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Assessing the Timeliness of Business Births in 

BLS Establishment Statistics 

U.S. Bureau of Labor Statistics 

Department of Labor 

April 7, 2004
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Study Summary 

Purpose: This study looked at one possible contributor to the recent observed discrepancy in 

employment growth between the Current Employment Statistics (CES) or establishment survey 

and the Current Population Survey (CPS) or household survey. Both CPS and CES sample 

results are tied to independently derived controls; the CPS uses Census Bureau population 

estimates to derive current estimates of employment and unemployment while the CES uses 

universe counts of employment from the BLS Quarterly Census of Employment and Wages 

(QCEW) program as an annual benchmark for employment data and as a critical input for 

modeling the birth-death component of monthly estimates. 

This study examined the QCEW universe count of employment to determine whether there was 

an emerging lag in capturing new business births. If the lag in capturing new employers by the 

QCEW program has lengthened, then it is possible that this could result in an underestimate of 

employment growth in the CES as the annual benchmark or the birth-death factor or both could 

be undercounted. (See pages 293-4 of the January 2004 Employment and Earnings for an 

explanation of business birth-death estimation and the report “Employment from the BLS 

Household and Payroll Surveys: Summary of Recent Trends” 

(https://www.bls.gov/ces/ces_cps_trends.pdf ) for other possible factors affecting the CES and 

CPS employment growth discrepancy.) 

Method: The study examined State Unemployment Insurance (UI) Contribution Operations 

(Form ETA 581) reports, which identify the number of new UI-liable employers processed each 

quarter. These reports were used to determine whether the full universe count of employment 

could be incomplete due to a lag in capturing new employers. Quarterly State ETA 581 data 

were aggregated to create a national time series of business births and this time series then was 

seasonally adjusted. The data flow in processing new employers and capturing that information 

in the BLS QCEW program was evaluated. 

Results: This study found that no lag has emerged in the capturing of new UI-liable employers 

by the QCEW program, indicating that the universe count used for benchmarking CES estimates 

remains complete. 

Sources: ETA 581 data used in this report can be located at http://www.workforcesecurity.doleta.gov/. 

Under the Advisories section, click on UIS/OWS Information Bulletins. 
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Study Description and Analysis 

Background: The QCEW program, also known as the ES-202 program, obtains information on 

all employers that have employees covered by the State UI laws, as well as federal workers 

covered by the Unemployment Compensation for Federal Employees (UCFE) program. Each 

quarter, the State Workforce Agencies edit and process the data and send the information to BLS 

in Washington, DC. These data items include the name, address, employment and wages for 

each quarter, the date of initial UI liability, and other information. The result is a quarterly 

universe list of UI-covered businesses that serve as the sampling frame for most BLS business 

statistics surveys. These surveys include the Current Employment Statistics (CES), the 

Occupational Employment Statistics (OES), the National Compensation Survey (NCS), and 

others. 

QCEW total employment counts also serve as the annual employment benchmark for the CES 

establishment survey and as the population base in business birth-death estimation. For these 

purposes, an important quality component of the QCEW universe count is the timely inclusion of 

new business births in the State UI systems. This study looks at information captured in the 

Employment and Training Administration’s internal unemployment system reporting 

mechanisms to identify any emerging lags in capturing new business births which could affect 

CES employment estimates. 

ETA 581 Report: The Contribution Operations report (Form ETA 581) provides 

comprehensive information on each State’s UI tax operations and is essential to the Employment 

and Training Administration’s oversight of the UI tax program. ETA 581 data are the basis for 

determining the adequacy of funding and measuring the effectiveness of States’ UI tax 

operations; these are required Federal functions under the Federal-State UI program. These 

reports provide information on State agency workloads and measure the timeliness of assigning 

UI accounts to new employers. The individual State ETA 581 reports for each calendar quarter 

are submitted electronically to ETA on the 20th day of the second month following the reference 

quarter (May 20, August 20, November 20, and February 20). 

Data from the ETA 581 report are used regularly for three critical purposes: (1) allocation of 

administrative funding based on State tax workload, (2) performance measurement to ensure the 

quality of State UI tax program operations, and (3) calculation of State and national economic 

statistics. This information also can be used to study processing lags in the capture of 

UI business births. 

Capturing New UI-Liable Employers in the State UI System: There are two primary steps in 

capturing new business births in the State UI system: learning of and determining the UI tax 

liability of new employers, and capturing information on new UI-liable employers into the State 

UI computer system. 

(1) Learning of and determining the UI-tax liability of new employers: The data in Table 1 

show the number of employers found to be liable during each quarter. BLS calculated 

seasonally adjusted measures to aid in the analysis of these data. Both the unadjusted and 

seasonally adjusted series show the business cycle aspects we would expect, with growing 
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workload during the economic expansion in the late 1990s and reduced levels during and 

following the recession. 

 

Table 1. Number of Newly Established UI Liable Employers, 

US Total, 1995-2003 

 

Number of Newly Established Liable 

Employers 

 

Quarter Original Seasonally Adjusted 

1995Q1 214,275 199,014 

1995Q2 210,297 194,078 

1995Q3 193,843 199,326 

1995Q4 175,168 201,050 

1996Q1 219,439 204,923 

1996Q2 224,195 207,202 

1996Q3 200,228 204,780 

1996Q4 184,400 211,279 

1997Q1 230,157 216,522 

1997Q2 234,233 215,766 

1997Q3 220,049 223,945 

1997Q4 200,891 231,400 

1998Q1 234,574 221,527 

1998Q2 226,869 207,424 

1998Q3 233,858 238,398 

1998Q4 184,419 213,488 

1999Q1 227,154 214,202 

1999Q2 258,892 235,850 

1999Q3 233,636 238,974 

1999Q4 198,746 230,879 

2000Q1 252,258 236,397 

2000Q2 270,102 246,442 

2000Q3 230,616 236,757 

2000Q4 197,000 229,165 

2001Q1 241,185 224,153 

2001Q2 237,606 217,776 

2001Q3 205,583 211,901 

2001Q4 191,340 222,411 

2002Q1 240,987 222,118 

2002Q2 233,169 215,046 

2002Q3 214,102 221,256 

2002Q4 194,215 225,273 

2003Q1 239,730 219,965 

2003Q2 224,216 207,634 

2003Q3 208,808 216,015 

 

 SOURCE: ETA 581 Report and BLS seasonal adjustment. 

 NOTE: US totals exclude Puerto Rico and the Virgin Islands. 
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As seen in Chart 1, the UI system has continued to detect and capture newly established 

businesses. In the eight quarters after the end of the recession, an average of 218,000 new 

businesses per quarter were determined to be liable for UI tax purposes. 
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(2) Capturing information on newly UI liable firms into the UI computer systems: Table 2 

below displays standard measures of the promptness of processing new employers within 

the UI system. Charts 2 and 3 depict the efficiency and speed with which the State 

UI offices capture new UI accounts. 

Table 2. Promptness of UI Liability Status 

Determination, US Total, 1995-2003 

 Percent Within Percent Within 

Quarter 90 Days 180 Days 

1995Q1 72.2 88.9 

1995Q2 79.7 92.7 

1995Q3 82.1 94.0 

1995Q4 82.5 92.5 

1996Q1 78.1 90.0 

1996Q2 77.8 88.8 

1996Q3 83.1 95.1 

1996Q4 78.8 90.7 

1997Q1 76.4 87.8 

1997Q2 79.1 89.8 

1997Q3 79.8 92.1 

1997Q4 80.0 89.4 

1998Q1 75.5 87.5 

1998Q2 79.3 90.1 

1998Q3 77.7 90.7 

1998Q4 80.2 90.7 

1999Q1 75.9 86.7 

1999Q2 72.6 80.4 

1999Q3 69.5 81.2 

1999Q4 81.5 91.1 

2000Q1 76.2 85.1 

2000Q2 75.5 84.7 

2000Q3 80.9 91.7 

2000Q4 82.6 91.4 

2001Q1 75.3 85.9 

2001Q2 79.9 89.3 

2001Q3 79.8 91.2 

2001Q4 80.2 90.4 

2002Q1 80.3 88.2 

2002Q2 83.1 90.0 

2002Q3 83.0 91.9 

2002Q4 84.0 91.2 

2003Q1 81.7 88.8 

2003Q2 84.2 91.0 

2003Q3 84.9 92.8 

 SOURCE: ETA 581 Report. 

 NOTE: US totals exclude Puerto Rico and the Virgin Islands. 
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Chart 2 depicts efficiency measures of capturing new businesses within the UI system. These 

measures include the total levels, the number processed within 90 days of the end of the quarter 

of initial liability, and the number processed within 180 days of the end of the quarter of initial 

liability. 

Chart 2 indicates that the UI computer systems continue to capture and process new employers 

on a timely basis. 

It should be noted that the ETA 581-based count of new UI accounts covers the work done, or 

number of new UI accounts assigned in a specific quarter, but does not necessarily capture all 

business formation during the reference quarter. This count not only includes new status 

determinations for truly new employers; it also includes those accounts for employers that had 

not provided a status determination form to the UI system on a timely basis. While most 

businesses establish their liability within a short period of their opening and hiring, many do so 

with a lag of months or quarters. It is primarily this lag in employers’ reporting that accounts for 

the difference between the total number of determinations made in a quarter and the “entered 

within 90 days” or “entered within 180 days” data shown on Chart 2. 
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Chart 3 shows the percentage of the total number of new accounts that are processed into the 

UI system within either 90 or 180 days. Since 1995, the UI offices have steadily captured just 

less than 80 percent of new UI accounts within one quarter and about 90 percent within two 

quarters, with these performance levels rising slightly over the past two years. The share of new 

accounts processed within 90 days has been above 80 percent in every quarter from the fourth 

quarter of 2001 and the third quarter of 2003 (the last data available). The percent of new 

employers processed within 90 days of 2003Q3 was 84.9 percent compared to 83.0 percent a 

year earlier and the share of new employers processed within 180 days was 92.8 percent versus 

91.9 percent. There have been year-over-year increases in both measures in every quarter 

starting with the first quarter of 2002, the quarter after the recession ended. 
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BLS Capture of new Business Births: Each quarter, BLS obtains extracts of the current and 

preceding quarters’ data from the state UI files for use in the QCEW program. The timely and 

comprehensive capture of new UI accounts in the QCEW program is an important feature for 

many BLS statistical programs including Current Employment Statistics. Table 3 shows that, for 

the most recent data available, 87.5 percent of the new business births that are included in the 

BLS files opened within the same quarter that they were liable for UI coverage. This high rate of 

capture corresponds closely to the ETA 581 data. 

Table 3. Liability Dates for New UI Accounts for the US: 2003/3Q 

Quarter Containing Initial UI Liability Date 

2003/3Q 2003/2Q 2003/1Q Before 2003/1Q No Liability Date 

Number 

of New 

Accounts 

 Number Percent Number Percent Number Percent Number Percent Number Percent 

196,861 172,303 87.5% 5,196 2.6% 2,333 1.2% 17,006 8.6% 80 0.0% 

SOURCE: Bureau of Labor Statistics, Quarterly Census of Employment and Wages Program. 

NOTE: US totals exclude Puerto Rico and the Virgin Islands. 

Analysis Summary: This study found no indication of a decline in the UI system’s capability to 

promptly include newly established businesses in their data. Similarly, the study found no 

indication of a decline in BLS’s ability to capture this information in a timely manner in the 

QCEW program.