Background on LMI Concepts Rod Fortran, August 6, 2008

Current Employment Statistics survey (CES) (a.k.a. the "establishment survey") Local Area Unemployment Statistics (LAUS) (a.k.a. the "household survey") Each month, the New York State of Labor produces and publishes estimates for two principal data series: Background on LMI Concepts

Comparing the CES and LAUS Series Current Employment Statistics (CES) (Business Survey) Local Area Unemployment Statistics (LAUS) (Household Survey) DescriptionEmployment, average production worker wages, and average weekly hours by industry and geographic area (place of employment) Employed and unemployed persons by geographic area (place of residence) MethodologySurvey of a sample of employers Estimate based on a survey of households, CES jobs data, and Unemployment Insurance claims Populations Excluded Self-employed, agriculture, domestic workers, military Individuals not in the labor force Background on LMI Concepts

Comparing the CES and LAUS Series Current Employment Statistics (CES) (Business Survey) Local Area Unemployment Statistics (LAUS) (Household Survey) CurrencyMonthly data available by the third week of the following month Geographic DetailU.S., states, MSAs, counties outside MSAs U.S., states, regions, MSAs, counties, cities over 25,000 AdvantagesCurrent employment data Current household data LimitationsUses statistical sample not universe of employers Frequent revisions Background on LMI Concepts

Non-Farm Payroll Employment data are based on the number of employees on firms' payrolls during the week including the 12th of the month. Farm jobs are excluded because of their seasonal nature, which can skew total employment figures. Data pertain to where those jobs are located (place of work). About 18,000 business establishments in New York are surveyed monthly. The data are published monthly by the New York State Department of Labor. What is Non-Farm Payroll Employment (a.k.a. establishment survey)? Background on LMI Concepts

Job data for the previous 18 months are revised at the end of each year for all states and the nation, as more complete information becomes available from employer unemployment insurance tax records. March 2005 is called the “reference month” and is the latest month for which estimates will not be revised in the future. Estimates for April 2005 and later months are still subject to revision in the next round of annual revisions in early How are Non-Farm Payroll Employment data revised (a.k.a. “benchmarking”)? Background on LMI Concepts

How is Non-Farm Payroll Employment Classified by Industry? The North American Industry Classification System (NAICS) serves as the basis for classifying business activity in the U.S. NAICS codes are organized hierarchically. The highest category, Domain, is divided into Goods-Producing and Service-Providing. Supersectors, such as Leisure & Hospitality, break down into sectors, such as Accommodation & Food Services, and ultimately branch out into Industries, such as Hotels.

DOMAINSUPERSECTORSECTORINDUSTRY (selected examples) Goods- Producing Natural Resources & Mining Agriculture, Forestry, Hunting and Fishing Logging MiningStone Mining and Quarrying Sand and Gravel Mining Construction Residential Building Construction Specialty Trade Contractors Utility System Construction Manufacturing (durable goods) Computers and Peripheral Equipment Machinery Manufacturing Motor Vehicle Parts (non-durable goods)Textile Mills Beverage Manufacturing Plastics and Rubber Products Background on LMI Concepts NAICS Structure

DOMAINSUPERSECTORSECTORINDUSTRY (selected examples) Service- Providing Trade, Transport & UtilitiesUtilitiesElectric Power Generation Natural Gas Distribution Transportation & WarehousingAir Transportation Couriers Warehousing and Storage Retail TradeGrocery Stores Hardware Stores Automobile Dealers Wholesale TradeMerchant Wholesalers Leisure & HospitalityAccommodation & Food ServicesHotels Full Service Restaurants Arts, Entertainment & RecreationMuseums Fitness & Recreation Centers Performing Arts Companies Financial ActivitiesFinance & InsuranceInsurance Carriers Securities Brokerage Real Estate & Rental & LeasingReal Estate Property Managers Passenger Car Rental Background on LMI Concepts NAICS Structure

DOMAINSUPERSECTORSECTORINDUSTRY (selected examples) Service- Providing Information Motion Pictures Wireless Telecommunications Periodical Publishers Professional & Business Services Professional, Scientific & Technical Services Legal Services Management Consulting Engineering Services Administrative Support; Waste Management & Remediation Services Temporary Help Services Waste Treatment and Disposal Security Guards and Patrol Services Management of Companies and Enterprises Corporate, Subsidiary, and Regional Managing Offices Educational and Health Services Educational ServicesColleges & Universities Technical & Trade Schools Health Care & Social Assistance Hospitals Nursing Homes Child Day Care Services Other Services Auto Repair Dry Cleaners Civil & Social Organizations Public Administration Fire Protection Background on LMI Concepts NAICS Structure

What is seasonally adjusted jobs data, and why do we examine it? Many economic series have seasonal patterns, which means they tend to occur at the same time each year. Examples include: Construction employment declines in winter; Tourism employment rises in summer; Retail employment peaks in December. Because of such seasonal factors, simply looking at monthly employment statistics may not be enough to reveal true underlying trends. Seasonal adjustment eliminates seasonal fluctuations in monthly employment data, thus permitting comparisons of data from one month to data from any other month. Background on LMI Concepts

What is seasonally adjusted jobs data, and why do we examine it? Employment in 1000s Not Seasonally Adjusted Background on LMI Concepts As shown in the chart below, leisure & hospitality sector employment peaks in the summer and subsequently decreases in the fall. Seasonal adjustment smoothes out this seasonal fluctuation, thereby revealing the underlying trend in the data. Seasonally Adjusted

In New York, seasonally adjusted jobs data for each of the 12 broad industry supersectors (e.g. financial activities, manufacturing, government) are independently adjusted. The seasonally adjusted private sector job count is the sum of seasonally adjusted jobs data for all industry supersectors except government. The seasonally adjusted total non-farm job count is the sum of seasonally adjusted jobs data for all industry supersectors including government. What are seasonally adjusted jobs data, and why do we examine it? Background on LMI Concepts

Statistics are published for states, metro areas, counties and places with population of 25,000 or greater. Estimates are calculated by a statistical model with the following inputs: Monthly Current Population Survey of households that interviews about 3,000 households in NYS. Monthly Current Employment Statistics survey of businesses. Unemployment insurance claims data. What is Local Area Unemployment Statistics (LAUS) (a.k.a. household survey)? Background on LMI Concepts

Interviewees are asked by the CPS whether during the week including the 12th day of the previous month (the reference week) they: worked (employed); did not have a job, but were actively searching for work (unemployed); did not work and were not actively searching for work (not in labor force). What is Local Area Unemployment Statistics (LAUS) (a.k.a. household survey)? Background on LMI Concepts

Labor force = Employed + Unemployed Unemployment Rate= Employed / Labor force The Unemployment Rate may: rise because—someone either loses a job or enters the workforce and starts looking for a job. fall because—someone either finds a job or drops out of the labor force (stops looking actively for work or moves out of the area.) How are Labor Force and Unemployment Rate Calculated? Background on LMI Concepts