[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Notices]
[Pages 9574-9575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5549]
[[Page 9573]]
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Part V
Department of Labor
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Bureau of Labor Statistics
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Notice of Decision To Revise Method for Estimation of Monthly Labor
Force Statistics for Certain Subnational Areas; Notice
Federal Register / Vol. 61, No. 47 / Friday, March 8, 1996 /
Notices
[[Page 9574]]
DEPARTMENT OF LABOR
Bureau of Labor Statistics
Notice of Decision To Revise Method for Estimation of Monthly
Labor Force Statistics for Certain Subnational Areas
AGENCY: Bureau of Labor Statistics, Labor.
ACTION: Statement of Policy.
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SUMMARY: The Department of Labor, through the Bureau of Labor
Statistics (BLS), is responsible for the development and publication of
local area labor force statistics. This program includes the issuance
of monthly estimates of the labor force, employment, unemployment, and
the unemployment rate for each State and labor market area in the
nation. Beginning with estimates for January 1996, monthly labor force
statistics for 11 large States (California, Florida, Illinois,
Massachusetts, Michigan, New Jersey, New York, North Carolina, Ohio,
Pennsylvania, Texas) and two large areas (New York City, and the Los
Angeles Metropolitan Area), are being developed according to the time
series model approach used in the 39 other States and the District of
Columbia. This action is in response to a reduction in the number of
households in the Current Population Survey (CPS) undertaken to address
lower funding levels for BLS and excessive volatility in the monthly
CPS estimates for these large States and areas. Historically, the CPS
sample in these States and areas was sufficiently large to meet the BLS
standard for direct use and the monthly estimates were taken directly
from the survey. The BLS will publish monthly estimates for these
subnational areas based on the time series modeling approach starting
in March 1996.
DATES: These changes were effective on January 7, 1996.
FOR FURTHER INFORMATION CONTACT:
Sharon P. Brown, Chief, Division of Local Area Unemployment Statistics,
Bureau of Labor Statistics, telephone 202-606-6390.
SUPPLEMENTARY INFORMATION:
Summary of Comments
The BLS received 5 comments in response to the proposal to revise
the method of labor force estimation for certain large States and areas
which was published November 3, 1995 [60 FR 55855]. Two commenters
expressed support of the proposal; 2 were opposed. The fifth commenter
expressed support for model-based estimation, but had reservations
about the characterization of the model approach and reduction in
sample size.'
Three commenters expressed concern that detailed demographic
statistics from the CPS be preserved. The BLS will continue to make CPS
demographic estimates available, although the variance of the monthly
estimates will rise, with a negative impact on analytical uses, because
of the sample size reduction. These monthly State characteristics data
will not add up to the official labor force totals which are produced
by the models.
Detailed characteristics will continue to be published in the
annual Geographic Profile of Employment and Unemployment publication.
These estimates will be consistent with annual totals, but the
reliability of these estimates will be reduced, and a few may no longer
be of publishable quality.
Two commenters asked that parallel estimates be prepared for a
minimum of one year, to explore other options to maintain the sample
size and to simulate the effect on the estimates and on federal fund
allocations. The decision to reduce the sample size of the CPS was made
because of the anticipated lower funding levels for BLS. Other options
to achieve commensurate savings were not available. Since the modeling
approach has been used successfully in the 39 smaller States and the
District of Columbia, simulation in the larger States was not required.
One commenter noted that the CPS sample size cut and switch to
model-based estimation appears to run counter to the purposes of the
major redesign of the CPS implemented in 1994. BLS does not agree, as
the models will benefit from the improvements in data accuracy and
definitional changes stemming from the redesign. A similar concern was
expressed by a commenter who felt that the models were portrayed as a
fall-back method. The BLS strongly supports the statistical modeling
modeling methodology. The models are designed to adapt to changes in
trend and seasonality in the CPS while using historical relationships
in the data to smooth current estimates and explicitly removing an
estimate of the CPS noise. The resultant estimates exhibit considerably
lower volatility as compared to the sample-based estimates.
A commenter noted that the CPS estimates have a statistical measure
of reliability, while the models at this time do not. BLS is
researching the development of monthly reliability measures for the
modeled estimates.
The issue of revision of estimates was raised. Under the model
methodology, State-wide estimates are revised monthly as well as at
year-end.
Operational concerns were expressed by two commenters on the delay
in the release of data. While the BLS will not publish the State labor
force estimates until 3-4 weeks after the national release, BLS will
update the estimating system immediately. Therefore, States will be
able to make estimates as early as the day that the monthly national
statistics are released, if they so desire.
Additional Information
The BLS has been responsible for the Local Area Unemployment
Statistics (LAUS) program since 1972. In 1978, the BLS broadened the
use of data from the CPS in the LAUS program by extending the annual
reliability criterion to monthly data. This action was within the
context of a budget proposal to expand the CPS to yield monthly
employment and unemployment data for all States by June 1981. Under the
expanded criterion, monthly CPS levels were used directly for the 10
largest States, two sub-States areas, and the respective balance-of-
State areas. The use of annual average CPS data continued for the other
40 States and the District of Columbia. Ultimately, the budget proposal
which initiated the direct use of monthly State CPS data was rejected
as too costly. Based on population ranking, the State of North Carolina
joined the group of direct-use States in 1985, bringing the group to a
total size of 11 States. Also in 1985, sample redesign and other
efficiencies improved the reliability of CPS data at the State level,
resulting in the criterion on monthly and annual average data of an 8
percent coefficient of variation on the level of unemployment when the
unemployment rate is 6 percent.
Especially in regard to the monthly direct use of State CPS data,
concern had been expressed as to the volatility of the statistics. In
the typical direct-use State, a month-to-month change in the
unemployment rate had to exceed 0.7 percentage point to be considered
significantly. Often, States experienced consecutive, offsetting large
movements in the unemployment rate.
For the other 39 States and the District of Columbia, after
extensive research and simulation, variable coefficient time series
models for monthly estimation of State employment and unemployment were
introduced in 1989. Further improvements was effected with the
implementation of signal-plus-noise models in 1994. These models rely
heavily on monthly CPS data, as well as current wage and salary
employment
[[Page 9575]]
and unemployment insurance statistics. At the end of each year, the
monthly model estimates are rebenchmarked so that the annual averages
for each State match the annual averages derived directly from the CPS.
Because of budget reductions, the CPS sample is not of sufficient
size to provide monthly data directly for the 11 large States, New York
City, and the Los Angeles Metropolitan Area. Monthly estimates will
continue to be produced, based on the time series modeling method
currently used for the other States and the District of Columbia. Data
for the current direct-use States and areas are no longer released by
the BLS at the same time as the monthly national labor force
statistics, but are published about four weeks later in the State and
Metropolitan Area Employment and Unemployment news release. States that
are able to do so have the option of releasing these data earlier,
perhaps even simultaneously with the release of national data. Monthly
data for these States also are subject to end-of-year benchmarking.
The impact of the CPS sample cut on the national statistics is to
increase the variability of most national estimates by about 5 percent.
For example, under the current sample, a month-to-month change of 0.19
percentage points in the national unemployment rate represents a
statistically significant change at the 90-percent confidence level;
the corresponding change under the former design was 0.18 percent.
Detailed descriptions of the estimating methods are available at
the above address.
Signed at Washington, D.C., this 1st day of March, 1996.
Thomas J. Plewes,
Associate Commissioner for Employment and Unemployment Statistics,
Bureau of Labor Statistics.
[FR Doc. 96-5549 Filed 3-7-96; 8:45 am]
BILLING CODE 4510-24-M
