Tuesday, April 28, 2015

A short guide to measures of employment, wages and income



Over the last few years I’ve spent a lot of time discussing employment with various other market participants, commentators, reporters and other assorted interested observers and, in my experience, one of the biggest obstacles to productive exchange is an incomplete understanding of the various measures of income & employment, what they attempt to estimate and how the estimates are arrived at. I put together this short description, which I hope to keep updating in the future, in an attempt to create a quick reference to various measures of employment, wages and income both for myself and colleagues.

To avoid any confusion related to nomenclature, it’s important to define some of the terms that I will use and how they relate to each other. The labor force is the portion of the population that is employed, unemployed, or discouraged (1). Estimates of the labor force, (un)employment levels, and demographic characteristics of the labor force come from the Current Population Survey (CPS), commonly referred to as the “household survey”, collected from a sample of 60,000 households by the Bureau of Census for the Bureau of Labor Statistics (BLS). Some key definitions are reproduced below:

Employed persons consist of: persons who did any work for pay or profit during the survey reference week; persons who did at least 15 hours of unpaid work in a family-operated enterprise; and persons who were temporarily absent from their regular jobs because of illness, vacation, bad weather, industrial dispute, or various personal reasons.
Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Persons who were not working and were waiting to be recalled to a job from which they had been temporarily laid off are also included as unemployed.
Discouraged workers are a subset of persons marginally attached to the labor force. The marginally attached are those persons not in the labor force who want and are available for work, and who have looked for a job sometime in the prior 12 months, but were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

In addition to the household survey, the BLS also conducts the Current Employment Statistics (CES) survey, commonly referred to as the “establishment survey” because it surveys establishments (employers). It covers about 143,000 employers which, in aggregate, employ over 588,000 persons (2). The establishment survey includes any full- or part-time worker that was paid during the pay period that includes the 12th of the month excludes self-employed workers, farm workers, domestic workers and non-civilian government workers. In addition to estimates of payroll employment, the establishment survey provides estimates of hours worked and hourly earnings for the estimated 77.2 million workers paid at hourly rates (3).

I will use the word “worker” to describe a member of the labor force and the word “employee” for a person on an establishment’s payroll. It is important to note that because an employed worker may be employed by zero (e.g. in the case of self-employed) or more establishments, these are not interchangeable. The household survey counts as “employedworkers who may or may not be on a payroll, while an employee is a worker that is currently on a payroll. The sum of all the remuneration employees receive for their work is compensation.

An estimate of Compensation of Employees is released quarterly by the Bureau of Economic Analysis (BEA) as part of the National Income accounts. Compensation of employees is the sum of wages and salaries and noncash benefits (e.g. retirement plan contributions and employer-provided health care plans) paid or provided to US residents by US or foreign employers. (4) This measure can effectively be thought of as the “labor share” of income. It is important to note that this measure excludes income from self-employment, including what is commonly referred to as “1099 income,” non-employee compensation paid to independent contractors, which is recorded as Proprietor’s Income.

Wage & Salary Disbursals, a monthly estimate which is lagged by one month is an almost perfect proxy for the wages & salaries portion of compensation of employees. This measure represents the actual aggregate compensation that employers paid both wage and salary employees and is a function of employment levels, salaries, hours worked and the rate at which those hours were paid, including overtime and paid time off. This measure deviates slightly from the quarterly series in that it is based on disbursements while the quarterly series is based on accruals.

The two most popular measures of employment are the establishment survey’s non-farm payrolls (NFP), an estimate for the number of jobs in the universe covered by the establishment survey, and the employment level estimate from the household survey. As previously mentioned, these measures are not equivalent, but the closest measure to NFP in the household survey is probably Employment Level - Nonagriculture, Wage and Salary Workers. As can be seen clearly here, the difference between the two is explained almost entirely by multiple jobholders.

Average Weekly Hours and Average Weekly of Production and Nonsupervisory Employees are measures of hours worked (not scheduled). It is calculated by dividing the total weekly hours by the number of employees paid for those hours for a cell and then calculating a weighted average across industries (2).

Average Hourly Earnings and Average Hourly Earnings of Production and Nonsupervisory Employees are not measures of wage rates. They are aggregate measures of the amounts paid to workers which may include distortions such as overtime or holiday pay or fluctuations in the proportion of hours worked by higher or lower waged workers. They are calculated by dividing the sum of the payroll by the total hours worked for a cell and then calculating a weighted average across industries. It’s important to note that these series cannot be used as a measure of wage inflation as they do not control for overtime or the composition of the workers. For example, in a rising wage environment that coincides with an increase in low wage employees and an increasing number of hours worked by those employees, average hourly earnings could fall even though a measure that controlled for occupation would rise. Special bonuses and non-cash compensation are not reflected in this measure.

Multiplying the estimates of average hourly earnings and average weekly hours would result in an estimate of average weekly earnings, the average gross weekly pay for an hourly position before any deductions (such as payroll and income taxes, health plan deductions, etc.) which are available on a monthly periodicity; however, a better measure of hourly earnings is released quarterly based on the household survey. The Usual Weekly Earnings of Wage and Salary Workers as part of the provides an estimate of quantile boundaries of weekly earnings before taxes and other deductions (5) which control for various demographic factors as well as weighted aggregates meant to be representative of the population.  In contrast to all the previous data series mentioned, this release holds information as to the distribution of earnings and allows us to see where changes in wages and employment are happening in the context of sex, age, race, occupation, full- or part-time status, and educational attainment.

Together, these measures give us an idea of how money is paid by employers, to how many people, as well as how that income is distributed and the aggregate utilization of hourly workers. However, none of these measures are a true measure of wage inflation, although the median of earnings of full-time employees by occupation can be close. For a closer look at wage inflation we have to look at the National Compensation Survey (NCS).
The NCS is a quarterly establishment-based survey that provides comprehensive measures of employer costs for employee compensation, compensation trends, and the incidence of employer-provided benefits among civilian workers, excluding federal, quasi-federal workers, overseas, and self-employed workers (6). The two main components of the NCS are the Employment Cost Index (ECI) and Employer Costs for Employee Compensation (ECEC). The ECI, one of the better measures of compensation inflation, provides a “measure of the change in the cost of labor independent of employment shifts amongst occupations and industry categories” and its composition by occupational groups and industry supersectors grouped into private sector or state & local employers. The ECI tracks changes in compensation within establishment jobs, not individuals, so an employee being promoted or changing jobs within the establishment would not affect the index. While the ECI measures changes in per employee hour wages paid to employees and is presented as an index level, the ECEC measures changes in the cost of per employee hour cost to employers and is presented in dollar amounts.
Finally, the US Treasury provides a daily record of assorted deposits and withdrawals in the Daily Treasury Statement (DTS) which includes deposits for “Withheld Income and Employment Taxes,” the portion of gross pay that employers withhold for income and FICA tax purposes. In contrast to numbers from the previously mentioned releases, this is not an estimate and is not revised. It is a true, real-time indicator of aggregate wages disbursed and can be used as a proxy until Wage & Salary Disbursals data is ready later-on. It is important to note that, because deposits for withholdings are not necessarily made simultaneously with payroll (the Treasury allows for a short lag between disbursal and deposit) and payroll periodicity varies between establishments, short-term periods will be noisy and this data can’t be used to approximate month-to-month changes in the seasonally-adjusted annual rate of disbursals without significant adjustments. In particular, deposits tend to be elevated on common “paydays” like Friday, Monday, and the turn of the month.

Works Cited

1. Bureau of Labor Statistics. Labor Force Statistics. Current Population Survey. [Online] April 2015. http://www.bls.gov/cps/lfcharacteristics.htm.
2. —. Technical Notes for the Current Employment Statistics Survey. Current Employment Statistics. [Online] April 2015. http://www.bls.gov/web/empsit/cestn.htm.
3. —. Minimum wage workers: Characteristics of minimum wage workers, 2014. Current Population Survey. [Online] April 2015. http://www.bls.gov/opub/reports/cps/characteristics-of-minimum-wage-workers-2014.pdf.
4. Bureau of Economic Analysis. Methodology Papers. Bureau of Economic Analysis. [Online] November 2014. http://www.bea.gov/national/pdf/chapter10.pdf.
5. Bureau of Labor Statistics. Usual Weekly Earnings Technical Note. Current Population Survey. [Online] April 2015. http://www.bls.gov/news.release/wkyeng.tn.htm.
6. —. Handbook of Methods, Chapter 8, National Compensation Measures. National Compensation Survey. [Online] http://www.bls.gov/opub/hom/pdf/homch8.pdf.

42 comments:

  1. The calculating the correct indicators of employment and wages will help to derive the optimal value. Such economic analysis is important for the population.

    ReplyDelete
    Replies
    1. I am discussing some issues are facing students because of the current situation they can't take class properly and another thing I saw about mens shalwar kameez with waistcoat that looked nice.

      Delete
  2. Now unfortunately not on so much a good level of salaries and not much work

    ReplyDelete
  3. Much obliged for the significant data and bits of knowledge you have so given here...
    Click Adobe Illustrator CC 2018 Masterclass

    ReplyDelete
  4. Awesome post.I really like it.Thanks for sharing such a valuable post.You can find more beautiful things here

    Pakistan English news
    Pakistan Breaking news
    Pakistan Latest news
    Pakistan Update news

    ReplyDelete
  5. I like your presentation and agree with much of this information. You kept my attention throughout the whole article, and that's a task. Thank you.
    myvegas free chips

    ReplyDelete
  6. You are a very persuasive writer. I can see this in your article. You have a way of writing compelling information that sparks much interest.
    Sindhi News

    ReplyDelete
  7. Its nice post.

    Redeem Your Special Deal On Apple Gift Cards.Look on the back of the gift card to locate a removable label.You will see a 16-digit code. How much left on your apple store gift card balance check your apple gift card balance.

    Please visit our site:https://www.webdeapple.com/checkapplestoregiftcardbalance/

    Apple Gift Card Balance
    Check Apple Gift Card Balance
    Apple Store Gift Card Balance
    Check Apple Store Gift Card Balance
    Apple Store Card Balance
    Apple Store Balance
    Check My Apple Gift Card Balance
    Check App Store Gift Card Balance
    Check Apple Store Balance
    Check Apple Store Card Balance

    ReplyDelete
  8. This is the kind of info that should be shared across We promise to do our This is a pure nice post. 먹튀사이트

    ReplyDelete
  9. Remember that the business may in any case be expected to take responsibility for the misdeeds submitted by a worker inside the extent of their employment.Unfair Dismissal

    ReplyDelete
  10. The new law doesn't deny a candidate from willfully and without provoking revealing compensation history data to a planned business. salary

    ReplyDelete
  11. Positive site, where did u come up with the information on this posting?I have read a few of the articles on your website now, and I really like your style. Thanks a million and please keep up the effective work. Indië-Business-Visa

    ReplyDelete
  12. Thanks for an interesting blog. What else may I get that sort of info written in such a perfect approach? I have an undertaking that I am just now operating on, and I have been on the lookout for such info. 오피

    ReplyDelete
  13. It's a diverse group of assignment experts in assignments who believe in giving students the opportunity to learn to be able to do better on their assignments and earn higher scores. We all know how crucial assignment assignments are in recent times. It is not just because of the marks that are associated with them, but it is also because it allows students to gain a deeper understanding of the work performed by scholars, students, researchers, and scientists as well as others.

    ReplyDelete
  14. Let's find out how a career coach program will benefit you in helping you to find your dream career and achieve your career goal in the shortest period of time.professionals

    ReplyDelete
  15. I was reading some of your content on this website and I conceive this internet site is really informative ! Keep on putting up. د کاناډا ویزې آنلاین

    ReplyDelete
  16. Your articles are inventive. I am looking forward to reading the plethora of articles that you have linked here. Thumbs up! Matchfinde

    ReplyDelete
  17. The employer can't "ask" or "consider" a candidate's conviction history until after a restrictive proposal of business has been made. https://www.opiniones-empresas.com

    ReplyDelete
  18. Nice Information I read this hope you share another ane thanks.here, is Nora our organization are providing security software and build your website and promote your
    brand you can go and read this.
    kucoin login |
    paypal login |
    crypto.com login |

    ReplyDelete
  19. Cures might incorporate recuperation of back pay and urging the employer from additional unlawful direct as well as sizeable fines. HitachiCredit Wandsworth Aviva

    ReplyDelete
  20. Hi! this is nice article you shared with great information. Thanks for giving such a wonderful informative information. I hope you will publish again such type of post. Also, please check out about. I highly recommend everyone to read this. Thanks for sharing your knowledge and opinion with us. If you would be so kind as to visit my websites. crypto exchange binance | Kraken crypto

    ReplyDelete
  21. If you're self-employed (which means you are a sole proprietor and file Schedule C as part of your personal income tax return), are you wondering how much federal income tax you may have to pay? This article will help you sort this out. self employed tax preparer income

    ReplyDelete
  22. Crypto.com exchange is powered by CRO, with deep liquidity, low fees and best execution prices, you can trade major cryptocurrencies like Bitcoin,Ethereum. Coinbase Down | Crypto.com Login | Pancake Swap |

    ReplyDelete
  23. Thanks for the great post you posted. I like the way you describe the unique content. The points you raise are valid and reasonable. I am a tech support expert telling you about.
    Crypto.com Exchange
    Crypto.com Login
    Pancake Swap
    Coinbase Down

    ReplyDelete
  24. The easiest and most secure crypto wallet. Earn interest on your crypto. Lend out your crypto assets to earn interest: compare different rates, easily deposit your crypto, and view balances on. coinbase pro login | coinbase login | gate.io |

    ReplyDelete
  25. start trading with your Cóínbase Pro account Log in to Cóínbase Pro for Digital Asset Exchange.
    metamask login |
    kraken login |
    metamask extension |
    metamask extension |
    blockchain login

    ReplyDelete
  26. Do attempt to safeguard an employee's poise. It's normal for an individual being terminated to feel disdain toward you and your business. Along these lines, all that you do in an end meeting ought to be intended to limit, however much as could be expected, this regular hatred. földmunkagép szállítás Europa-Road Kft.

    ReplyDelete
  27. I use only high quality materials - you can see them at: read here

    ReplyDelete
  28. Rather than enhancing our current website for cell phones.
    onohosting.com

    ReplyDelete
  29. You have a very original and informative article. I am glad that I came across this blog. It's a great site for me and I really enjoy visiting Thank you so much for sharing.- jss1 basic science past questions pdf

    ReplyDelete
  30. NBC stands for National Broadcasting Company, and it is one of the most popular commercial broadcast TV networks in the US. NBC is a flagship product of NBCUniversal and a subsidiary of Comcast.
    nbc.com/activate

    ReplyDelete
  31. Hover over Payments at the top of page go there, and then scroll down and click Make a Payment option. Select Minimum Payment amount, Statement Balance (as of your last amazon statement), the Current Balance, or Other.
    primevideo.commytv

    ReplyDelete
  32. Capital One is a targeted online banking service that provides a variety of services similar as credit or disbenefit cards, net banking, and so on.

    ReplyDelete
  33. ziatogel ผู้เล่นทุกคนสามารถเข้าถึงข้อมูล อะไรบางอย่าง ตัวอย่างเช่น pg slot ผลของการใช้จ่ายที่เร็วที่สุดสำหรับข้อมูลการใช้จ่าย ในหลายตลาดโดยไม่ต้องรอนานสามารถ เพลิดเพลินใจ

    ReplyDelete
  34. ufa wallet slot สำรวจโลกของยูฟ่าวอลเล็ตสล็อตที่ทำให้ความบันเทิงรวมถึงความตื่นเต้น! ค้นพบเคล็ดลับที่ดีที่สุด PG วิธีการและกลยุทธ์ในการเพิ่มประสบการณ์ในการเล่นเกมของคุณในขณะ

    ReplyDelete
  35. allone66  พวกเราเป็นผู้ให้บริการแพลตฟอร์มเกมส์พนันออนไลน์ทุกแบบอีกทั้ง สล็อต คาสิโน กีฬา ลอตเตอรี่ การเทรด รวมทั้งอีสปอร์ต และสล็อตต้องเข้ามาเล่นใน pgslot เว็บที่สมัครง่าย

    ReplyDelete
  36. ทางเข้า pg เฮง 99 มือที่ครบครันเกี่ยวกับประตูท่ามกลางการผจญภัยเกมออนไลน์ที่ไม่เหมือนใคร PGSLOT บทความนี้จะให้ความรู้จากผู้เชี่ยวชาญ คำถามที่พบบ่อย และข้อมูลมีค่าเพื่อเพิ่มประสบการณ์

    ReplyDelete
  37. ทางเข้า pg slot ค่ายบริการเกมบนมือถือที่มีเกมมากรูปแบบใหม่ที่ทำเงินให้ผู้เล่นได้เงินจริง เล่นเกมง่าย มีแนวทางสอนการเล่นเกมสำหรับมือใหม่ pg slot ไม่มีเบื่อและตื่นเต้นไปกับเอฟเฟคในเกมที่ไม่ซ้ำ

    ReplyDelete

Do the right thing.