Nonfarm Wage & Salaried Workers - Technical Notes

The nonfarm wage and salaried worker data series is a leading economic indicator, providing an important and timely measure of the number of jobs in nonfarm industries.

Scope of the Program

The Labor Market Information Center (LMIC) produces monthly estimates of nonfarm payroll employment through the federal/state cooperative Current Employment Statistics (CES) program. The CES program is administered and overseen at the national level by the U.S. Bureau of Labor Statistics. 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 to allow accurate and valid comparisons between states' nonfarm payroll employment statistics.

BLS is responsible for methodology development, program oversight, data collection, estimates and program funding. BLS collects data on employment, hours and earnings from a nationwide sample of approximately 145,000 businesses and government agencies, which cover approximately 697,000 individual worksites.

The sample includes approximately 1,540 South Dakota businesses and government agencies, covering approximately 2,980 individual worksites in the state. 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.

Data Inclusions/Exclusions

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 (NAICS) manual.

The Labor Market Information Center cooperates with BLS to develop estimates for the state and the two Metropolitan Statistical Areas (MSAs), the Sioux Falls and Rapid City MSAs.

Non-covered Employment

In addition to the covered businesses, employers who are exempt from unemployment insurance laws are also surveyed as part of the CES sample. This is referred to as Non-covered Employment (NCE). NCE employers include railroads, independent insurance agents, churches and schools operated by churches as well as elected officials, judges, work study students, etc.

Each year, CES staff prepare NCE estimates for the state and MSAs. The 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 survey conducted every five years to gather worker data on other businesses, including churches, schools operated by churches, etc.

Benchmarking

Once each year, the CES estimates are benchmarked using information that was previously not available at the time of estimation. In this process, BLS revises the estimates to realign with data from the Quarterly Census of Employment and Wages (QCEW) program and NCE data. Benchmarked data is released in March.

Seasonal Adjustment

Over the course of a year, employment levels undergo sharp fluctuations due to such seasonal events as changes in weather, reduced or expanded production, harvests, major holidays and the opening and closing of schools. Because these seasonal events follow a more or less regular pattern each year, their influence on statistical trends can be eliminated by adjusting the statistics from month-to-month. It is important to note that seasonal adjustment is merely an approximation based on past experience. Seasonally adjusted estimates have a broader margin of possible error than the original data on which they are based, because they are subject to not only to sampling and other errors but are also affected by the uncertainties of the seasonal adjustment process itself. Employment data is seasonally adjusted using X-13ARIMA-SEATS software. For more information on seasonal adjustment of nonfarm wage and salaried worker data, see the U.S. Bureau of Labor Statistics website.