Department of Labor and Regulation

Title - Labor Market Information Center

Nonfarm Wage & Salaried Workers - Technical Notes

The Labor Market Information Center (LMIC) produces monthly estimates of nonfarm payroll employment through a federal/state cooperative program. The program is known as Current Employment Statistics (CES) program. The CES program is administered and overseen at the national level by the U.S. Department of Labor. Each of the 50 states follows the same methodology, which includes an employer survey, to produce the nonfarm employment estimates. Common methodology is critical in the production of these estimates as these common methods allow accurate and valid comparisons between states' nonfarm payroll employment statistics.

Methodology

The Bureau of Labor Statistics (BLS) -- a division of the U.S. Department of Labor -- is responsible for methodology development, program oversight, data collection and program funding. The BLS collects data on employment, hours, and earnings from a sample of about 140,000 businesses and government agencies, which cover approximately 440,000 individual worksites drawn from a sampling frame of approximately nine million unemployment insurance tax accounts. The active CES sample includes approximately one-third of all nonfarm payroll employees. Sample respondents extract the requested data from their payroll records, which must be maintained for a variety of tax and accounting purposes.

Data submitted are used in developing statewide and major metropolitan area estimates. The state produces and transmits state-developed geographic estimates to Washington. All states' samples are combined to form a collective sample for developing national industry estimates. It should be noted that state estimation procedures are designed to produce accurate data for each individual state.

Program Oversight

The Bureau of Labor Statistics is responsible for the review and approval of all estimates produced by the states.

About the statistics

Nonfarm wage and salaried workers are an important economic measure of the number of jobs in nonfarm industries. As the title implies, agricultural industry workers are not included. In addition, nonfarm self-employed and unpaid workers are also excluded from the nonfarm wage and salaried worker counts. Nonfarm worker data refer to persons on establishment payrolls who receive pay for any part of the pay period which includes the 12th of the month. Persons are counted at their place of work rather than at their place of residence; those appearing on more than one payroll are counted on each payroll. Establishments are classified in an industry on the basis of their principal product or activity in accordance with the most recent North American Industry Classification System Manual.

There are two different procedures to estimate monthly nonfarm wage and salaried workers in South Dakota. First, the Labor Market Information Center cooperates with BLS to make nonfarm wage and salaried worker estimates for the state and the two Metropolitan Statistical Areas (MSAs) as part of the national Current Employment Statistics (CES) program. The two MSAs in South Dakota are the Sioux Falls MSA and the Rapid City MSA.

Each month, South Dakota CES staff cooperate with BLS Data Collection Centers to collect data on nonfarm wage and salaried workers from a sample of 2,200 businesses and government agencies, which cover approximately 3,400 individual worksites drawn from a sampling frame of almost 28,500 unemployment insurance tax accounts. The active CES sample includes approximately 17 percent of all nonfarm covered workers. In addition to the UI covered businesses, employers who are exempt from UI laws are also surveyed as part of the CES sample. These workers are called the presumed not covered workers. CES sample respondents extract the requested data from their payroll records, which must be maintained for a variety of tax and accounting purposes. CES data are collected by telephone, touch-tone self response, computer-assisted interviews, fax technology, voice recognition and mail. After the data is collected and reviewed, state staff use CES program procedures to make nonfarm wage and salaried worker estimates each month. Worker numbers are developed using a "link relative" technique in which a ratio (link relative) of current-month employment to that of the previous month is computed from a sample of establishments reporting for both months. The estimates of employment for the current month are obtained by multiplying the estimates for the previous month by these ratios.

A second procedure is used to make nonfarm wage and salaried estimates for counties that are not part of the two MSAs. (The CES sample is not large enough to make estimates for non-MSA county areas.) Since the CES program does not produce estimates for non-MSA areas, a substitute procedure has been developed. Just like the statewide and MSA estimates, there are two components to the non-MSA county worker estimates.

The largest component of the county nonfarm wage and salaried worker estimates are the workers covered by unemployment insurance. Monthly covered worker numbers are collected on a quarterly basis by the Unemployment Insurance Division of the South Dakota Department of Labor. The worker and payroll data from UI quarterly reports are tabulated as part of the national Quarterly Census of Employment and Wages program conducted by the LMIC. Because of the time lag in employer reporting and data processing, the covered worker data lag the current nonfarm estimates by five to six months. So, economic models are used to project/estimate current month worker levels. As actual monthly covered worker data becomes available, the projected/estimated numbers are replaced.

The second component of the county nonfarm wage and salaried numbers are the presumed not covered workers. The presumed not covered workers include small seasonal businesses, railroads, independent insurance agents, churches, schools operated by churches, elected officials, judges, work study students, etc. The total presumed not covered workers are not a large component of the nonfarm workers, but represent a large share of some nonfarm industries.

Each year, the CES staff prepare monthly presumed not covered worker estimates for statewide and the MSAs. In addition, presumed not covered workers for county areas are developed on an annual basis. The presumed not covered workers data comes from several different sources, including monthly reports of state elected officials, elected and appointed board members and staff, and judges; annual telephone surveys of institutions with work study students not reporting as part of the CES sample; annual reports of elected city officials; and a large presumed not covered survey conducted every five years to gather worker data on other businesses, including churches, schools operated by churches, etc.

Each month, LMIC staff estimate the number of presumed not covered workers for each non-MSA county. Those numbers are added to the projected/estimated covered worker totals to determine a nonfarm wage and salaried worker estimate for each non-MSA county. The non-MSA county and MSA estimates are forced to sum to the CES statewide nonfarm wage and salaried worker number.


Marcia Hultman, Secretary
700 Governors Drive
Pierre, SD 57501-2291
Tel. 605.773.3101
Fax. 605.773.6184