together, they provide an indispensable source of accurate national and local employment and wage information for use in analyzing various aspects of the labor market.

Among the agencies that use this information are the Employment and Training Administration (ETA), the Bureau of Labor Statistics, and various State and other Federal agencies. Within the Bureau, besides providing the employment benchmark for the Current Employment Statistics monthly payroll survey, the QCEW is the universe frame for the sampling of several important economic surveys. Other agencies use the QCEW for funding allocation purposes, and State workforce agencies and the ETA use it in the administration of the UI program. The QCEW also is an important input in a large number of national statistics. For example, it is the largest single input to the Bureau of Economic Analysis Personal Income estimates. Business locations are currently being geocoded, so that the physical location of an establishment can be displayed precisely on a map. This BLS initiative permits visual displays of data, the development of subcounty data, and detailed geographic analysis of the data.