INFO 7470/ILRLE 7400 Introduction to Integrated Data Systems: The LEHD Data

1. INFO 7470/ILRLE 7400 Introduction to Integrated Data Systems: The LEHD Data John M. Abowd and Lars VilhuberMarch 8, 2011with thanks to Stephen Tibbets, U.S. Census Bureau

2. Part 1: Overview of Methodology Advanced LED TrainingQWI

3. Underlying Concepts:Construction of the LEHD Infrastructure • Goals: • Understand concepts, basics of construction of LEHD infrastructure and processing • Understand QWI measures, how data is used in LED products • Understand differences between QWI measures and other measures • Related to definitions • Related to data sources/construction

4. Reference Materials • QWI Comprehensive Index • Provides crosswalk between various naming conventions • Indicates how measures are used in online products • Comparison of employment definitions • CPS vs. QCEW vs. LED • QWI Cheatsheet • Reference for the structure of the public released QWI files

5. Additional References • The LEHD Infrastructure Files and the Creation of the Quarterly Workforce Indicators • Primary reference for LEHD methodology • Technical papers also available in the LEHD and CES working paper series on various topics • Resources on the VirtualRDC for the Quarterly Workforce Indicators, OnTheMap, and the LEHD Infrastructure File System

6. Basic Concepts and Definitions • Dates • Year and quarter • Boundary between quarters is the employment reference date • Employer (SEIN) • single Unemployment Insurance (UI) account in a given state’s UI wage reporting system • Location (SEINUNIT) - work place location • Employee (PIK) • at least one employer reports earnings of at least one dollar of UI-covered earnings for an individual

7. Basic Concepts:Job • Job (PIK-SEIN-SEINUNIT) • coupling of specific individual with specific employer and location in a given year/quarter • Thejob is the basic unit of analysis within the LEHD Infrastructure • Jobs are linked across years and quarters to develop longitudinal measures

8. Basic Concepts: Employment • Level of measurement • Job (PIK-SEIN-SEINUNIT) • Level of estimation • Worker’s job (PIK-SEIN-SEINUNIT) • Primary job (OnTheMap PIK-SEIN-SEINUNIT most earnings) • All jobs in a firm (SEIN) and location (SEINUNIT) • All jobs for a worker (PIK) • Employment status • Point-in-time • Full quarter (continuous during quarter- stable)

9. Basic Concepts: QWI Measure Aggregation • Jobs are aggregated to generate estimates of QWI measures at desired levels • Measures are all built from linearly aggregable components • Means are calculated, rather than medians • Some measures on the public use files may be further aggregated, others not • Some firm-based flow measures are not aggregable • Components of average earnings measures not available • Turnover may be recalculated using component pieces

10. Basic Concepts: QWI Aggregation Levels - Establishment • Establishment level characteristics for aggregation: • Geography • State totals • County, Metro, Workforce Investment Board areas • Industry • All industries • NAICS Sectors, Sub-sectors (3-digit), Industry groups (4-digit) • Ownership • All (1-5) • Private-only (5)

11. Basic Concepts: QWI Aggregation Levels - Employee • Employee level characteristics for aggregation • Age • All ages • 14-18, 19-24, 25-34, 35-44, 45-54, 55-64, 65-99 • (Workforce Investment Act age categories) • Sex • Both sexes • Male, Female

12. Basic Concepts: QWI Aggregation Levels - Employee • Employee level characteristics for aggregation • Race (not on S2004) • OMB categories • White alone • African-American or Black alone • Asian or Pacific alone • Native Hawaiian or Other Pacific Islander alone • American Indian or Alaska Native alone • Two or More Races • Ethnicity (not on S2004) • Hispanic or Latino • Not Hispanic or Latino • Education (not on S2004) • Only valid for individuals age 25+ • Less than a High School Diploma • High School Diploma, No College • Some college or Associate’s Degree • Bachelor’s Degree or Above

13. Basic Concepts: QWI Measures • The QWI public use files contain a series of 30 measures • Employment: stock/flow measures • Earnings • These measures are reported for all of the aggregation listed in previous slides • The entire time series is re-estimated in every data release • A broader range of theoretical measures are defined in the technical papers, though many are not estimated in regular production

14. Basic Concepts: Beginning of Period Employment • Will reference as “b” or “B” • lowercase b – job level • uppercase B – jobs aggregated to establishment or higher level • Primary measure of employment for QWI and OnTheMap • Developed from job history • Defined when job is present in previous and current quarter • Conceptually and empirically similar to QCEW Month 1 employment (Mon1) • Definitions, data sources, and methodology result in differences

15. QWI Production Process

16. QWI Production Process:Key Stages

17. LEHD Processing:Merging QCEW and UI Data Quarterly Census of Employment and Wages Firm and Establishment (Single/Multi-unit) Geography Industry Ownership Unemployment Insurance Wage Records Firm-Worker (most states) OR Establishment-Worker (Minnesota only) Wages Job history Link to demography UI Account Number Firm Level (SEIN) OR Establishment Level (SEIN-SEINUNIT) Minnesota only

18. LEHD Processing:Successor-Predecessor • Adjustments to account for administrative changes to firms • mergers, divestitures, etc. • Transitions may be identified through: • report on the QCEW • firm level and establishment level • finding large employment flow from the individual wage records • firm level only • Individual job history at predecessor is concatenated with job history for same PIK at successor for purposes of calculating QWI measures

19. LEHD Processing:Unit-to-Worker Impute • Necessary to impute establishment to a job when not available • Currently only Minnesota reports establishments on wage data • Individual job histories are assembled • Establishment (multiply) imputed to longitudinal job, with the following predictors: • Proximity of residence to establishment • Size of establishment • Establishment history (allowing for predecessors) must be consistent with individual job history

20. LEHD Processing:Weighting • QWI B is benchmarked against QCEW Mon1 employment • Firm-level weights (within bounds) are applied to adjust employment towards Mon1 employment • Secondary weights are applied to match statewide private-only employment • Weights are calculated at ECF stage, applied at QWI

21. LEHD Processing:QCEW-QWI Differences • Sub-state adjustments are not currently applied to QWI data • While state employment totals should be quite close, sub-state estimates will display deviations from benchmark • County, industry employment totals, or smaller cells • These differences can come from any of a number of QWI-specific processing steps • Specific differences observed in the data may also result from an interaction of several sources of deviation

22. Causes of Differences:Measure Definition • B and Mon1 do not capture exactly the same universe • An individual may count towards either one of the measures, but not towards the other • Differences generally minor, but may be noticeable in some industries with particular seasonal patterns • e.g., education, agriculture

23. Causes of Differences:BLS Data Editing • LEHD data receipts • Before 2004 LEHD received BLS edited data • Since 2004 LEHD does not receive BLS edited data (CIPSEA) • BLS QCEW file may be edited/different from that which LEHD receives • Completeness • Imputed employment • Industry/geography changes • Statewide totals are close (<1% off) • LEHD QA will periodically note BLS QCEW data inconsistent with internal LEHD QCEW micro-data

24. Causes of Differences:Noise Infusion (“Fuzzing”) • Why infuse noise into data? • Reduce the amount of cell suppression while preserving confidentiality and analytic validity • Properties of noise • Every data item is distorted by a minimum amount • For a given workplace, data are always distorted in the same direction, by the same percentage in every period and release of QWI’s • When aggregated, the effects of the distortion cancel out for the vast majority of the estimates • QWI statistics are flagged when the value is significantly distorted (Status flag 9) • See infrastructure document, section 6, for more details

25. Causes of Differences:UI Wage Data Reporting • Firm may fail to report wage records • QCEW still reported or imputed • Firm may report wage records and QCEW records on different account numbers • Successor/predecessor mistiming • Public sector issues • PIK (SSN) miscoding prevents linking wage records to same longitudinal job

26. Causes of Differences:Industry Assignment • Most establishments are assigned based on the reported NAICS_AUX • For earlier years in the data series, the reported SIC code is probabilistically mapped to the current NAICS codes • Imputes may also be used for transitions between 1997, 2002, and 2007 NAICS • LDB data are used for NAICS back-coding purposes when the file has been provided by state • Variations in algorithms between LEHD and BLS may result in differences • NAICS sector 55 (management of companies) displays particular issues during SIC-NAICS transition

27. Causes of Differences:Geographic Coding • LEHD performs own geo-coding of addresses • Generates lat-long for distance measures, allows custom geography • Address data are processed along with address data from other sources • Results may differ from BLS assignments • Marginal shift over county line • Significant relocation • Effort currently underway to reengineer LEHD geographic assignment to improve results

28. Causes of Differences: Multiple Worksites (U2W) • QCEW can report Mon1 by building directly from establishment (with geo/industry info) • LEHD “No transfer” assumption a single job spell to be reported to the same establishment • Job spell – PIK-SEIN relationship that does not contain four consecutive quarters with zero earnings. • A change in firm structure can make it impossible to replicate counts given constraint • Long-term differences may result from new, large establishments appearing without predecessor

29. Causes of Differences:Successor-Predecessor • QCEW can, again, build up estimates directly from establishment • Does not matter for month1 purpose if predecessor existed • LEHD must have information from previous and following quarters for range of measures • If a new firm appears, and that firm does not have a predecessor (with same employees), jobs at the new firm will not count towards primary LEHD B employment in that quarter

30. Overview:Summary • The QWI are developed by incorporating data from a broad variety of sources • Differences in data sources, construction, and imputation procedures may cause employment estimates that do not match other sources

31. Part 2: Employment and Earnings Advanced LED TrainingQWI

32. Employment History • Jobs are linked across years and quarters to develop an individual’s employment history with a firm • PIK-SEIN-SEINUNIT level • The reference quarter is noted at t • Earlier quarters are negative, later positive • For calculation of measures, • RED indicates positive earnings • BLACK indicates zero earnings • BLUE (background) indicates time period not referenced

33. Details: Jobs • See m and M on comprehensive index • This variable is turned on (m=1) for every wage record in a state’s UI system that reports earnings of at least $1 in t • This is a job for m (PIK-SEIN-SEINUNIT) • This is a count of all persons ever paid by an employer at a location • By itself, it is not comparable to any other job-based statistic in the US system • Released in QWI public use files as “EmpTotal” and labeled as “Employment reference quarter: Counts” • Not reported in QWI Online, Industry Focus

34. Details: Employment – Beginning of Period • See b and B on comprehensive index • This variable is turned on whenever an individual has positive earnings in both the previous and current quarters • m=1 for last quarter (t-1) and this quarter (t) • b=1 means an individual was employed at a particular employer and location (PIK-SEIN-SEINUNIT) on the first calendar day of the quarter • B is the count of beginning of quarter employment for an employer location (SEIN-SEINUNIT) • This is the main employment measure used in QWI and OnTheMap

35. Beginning of Period Employment:Use in LEHD Data Products • In QWI Online reported as “Total Employment” • In Industry Focus reported as “Employment” and used to calculate “Growth in Employment” • In QWI public use files reported as “Emp” and labeled as “Employment: Counts” • In OnTheMap reported as “All Jobs” or “All Private Jobs” in all reports

36. Beginning of Period Employment: QWI-OnTheMap Comparison • In QWI, each job is counted separately, even if a worker has multiple jobs • In OnTheMap, the beginning-of-quarter employment variable for the second quarter (April 1 reference date) is further refined • Primary job: b=1 and (SEIN-SEINUNIT) were the largest source of wage earnings for the second quarter among all employers for a given individual • All jobs: b=1

37. Comparison of Employment Definitions • See Employment Definitions handout • Compares household definitions (CPS) with employer-based definitions (QCEW) and UI wage-record-based definitions (QWI, OnTheMap, LED, generally) • Originally prepared by George Putnam at the Illinois Department of Employment Security • The description of the “allocation” process under LED in this handout is a simplification of the multiple imputation process actually used. It should not be taken as definitive.

38. Details: Employment –End of Period • See e and E on comprehensive index • This variable is turned on whenever an individual has positive earnings in both the current and next quarters • m=1 for this quarter (t) and next quarter (t+1) • e=1 means an individual was employed at a particular employer and location (PIK-SEIN-SEINUNIT) on the last calendar day of the quarter • E is the count of end of quarter employment for an employer location (SEIN-SEINUNIT) • This variable is only reported in the QWI public use files, as EmpEnd.

39. Details: Employment – Full Period • See f and F on comprehensive index • This variable is turned on whenever an individual has positive earnings in the last, current and next quarters m=1 for last quarter (t-1), this quarter (t) and next quarter (t+1) • f=1 means an individual was employed at a particular employer and location (PIK-SEIN-SEINUNIT) throughout the current quarter • F is the count of full quarter employment for an employer location (SEIN-SEINUNIT) • This variable is reported in the QWI public use files as EmpS and on OnTheMap as “Employment, Stable Jobs”

40. QWI Estimates:Employment Measures48 States, Private Sector Only

41. QWI Estimates:Employment Percent Change 48 States, Private Sector Only

42. Basic Concepts: Earnings • Point in time earnings • Defined for a reference group meeting a particular employment definition at a point in time (End-of-quarter employment) • Full-quarter earnings • Defined for a reference group of full-quarter employment (Full-quarter employment, Full-quarter hires, Full-quarter new hires, Full-quarter separations) • Average earnings based on wage record earnings for the indicated quarter divided by 3 (monthly estimate) • In graphics, dollar sign ($) indicates reference quarter for earnings

43. Details: Earnings – End-of-Quarter • See Z_W2 on comprehensive index • Earnings in quarter t are accumulated into W2 whenever an individual has positive earnings in the current and next quarter • m=1 for this quarter (t) and next quarter (t+1) • Z_W2 is the average monthly earnings of end-of-quarter employees for an employer location (SEIN-SEINUNIT) • This variable is reported in the QWI public use files as “EarnEnd”

44. Details: Earnings – Full Quarter • See Z_W3 on comprehensive index • Earnings in quarter t are accumulated into W3 whenever an individual has positive earnings in the last, current and next quarters m=1 for last quarter (t-1), this quarter (t) and next quarter (t+1) • Z_W3 is the average monthly earnings of full quarter employees for an employer location (SEIN-SEINUNIT) • This variable is reported in the QWI public use files as “EarnS”, on QWI Online as “Avg Monthly Earnings”, in Industry Focus as “Average monthly earnings for all workers” (and for growth), and on OnTheMap as “Average Monthly Earnings, Stable Jobs”

45. Details: EarningsTotal Payroll • See w1 and W1 on comprehensive index • Earnings in quarter t are accumulated into W1 whenever an individual has positive earnings current quarter m=1 for this quarter (t) • W1 is the total quarterly earnings of employees for an employer location (SEIN-SEINUNIT) • This variable is reported in the QWI public use files as “Payroll”

46. QWI Estimates:Average Monthly Earnings48 States, Private Sector Only

47. Data Irregularity:Missing UI Records • Impact of large firm that fails to report UI wage data (or reports late) in 2009Q2.

48. Data Irregularity:Spike in Wage Records • Impact of large firm that displays unusual spike for only 2009Q2 e.g., back pay for a court settlement

49. Data Irregularity:Unidentified Succ-Pred • Firm reported under account X in 2009Q1, account Y in 2009Q2 (same geography, industry, job count); • Transition not identified in LEHD processing

50. Geographic Distributionof Data Irregularities • County-level maps show areas of most significant difference between QWI B and QCEW Mon1 • Some county-level differences are consistent over time, others only for short periods • Many are in very small counties