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Oct 9 -- The Bureau of Labor Statistics (BLS) indicates it will ask OMB to approve a three-year renewal of its collection of the Quarterly Census of Employment and Wages (QCEW), including a revised methodology for imputations in light of the pandemic. BLS welcomes comments on its proposed revision by December 8, 2020.
  
The QCEW program, a Federal/State cooperative effort, produces monthly employment and quarterly wage information. It is a by-product of quarterly reports submitted to State Workforce Agencies (SWAs) by employers subject to State Unemployment Insurance (UI) laws. The QCEW data, which are compiled for each calendar quarter, provide a comprehensive business name and address file with employment and wage information for employers subject to State UI laws. Similar data for Federal Government employers covered by the Unemployment Compensation for Federal Employees program also are included. These data are submitted to the BLS by all 50 States, the District of Columbia, Puerto Rico, and the Virgin Islands. The BLS summarizes these data to produce totals for all counties, Metropolitan Statistical Areas (MSAs), the States, and the nation. The QCEW program provides a virtual census of nonagricultural employees and their wages, with about 54 percent of the workers in agriculture covered as well.

The QCEW program is a comprehensive and accurate source of data on the number of establishments, monthly employment, and quarterly wages, by industry, at the six-digit North American Industry Classification System (NAICS) level, and at the national, State, MSA, and county levels. The QCEW series has broad economic significance in measuring labor trends and major industry developments, in time series analyses and industry comparisons, and in special studies such as analyses of establishments, employment, and wages by size of establishment.
 
The QCEW program is implementing improvements to the methods used to impute data for missing employer reports starting in October 2020. The current method of imputation estimates the current month's employment or current quarterly wages by applying the change from a year earlier to the previous month's reported employment and/or quarterly wages. A drawback to this procedure is that it uses the data from a year earlier, which may not reflect current economic conditions. BLS anticipates that the number of non-responding employers will be substantially higher than usual in the second quarter of 2020, as a result of the business response to the coronavirus (COVID-19) pandemic. Existing imputation methods would likely understate the impact of the pandemic on the US economy. BLS has conducted research on improvements to its imputation methodology and will implement these improvements with the first release of data for the second quarter of 2020.

Usually, non-respondents account for a minor portion of QCEW employment and wages. However, BLS anticipates that the number of non-responding employers will be substantially higher than usual in the second quarter of 2020 as a result of the business response to the coronavirus (COVID-19) pandemic.  The existing imputation methods would likely understate the impact of the pandemic on the US economy.

In response to the pandemic BLS implemented three improvements to imputation methods in October 2020.  The first improvement implements the ratio method of imputation, discussed immediately below. The second and third improvements use summary counts of claims for unemployment benefits as a supplement to existing QCEW imputation.  This is discussed following the section on the ratio method.  

The BLS conducted extensive research on alternative imputation methods for both employment and wages.  The findings of the research indicate improved results when using current trends from responding establishments with characteristics similar to the non–respondents.  The BLS defines this procedure as the ratio method.  The ratio of a particular estimation cell is computed as the sum of the current month’s reported employment divided by the sum of the previous month’s reported employment.  To impute this month’s employment for a non-respondent, the ratio is then multiplied by the non-respondent’s previous month employment.  A similar procedure is applied to impute average quarterly wages.  The details of the method including various exceptions are available in Attachment 1.

The ratio method of imputation will be implemented in the redesigned state QCEW processing system.  Implementation of this system is scheduled to begin in September of 2021.  A simplified version of the ratio method was implemented in BLS QCEW processing in October 2020.  The BLS accelerated the implementation of the ratio method due to the economic disruption caused by the coronavirus (COVID-19) pandemic, in order to provide the most accurate QCEW data possible.  

The second and third improvements to imputation methods use summary counts of claims for unemployment benefits as a supplement to existing QCEW imputation.  This is a new use of claims counts, which are collected by the BLS Local Area Unemployment Statistics (LAUS) program.  Most states supply these data to the LAUS program; California and Florida are exceptions.  As of October 2020, not all states shared LAUS claims count files for QCEW use.  California was unable to provide the file for technical reasons, and Massachusetts declined to share the LAUS file with the BLS QCEW program. Florida was able to produce a substitute file suitable for this QCEW use.  

The QCEW system at BLS matches summary counts of claims for the regular state unemployment insurance benefits per employer to missing employers.  This match identifies employers who are likely to have ceased operations. These non-responding employer records are immediately dropped from the QCEW file.  These employer records otherwise would have been imputed for two quarters before being dropped.

QCEW program webpage: https://www.bls.gov/cew/
Draft QCEW supporting statement: https://www.dropbox.com/sh/0we56hewiu50o9o/AADK5o2B_vAA3YuCsTAlOg7la?dl=0
FR notice inviting comment: https://www.federalregister.gov/documents/2020/10/09/2020-22366/information-collection-activities-comment-request
 
Point of contact: Edwin Robison, Chief, Statistical Methods Staff, BLS Office of Employment and Unemployment Statistics  202-691-6363  robison.edwin@bls.gov

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