1. Quarterly Workforce Indicators: Case Studies and Examples C2ER Training Workshop June 4, 2012 Erika McEntarfer LEHD Program US Census Bureau

2. In this section: Apply knowledge about basic employment and wage concepts in QWI to specific questions you may encounter in your work Specifically: –Smoothing seasonal data –Calculating rates –Producing custom aggregates 2

3. Smoothing seasonal indicators Hiring in California, 1993-2011: Not Seasonally Adjusted 3 Source: Quarterly Workforce Indicators, US Census Bureau QWI currently doesn’t generate a seasonally adjusted series. Hard to see cyclical trends with all the seasonality.

4. Seasonal adjustment: Options Annualize the data –Easier for some indicators than others Take rolling averages –Easy, but crude (available in QWI online) Do your own seasonal adjustment –Best option –X12 (SAS, others) –Excel seasonal adjustment module 4

5. Smoothing seasonal indicators Hiring in California, 1993-2011: Seasonally Adjusted 5 Source: Quarterly Workforce Indicators, US Census Bureau This series is adjusted using X12 in SAS. Much easier now to see cyclical trends and graphs look much cleaner.

6. Constructing rates Separations, Accessions, Job Creation, etc. all very useful statistics, –but often more meaningful expressed as rates Because there are several types of hires, separations, and employment indictors, it’s not always clear how to construct simple rates. 6

7. Constructing an accession rate Hires: several options –H–Hires –N–New Hires –R–Recalls –S–Stable Hires Employment: several options –B–Beginning of Quarter Employment –E–End of Quarter Employment –F–Flow Employment –S–Stable Employment 7

8. DateAccessionsBeginning of Qtr EmpEnd of Qtr EmpFlow Employment 1993.12541912117088101173800814301758 1993.22691719117179951179065014391428 1993.32680001117194051178134114394272 1993.42720066117524121179564614462676 1994.12719362117869361184196514537501 1994.22856576117922671189028614637325 1994.32923723118819801194962914812717 8 Hiring and Employment in CA, Seasonally AdjustedAccessions (A): -- all hires in a quarter, regardless of length of employment spell Flow employment (M): -- all persons who had positive wages during the quarter, typically much larger than point in time employment estimates B & E employment: -- point in time estimates of employment at start and end of quarter. Accessions, particularly in small, high turnover firms, can exceed point in time employment -- so A/(B+E)*1/2 can be greater than 100% -- A/M is bounded by 100%

9. Constructing a separation rate 9 Job separation rate in California, 1993-2011: Seasonally Adjusted Source: Authors calculations from the Quarterly Workforce Indicators, US Census Bureau What is true for accessions is also true for separations While either choice is valid, using flow employment does benchmark better to other series such as JOLTS. Recommended

10. Hiring vs. Job Creation Often, we are interested in both hiring, job creation, and net job flows: –Hires: growth hires and replacement hires –Job Creation: growth hires only –Net job flows: Job Creation – Job Destruction, or net employment change 10

11. Hiring vs. Job Creation 11 Source: Authors calculations from the Quarterly Workforce Indicators, US Census Bureau Hiring and Expansionary Hiring in California, 1993-2011: Seasonally Adjusted Note: All Hires are more cyclical than expansionary hiring – employment churn is procyclical Can calculate the share of all hires that are replacement hires (A/JC). Note replacement hiring falls much more steeply in the Great Recession -- workers either not separating from jobs -- or employers leaving vacancies unfilled

12. Exercise 1: Examine Hiring Patterns in California (10 minutes) Calculate hires as a share of employment –Use both flow employment and average employment, why are they different? Calculate the share of hires in CA that are expansionary 12

13. Exercise 1: 13 Job hiring rate in California, 1993-2011: Seasonally Adjusted

14. Exercise 1: 14 Share of Hires in California that are Expansions in Firm Employment, 1993-2011: Seasonally Adjusted

15. Exercise 2: Comparing Separation Rates Within a sector (10 minutes) Health Care is often thought of as a high turnover sector, but there’s quite a bit of heterogeneity in turnover within health care Calculate worker separation rates using your preferred measure for: Ambulatory Health Care (Physicians offices, clinics) Hospitals Nursing Facilities 15

16. Exercise 2: Comparing Separation Rates Within a sector 16

17. Creating custom aggregations QWI are available by: –Worker age, education, gender, race –Detailed Industry –Detailed Geography But often want to create custom aggregations of available categories –Older workers –Industry Clusters –Etc. 17

18. Be careful when aggregating Employment and net job flows fairly straight- forward –Simply aggregate them across categories However: –Because of noise infusion and suppressions, be cautious when aggregating small cells –Always use tabulated aggregation if available Earnings and nonemployment more complicated – Should compute weighted averages using the appropriate employment number (stable for stable wages, etc) 18

19. Job Creation and Destruction: Most Common Aggregation Error Note that for categories like age and sex, the published net job flows for the subcategories will sum to the margin But for gross Job Creation and gross Job Destruction this is not true (Job Creation for men) + (Job Creation for women) does not equal (total Job Creation) –For example, a job could be created at a firm and filled by a woman, while another job at the same firm is destroyed, previously filled by a man MenWomenTotal Job Creation010 Job Destruction100 Net Job Flows+10 19

20. Exercise 3: Younger Workers (10 minutes) Graph the share of workers under 25 in California over the time series. Calculate and graph growth trends in average nominal earnings for workers under 25 in California, relative to those for all workers in California. 20

21. Exercise 3: Younger Workers 21 Workers under 25 as a share of the California workforce, 1993- 2011: Not Seasonally Adjusted Great Recession impacted share of young workers in market quite severely, is at almost 20 year low.

22. Exercise 3: Younger Workers 22 Growth Average Nominal Monthly Wages, Workers < 25, California workforce, 1993-2011: Not Seasonally Adjusted (1993:1=1) Around 2007, wage growth for young workers stalls out, even falls

23. To sum up While many QWI indicators can be used as is, frequently they require manipulation to produce the information needed These exercises show how to: –Handle seasonality –Construct rates –Create custom aggregates 23