1. Bureau of Labor Statistics The BLS Local Area Unemployment Statistics Program Sharon P. Brown, Chief Local Area Unemployment Statistics Bureau of Labor Statistics Federal State Cooperative Program for Population Estimates October 6, 2004 Meeting

2. Bureau of Labor Statistics 2 Program description Estimation methods Publication of data Administrative uses of data Use of population estimates by the LAUS program Upcoming changes to LAUS The BLS LAUS Program

3. Bureau of Labor Statistics 3 The Local Area Unemployment Statistics Program LAUS is the cooperative Federal-State program responsible for the development of monthly estimates of the civilian labor force, total employment, and unemployment for more than 7,000 areas in the nation. State partners are the counterparts to the Department of Labor BLS is responsible for the methodology, data review, and validation. States are responsible for producing the estimates. Both BLS and States publish the data.

4. Bureau of Labor Statistics 4 The LAUS Program in Brief Data: Civilian labor force, total employment, total unemployment, unemployment rate Geography: States, DC, Puerto Rico, metropolitan areas, small labor market areas, counties, cities and towns in New England, cities of 25,000+ population elsewhere Estimation: Model-based, with varying levels of sophistication Frequency: Monthly Uses: Economic analyses, labor market studies, Federal fund allocations Concepts: CPS—the official measurement of the labor force

5. Bureau of Labor Statistics 5 LAUS estimation: States and selected areas Current LAUS models –Are signal-plus-noise models of the unemployment rate and employment-population ratio with CPS, non farm wage and salary employment, and population estimates as inputs –Are seasonally adjusted externally –Use the State annual average CPS employment and unemployment levels as benchmarks –Rely on population estimates as an independent control –Lack published error measures

6. Bureau of Labor Statistics 6 LAUS Substate Area Estimation Labor Market Area –An economically integrated geographic area within which individuals can reside and find employment within a reasonable distance or can readily change employment without changing their place of residence. OMB-designated metropolitan areas BLS-designated small labor market areas “Building block” approach used to the area estimation Labor Market Areas are controlled to the State estimates Counties (of multi-county areas) and cities are developed through disaggregation

7. Bureau of Labor Statistics 7 Use of Population Estimates in the LAUS Program LAUS uses CNP 16+ for direct estimation, and resident pop for disaggregation Intercensal population controls affect CPS employment and unemployment inputs to current LAUS models Intercensal population controls are used in annual benchmarking to adjust current model inputs and as independent controls for employment and unemployment Intercensal population estimates at the county and city level are used the disaggregation methods for county and city LAUS estimates

8. Bureau of Labor Statistics 8 Publication of LAUS Estimates News releases and reports –Monthly Regional and State release Typically, two weeks after the national release –Monthly Metropolitan Area release Typically, one and one-half weeks later –All area LABSTAT release One week after met area release –Annual Region and State release –Geographic Profile Annual average CPS data for States and selected areas –Special analyses, tables, maps Internet/website: http://www.bls.gov/lau/home.htm

9. Bureau of Labor Statistics 9 Administrative Uses of LAUS Data LAUS data are used to allocate more than $40 million in federal funds to States and areas –Department of Labor programs: Dislocated workers, youth, Job Service and Unemployment Offices, disadvantaged workers -- $3.8 billion –Agriculture--Food Stamp waivers--$26.4 billion –Health and Human Services programs: Welfare assistance -- $10.2 billion –Commerce/EDA public works programs -- $240 million –Preference in contracting, immigration visas, grants for financial institutions, projects, and infrastructure in distressed communities

10. Bureau of Labor Statistics 10 LAUS Redesign: Purpose and Objectives Improving the quality and quantity of LAUS estimates –Accurately reflect the labor market: The labor force estimates will incorporate the necessary decennial updates to methodology and geography. –Accurately measure the labor force: The accuracy of the labor force estimates will be affected through improved and innovative methodology that results in smaller revisions. –Improve our analysis of the labor force: Labor market analysis will be enhanced by the provision of measures of error and improved seasonal adjustment. –Expand the information we have on the local labor force: ACS demographic and economic data may be useful in generating current LAUS estimates by age, race, and sex.

11. Bureau of Labor Statistics 11 LAUS Redesign Activities Third generation models with real-time benchmarking More modeled areas Improved operating system for model-based estimates Handbook improvements Updated geography Updated decennial census inputs Improved quality of UI data

12. Bureau of Labor Statistics 12 LAUS Redesign Models Third generation of LAUS models Bivariate models of employment and unemployment that model UI claims, CES employment, and their interaction with appropriate CPS series Real-time benchmarking uses monthly national CPS levels of employment and unemployment Provide for direct model-based seasonal adjustment Produce measures of error on over-the-month and over-the-year change for both seasonally adjusted and not seasonally adjusted series

13. Bureau of Labor Statistics 13 LAUS Redesign Activities More modeled areas Redesign Objective: The use of statistically sound modeling will improve the methodological basis of area estimates Criteria: –Consistent time series, no interstate areas, only one area per State –“Reasonable” CV –Relative consistency in geographic composition based on 1990 and 2000 definitions –Good model diagnostics Selected areas Chicago MDDetroit MDNew Orleans MA Cleveland MAMiami MDSeattle-Everett MD And respective balance-of-State areas

14. Bureau of Labor Statistics 14 LAUS Redesign Activities Updated geography Metropolitan areas and small labor market areas will be revised, both conceptually and geographically –Revised standards, as well as demographic shifts, will result in new geography Metropolitan divisions and micropolitan areas will be implemented in the LAUS program The updated geography will be reflected in Geographic Profiles based on geographic composition of CPS areas and area variance

15. Bureau of Labor Statistics 15 LAUS Redesign Implications for Population Estimates Intercensal population estimates will continue to be used to adjust LAUS model inputs Intercensal population estimates will continue to be used as annual benchmark controls for States Intercensal population controls will be needed for more areas—the 12 additional modeled areas—and more will come Intercensal population estimates for counties and cities will continue to be used in LAUS disaggregation

16. Bureau of Labor Statistics 16 LAUS Redesign Key Dates to Implementation Federal Register NoticeNovember 8 First box note in Region/State releaseNovember 19 FRN comment period closedDecember 10 Final Federal Register NoticeJanuary 14, 2005 January 2005 Region and State releaseMarch 10, 2005 For more information on the LAUS Redesign, go to http://www.bls.gov/lau/lausredesignqa.htm