Economic News Release

Average Annual Pay Technical Note


                                     
Technical Note
   

   These data are the product of a federal-state cooperative program known
as Covered Employment and Wages (CEW), or the ES-202 program.  The data are
derived from summaries of employment and total pay of workers covered by
unemployment insurance (UI) legislation and provided by State Employment
Security Agencies (SESAs).  The summaries are a byproduct of the adminis-
tration of state unemployment insurance programs that require most employers 
to pay quarterly taxes based on the employment and wages of workers covered 
by UI.  Data for 2001 are preliminary and subject to revision.
   
   Effective January 2001, the CEW program began assigning Indian Tribal
Councils and related establishments to local government ownership.  This
action by the Bureau of Labor Statistics (BLS) was in response to a change 
in federal law dealing with the way Indian Tribes are treated under the 
Federal Unemployment Tax Act (FUTA).  This law requires federally recognized 
Indian Tribes to be treated similarly to state and local governments.  In the 
past, the CEW program coded Indian Tribal Councils and related establishments 
in the private sector.  As a result of the new law, CEW data will reflect 
significant shifts in employment and wages between the private sector and 
local government from 2000 to 2001.  BLS incorporated this change in first
quarter 2001 data because of the immediate effectiveness of the law, signed
December 21, 2000.  Data will also reflect industry changes.  In addition
to the change to local government, the industry codes of federally
recognized Indian Tribal Councils were changed.  Those accounts previously
assigned to civic and social organizations were assigned to tribal
governments.  There were no required industry changes for related
establishments owned by these Tribal Councils.  These tribal business
establishments continued to be coded according to the economic activity 
of that entity.
     
Coverage
   
   Employment and wage data for workers covered by state UI laws and for
federal civilian workers covered by the Unemployment Compensation for
Federal Employees (UCFE) program are compiled from quarterly contribution
reports submitted to the SESAs by employers.  In addition to the quarterly
contribution reports, employers who operate multiple establishments within
a state complete a questionnaire, called the "Multiple Worksite Report,"
which provides detailed information on the location and industry of each of
their establishments.  Average annual employment and pay data included in
this release are derived from microdata summaries of 8.0 million employer 
reports of employment and wages submitted by states to BLS.  These reports 
are based on place of employment rather than place of residence.
   
   UI and UCFE coverage is broad and basically comparable from state to
state.  In 2001, UI and UCFE programs covered workers in 129.7 million
jobs.  The estimated 124.8 million workers in these jobs (after adjustment
for multiple jobholders) represented 99.7 percent of wage and salary
civilian employment.  Multiple jobholder estimates are produced by the
Current Population Survey.  Covered workers received $4.695 trillion in
pay, representing 94.8 percent of the wage and salary component of personal
income and 46.6 percent of the gross domestic product.
   
   Major exclusions from UI coverage during 2001 are self-employed workers, 
most agricultural workers on small farms, all members of the Armed Forces, 
elected officials in most states, most employees of railroads, some domestic 
workers, most student workers at schools, and employees of certain small 
nonprofit organizations.

                                  - 2 -

Concepts and methodology
     
   Average annual pay was computed by dividing total annual pay of
employees covered by UI programs by the average monthly number of these
employees.  In addition to salaries, average annual pay data include bonuses, 
the cash value of meals and lodging when supplied, tips and other gratuities, 
and, in some states, employer contributions to certain deferred compensation 
plans such as 401(k) plans, and stock options.  Monthly employment is based 
on the number of workers who worked during or received pay for the pay period
including the 12th of the month.  With few exceptions, all employees of
covered firms are reported, including production and sales workers, corpora-
tion officials, executives, supervisory personnel, and clerical workers.  
Workers on paid vacations and part-time workers also are included.  Percent 
changes in average annual pay were computed using preliminary North American 
Industry Classification System (NAICS)-based 2000 data as the base.  These 
preliminary NAICS-based 2000 data will differ from the Standard Industrial 
Classification (SIC)-based 2000 data previously published.
   
   Average annual pay is affected by the ratio of full-time to part-time
workers as well as the number of individuals in high-paying and low-paying
occupations.  When comparing average annual pay levels between industries
and/or states, these factors should be taken into consideration.  Annual
pay data only approximate annual earnings because an individual may not be
employed by the same employer all year or may work for more than one 
employer.  Also, year-to-year changes in average annual pay can result from
a change in the proportion of employment in high- and low-wage jobs, as
well as from changes in the level of average annual pay.
   
   In order to insure the highest possible quality of data, SESAs verify
with employers and update, if necessary, the industry, location, and
ownership classification of all establishments on a 3-year cycle.  Changes
in establishment classification codes resulting from the verification
process are introduced with the data reported for the first quarter of the
year.  Changes resulting from improved employer reporting also are introduced 
in the first quarter.  For these reasons, some data, especially at more 
detailed industry levels, may not be strictly comparable with earlier years.
   
   Data in table 4 are presented separately for the private sector and for
government.  Government data include federal, state, and local establishments.
   
   A few covered employers provided insufficient information on the nature
of their businesses to enable the SESA to assign a specific NAICS code.  
The establishments of these employers therefore could not be classified by 
industry sector.  The wages for these nonclassifiable establishments, along 
with data for the agricultural division, are not shown separately, but are 
included in the averages for state and national totals.
     
Additional statistics and other information

   An annual bulletin, Employment and Wages, features comprehensive 
information by detailed industry on establishments, employment, and wages 
for the nation and all states.  Employment and Wages Annual Averages, 2001 
will be available for sale in late 2002 from the BLS Publications Sales 
Center, P.O. Box 2145, Chicago, Illinois 60690.  News releases on 2001 
average annual pay for the nation's metropolitan areas and for 2001 employ-
ment and average annual pay for large counties are scheduled to be released 
soon.  Average annual employment and pay data by state and industry are
available upon request from the Division of Administrative Statistics 
and Labor Turnover, Bureau of Labor Statistics, U.S. Department of Labor,
Washington, DC 20212, telephone 202-691-6567 (e-mail: CEWInfo@bls.gov).

   Information in this release will be made available to sensory impaired
individuals upon request.  Voice phone: 202-691-5200; TDD message referral
phone number: 1-800-877-8339.


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