Monthly Labor Review • April 2008 25

Transitional Employment Cost Indexes

Transitional Employment Cost Indexes

for seasonal adjustment

As part of its conversion to the 2002 North American Industry

Classification System and the 2000 Standard Occupational

Classification System, the Bureau of Labor Statistics estimated

transitional historical indexes to implement seasonal adjustment

As part of the National Compensation 

Survey (NCS) of the Bureau of Labor 

Statistics (BLS), the Employment 

Cost Index (ECI) provides quarterly measures 

that represent the change in employers’ labor 

costs per employee hour worked, exclusive of 

shifts in employment among industries and 

occupations.1 The ECI program publishes indexes and 3- and 12-month percent change 

estimates for total compensation, wages and 

salaries, and total benefits. Since 1975, the ECI

has been computed from survey information on 

a sample of establishments and jobs weighted 

to represent the universe of establishments and 

occupations in the U.S. economy. The ECI is a 

principal Federal economic indicator that has 

many uses, both public and private, including 

formulating monetary policy, indexing hospital charges for Medicare reimbursement, adjusting Federal Government pay, and adjusting 

wages in long-term contracts.

After more than a quarter of a century, the 

ECI program has switched to new industry 

and occupational classifications, as required by 

Office of Management and Budget mandates 

stating that all Federal statistical agencies 

which produce industry or occupation statisE. Raphael Branch,

James A. Buszuwski,

Albert E. Schwenk,

and

Mark Gough

tics shall adopt the North American Industry Classification System (NAICS)

2

 and the 

Standard Occupational Classification System 

(SOC).3 Before the conversion to NAICS and 

SOC, the ECI program had been using the 

Standard Industrial Classification (SIC)

4

 system and the BLS Occupational Classification 

System (OCS).5 Among the changes to the 

ECI made in response to the mandates were 

changes for seasonal adjustment purposes.6

The focus of this article is the construction of the transitional time series that were 

used to derive seasonal factors for seasonal 

adjustment of the NAICS and SOC-based 

ECI, published beginning in April 2006 with 

the release of the March 2006 ECI estimates.7

These historical transitional series are independently calculated estimates that include 

data classified by NAICS and SOC with the 

use of both field coding and national office 

recoding. As part of the conversion of the 

ECI to NAICS and SOC, special computations 

outside the ECI quarterly production system 

were needed to create 10-year data spans for 

seasonal adjustment.Ten years is the specific 

period of historical indexes used in ECI seasonal factor estimation.8

 The sections that 

E. Raphael Branch, 

James A. Buszuwski, 

and Albert E. Schwenk 

are economists in the 

Office of Compensation 

and Working Conditions, 

Bureau of Labor Statistics; 

Mark Gough is a student 

formerly in the summer intern program in the same 

office. E-mail: branch.

raphael@bls.gov
Transitional Employment Cost Indexes

26 Monthly Labor Review • April 2008

follow summarize the seasonal adjustment methodology, 

examine differences between the classification systems, 

and discuss the methodology, data, and computations 

related to the construction of the transitional ECI series. 

The article also presents selected transitional estimates 

(not seasonally adjusted) classified by NAICS and SOC and 

compares those estimates with their counterparts from 

SIC and OCS, respectively. The comparisons use absolute 

difference meas-ures to quantify differences.

The article complements an earlier one by E. Raphael 

Branch and Lowell Mason9 on seasonal adjustment of the 

ECI and the conversion to NAICS and SOC. It also follows 

an earlier article by Harriet G. Weinstein and Mark A. 

Loewenstein10 that compared both NAICS with SIC and 

SOC with OCS sample employment and cost levels of the 

Employer Costs for Employee Compensation (ECEC) 

data series, which BLS converted to NAICS and SOC in 

2004. That article compared ECEC data at a single point 

in time, whereas the approach presented here compares 

transitional ECI estimates over a 10-year period.

Seasonal adjustment methodology

Over a given period, rates of change in the cost of compensation in certain industries, as measured by the ECI, 

reflect events that follow a regular pattern. These events 

include natural fluctuations of economic activity that occur at specific times of the year, such as heightened activity in the construction or leisure and hospitality industry 

during warm weather. Such recurring patterns in economic time series are referred to as seasonal effects. Removing these effects from economic time series, a procedure 

referred to as seasonal adjustment, makes it possible for 

analysts to observe the combined trend and other random 

movements in those series. Many public and private analysts, economists, and statistical agencies use seasonally 

adjusted data for economic research and analysis to gain a 

better understanding of changes in the economy.

Two methods are employed for seasonal adjustment of 

the ECI: direct and indirect seasonal adjustment. In direct 

seasonal adjustment, an original (not seasonally adjusted) 

index is divided by the seasonal factor for the series. In 

indirect seasonal adjustment, seasonally adjusted index 

components of an aggregate series are averaged by taking 

a weighted sum.11

Seasonal factors for directly adjusted ECI series are 

estimated by applying seasonal adjustment techniques 

to 10 years12 of historical indexes for a series, using the 

X-12-ARIMA13 (Auto Regressive Integrated Moving Average) seasonal adjustment program.14 The estimated seasonal factors are used as projected seasonal factors for the 

coming year, under the assumption that there will be no 

substantial change in seasonality between estimates based 

on data spans that include the most current year of data 

and estimates that would be obtained if actual data for the 

coming year were known. This assumption allows the seasonal factor estimates used in the production of the ECI to 

be based on actual data rather than projections.

ECI seasonal factors, seasonally adjusted indexes, and 

seasonally adjusted 3-month percent changes are subject 

to revision for 5 years. Revisions are conducted annually 

after the December ECI production quarter is completed. 

This timing allows for a complete year of the most current 

indexes to be available for the revision.

Differences between NAICS and SIC

NAICS and SIC differ in both the concept and reference 

period of the industrial structure of the U.S. economy. 

NAICS classifies establishments into industries according to similarities in the production processes they use 

to produce goods and services.15 The 2002 NAICS reflects 

the industrial structure of the U.S. economy as it existed 

during the development of the classification system. NAICS development began in 1992, and the 1997 NAICS

manual was published in 1998. A subsequent revision for 

2002 was designed to address the continually changing 

economy. In this revision, 14 of 20 sector classifications 

are the same as in the 1997 NAICS.

16 By contrast, the SIC

system groups establishments by the type of economic 

activity in which the establishment is primarily engaged, 

based on supply and demand characteristics of industries. 

Originally developed in the 1930s, the SIC system was revised periodically to reflect the U.S. economy’s changing 

industrial composition and organization. The last revision 

was in 1987.

In spite of the different concepts upon which the two 

systems are based, two-thirds of the four-digit SIC classifications can be derived from NAICS. Many of the remaining third are breaks in time series.17 Weinstein and 

Loewenstein observed both similarities and “breaks in series” when they compared NAICS with SIC using employment, wage cost, and total compensation cost estimates 

from 2004 ECEC data.18 Weinstein and Loewenstein 

reported many ECEC series with more than 90 percent 

of employees common to both NAICS and SIC, including many with 98 percent or more of their employees in 

both classifications. At the same time, a variety of other 

NAICS and SIC series had substantially fewer employees in 

common, and new classifications were included in NAICS
Monthly Labor Review • April 2008 27

that did not exist in SIC. Weinstein and Loewenstein also 

indicated that higher level industrial and occupational 

categories had virtually the same employee populations 

in both classification systems and that differences were 

more prevalent among detailed categories. Also, wage 

comparison ratios showed many series ratios close to 1.0, 

meaning that there was essentially no difference in the 

estimates. The results based on ECEC had implications 

for the conversion of the ECI to NAICS and SOC, because 

the ECEC and ECI samples are essentially the same and 

rates of change, as measured in the ECI, were expected 

to be closer to the NAICS and SOC rates than cost levels 

were.19 

Difference between SOC and OCS

The SOC and BLS OCS occupational classification systems 

also differ in concept, structure, and reference periods 

pertaining to the U.S. economic structure. The ECI now 

uses the 2000 SOC system, which is designed to represent the occupational structure of the United States as it 

existed at that time.20 The SOC system covers all occupations in which work is performed for pay or profit. At the 

most detailed level, each occupational category includes 

workers who perform similar job tasks at similar skill levels. The SOC system represents a major change relative to 

the BLS occupational classification structure previously 

used for the ECI. The SOC system includes a concept of 

“job families,” in which people who work together are 

classified together, regardless of their skill levels. As a result, many workers who were classified separately in the 

OCS system are now included in the same SOC group,21

and certain workers who were in the same group in the 

OCS system are now classified into different or new SOC 

groups. Therefore, the aggregations created in SOC differ 

from those in OCS.

By contrast, the BLS OCS classifications, which are 

based on Census Bureau occupational classifications, 

are designed to represent the economy as of 1990.22 As 

with the SOC, the basic concept of OCS classification is 

primarily by work performed; but the classifications of 

occupations are separated by skill levels. Because of the 

differences between the two classification approaches, 

researchers anticipated that analyzing occupational data 

across time would be much more challenging with SOC

than analyzing industry data would be with NAICS.

23 In 

an earlier article, Albert E. Schwenk and William J. Wiatrowski discussed overlapping employment coverage between SOC and OCS groups in 2002 ECI data. The overlap 

ranged from 66.3 percent to 99.3 percent of workers in 

a group.24 In another article, Schwenk and Loewenstein, 

finding inconsistencies between SOC and OCS, did not 

compare natural resources and production occupations 

between the two systems. Nor did they compare the two 

systems’ transportation and material-moving occupations.25 Weinstein and Loewenstein’s breaks in series 

mentioned earlier represent similar results for aggregate 

groups in ECEC data.26 

Transition methodology

From a time-series perspective, differences between classification systems could have substantial implications for 

seasonal adjustment, for which a consistent time series is 

essential for accurate analyses and forecasts.27 In response 

to the significant changes found in NAICS compared with 

SIC, the BLS, recognizing the needs of users of time-series 

data, generally approached the problem by restructuring 

historical series. For instance, the BLS Quarterly Census 

of Employment and Wages (QCEW) program restructured 

its employment and wage estimates back to 1990, the Current Employment Statistics (CES) program restructured its 

employment estimates back to 1939, and the Productivity 

program restructured its output-per-hour indexes and related series back to 1987.

Using the new NAICS and SOC classifications, BLS

economists in the Office of Compensation and Working 

Conditions computed transitional Employment Cost Indexes (not seasonally adjusted) for December 1994 through 

December 2005.28 The choice to compute transitional indexes was a highly desirable one, because it was consistent 

with the approach taken by other BLS programs and other 

Federal agencies to address the data comparability concerns of seasonal adjustment analysts. The main concern 

of these researchers was that, due to the conceptual and 

definitional changes brought about by the new classification systems, comparability issues could affect the accuracy 

of seasonal factor estimation, even when no comparability 

adjustments appeared necessary.29 It was not appropriate 

to mix indexes based on SIC and OCS with those based on 

NAICS and SOC, because a change in classification systems 

within the 10-year data span might lead to a change in the 

underlying seasonal behavior of a series. Although X-12-

ARIMA is robust and can readily adapt to minor changes in 

the computation of a series, the X-11 routine that is part of 

X-12-ARIMA takes time to adapt to major changes. (X-11 is 

a seasonal adjustment method that uses moving averages, 

referred to as filters, to smooth an economic series.30) 

Computing the NAICS and SOC estimates for the entire 

data span has two major advantages. First, changes in the 
Transitional Employment Cost Indexes

28 Monthly Labor Review • April 2008

seasonal pattern brought about by the new industry and 

occupation definitions are fully embodied in the series. 

The seasonal adjustment routine within X-12-ARIMA is 

more likely to give smoother estimates of trend, seasonal, 

and irregular components. Because the X-11 filters are using data by NAICS and SOC over the entire data span, the 

seasonal factor estimates generally are not biased by effects associated with the change in classification systems. 

Second, computing NAICS and SOC estimates for the entire data span provided historical data for NAICS and SOC

series that did not exist under the SIC and OCS classification systems. These new series could then be seasonally 

adjusted as appropriate with the first publication of NAICS

and SOC data—the March 2006 estimates. This approach 

was preferable to simply waiting until enough historical 

data for the new NAICS and SOC series had accumulated 

to perform seasonal factor estimation on those series. 

Data considerations

In anticipation of seasonal adjustment, the BLS began dual 

coding NCS data in March 2000; that is, BLS field economists were asked to code new establishment and occupation samples, using both the NAICS and SOC classifications 

and the SIC and OCS classifications. The NAICS structure 

is a six-digit hierarchical coding system that identifies particular industries and their placement in the classification 

structure. The first two digits represent sectors—general 

categories of various economic activities. The entire 2002 

NAICS structure contains 20 sectors. Although the BLS

originally planned to publish estimates at the two-digit 

NAICS level, economists in the national office coded establishments at the six-digit level wherever feasible, in order 

to afford the best possible classification of industries.31

Dual coding was implemented with successive sample 

replacement groups; therefore, not all the data for 2000 

and 2001 were dual coded during data collection. Beginning with 2002 data, every establishment and occupation 

in the ECI sample at any point during 2001–05 was dual 

coded by staff collecting the data. However, not every 

establishment or occupation in the ECI sample during 

1994–2001 was dual coded in that way. Of roughly 17,200 

establishment-occupation combinations in the ECI sample from December 1994 to December 2001, only about 

37 percent were dual coded at the time of data collection. 

This left approximately 63 percent of the establishments 

and occupations in the sample during 1994–2001 to be 

recoded in the national office.

For the first half of the data span for 2006 seasonal 

factor estimation (March 1996 through December 2000), 

two sources facilitated the national-office recoding of ECI

data from SIC to NAICS: (1) the reconstruction file developed in the BLS Office of Employment and Unemployment Statistics to recode establishments in the CES survey 

and (2) the BLS Longitudinal Data Base (LDB) files for 

1995 and March 2001.32 When ECI data could not be recoded with the use of these sources (about 600 cases), BLS

staff recoded the establishments by assigning NAICS codes 

in accordance with definitions in the NAICS manual. In 

most of these cases, there was a one-to-one correspondence between the NAICS and SIC codes at the three-digit 

level at least, so no judgment was involved when BLS

economists assigned the NAICS codes. However, in about 

200 cases, the SIC mapped into two or more two-digit 

NAICS codes. In these cases, the appropriate NAICS code 

was determined by the name of the establishment and the 

titles of the NAICS categories.

Occupational quotes that were not coded during data 

collection were recoded to appropriate intermediate (twodigit) aggregation SOC groups33 by means of a crosswalk 

that matched the SOC with the OCS. The recoding from 

OCS to the two-digit aggregation level of SOC was feasible, given that the ECI occupational estimates are published at that same level, and was even easier than NAICS

recoding, because the SOC groups are at a more aggregate 

level.

Computing the index 

The basic computations for the transitional indexes are the 

same as those for the regularly published ECI. The ECI is 

a Laspeyres index, and the standard formula for an index 

number with fixed weights applies.34 The discussion that 

follows pertains to ECI wages and salaries indexes; the calculation for benefit cost indexes is essentially the same.35

An Employment Cost Index is a weighted average of 

the cumulative average wage changes from a specified 

base-period wage. Currently, Employment Cost Indexes 

are based at 100 for December 2005. A formula for an 

Employment Cost Index It at quarter t is presented next. 

The formula assumes that the index series is based at 100 

for t = 0. With this base, to obtain an index for an estimation cell at any quarter t, the wage bill or cost weight sum 

for the cell is divided by the wage bill for that cell for 

quarter t – 1, the previous quarter; that is, 

 ( 1)

( 1)

,

ti

i

t t

t i

i

W

I I

W

−

−

=

∑

∑
Monthly Labor Review • April 2008 29

where I(t-1) is the previous quarter’s index; Wti is the wage 

bill, or cost weight, for quarter t and estimation cell i; 

and W(t-1)i is the previous quarter’s wage bill for the same 

cell i. A wage bill is a weighted average hourly wage of 

workers in the cell, times the number of workers represented by the cell. In general, a cell is defined by private or 

government sector, industry, and occupational group.

For a current quarter t index, 

 

where Rti is the ratio of the current quarter’s weighted 

average wage in a cell to the previous quarter’s weighted 

average wage in a cell.36

Operationally, several steps took place in the process of 

computing NAICS-SOC-based Employment Cost Indexes 

for the 1996–2005 periods:

Define industry and occupation cells. In all, 58 industry categories were defined for private industry 

and 13 industry for State and local governments. For 

each industry category, nine occupational categories 

were defined. 

Determine 2002 employment in each industry and 

occupation cell.37 Employment counts were obtained mainly from the BLS QCEW file of quarterly 

reports to State employment security agencies from 

every employer that is subject to State Unemployment Insurance laws and is in the BLS Occupational 

Employment Statistics program.

Compute base-period (December 1994) wage and 

total benefit cost weights for each industry and occupation cell. The base-period wage cost weight for 

each cell was equal to 2002 employment, times the 

average December 1994 wage, and similarly for the 

base-period total benefit cost weight. Extending the 

series back to 1994 provided an opportunity to test 

seasonal adjustment of NAICS-SOC data before 2005 

data became available and also permitted additional 

testing of NAICS-SOC data to increase the level of 

confidence in the accuracy of the data.

Compute the current quarter’s wage and total benefit cost weights for each industry and occupation 

cell, for each quarter, through December 2005. 

For each series of interest for each quarter, sum both 

the current and previous quarters’ cost weights across 

the component cells.

Calculate indexes with December 1994 as the base 

(= 100), and then, for each subsequent quarter, move 

1)

2)

3)

4)

5)

6)

the index forward by setting it equal to the previous 

quarter’s index times the ratio of the current quarter’s 

cost weight to the previous quarter’s cost weight.

Rebase all indexes to December 2005 = 100 by dividing each index by the December 2005 index value 

and multiplying by 100.38

Transitional Estimates

Table 1 shows selected transitional Employment Cost 

Indexes, not seasonally adjusted, that were developed 

specifically for seasonal adjustment of the ECI classified 

by NAICS and SOC. Ten-year historical index data spans 

from 1996 to 2005 and from 1997 to 2006 were used to 

estimate seasonal factors by quarter,39 as part of the direct seasonal adjustment method employed for the 2006 

and 2007 published seasonally adjusted Employment 

Cost Indexes, respectively. The transitional indexes and 

3-month percent changes in the table are provided for informational purposes only, to show the entire data spans 

that were used in estimating seasonal factors, as well as to 

provide additional context for the published NAICS and 

SOC ECI estimates.

The data in the table are transitional because they are a 

combination of independently calculated estimates (from 

December 1994 to December 2005) and production-system-calculated estimates (from March 2006 to December 

2006), which have a couple of limitations arising from the 

method by which they were derived. First, the 10-year data 

spans are a mixture of field-collection-coded and specially 

recoded data, where the latter data are obtained by means of 

a recoding procedure that differs from the field collection 

procedure used for regularly published ECI data.40 Second, 

the imputation of missing data based on the SIC and OCS

sample has been retained; no imputations were made on 

the basis of data reclassified by NAICS and SOC. Notwithstanding these limitations, BLS economists considered the 

transitional estimates to be sufficient for seasonal adjustment.

The early years of the transitional series provide a longer historical perspective for the seasonally adjusted ECI 

classified by NAICS and SOC than do the transitional data 

that are published with the official ECI estimates, which 

begin with March 2001. These earlier-reference-period 

data have not been published in the official historical listing due to the substantial amount of national-office coding that was required and due to their restricted use for 

seasonal adjustment. 

Official ECI estimates are available in the Employment 

Cost Index news releases and in historical listings. The of7)

( 1) , W W R ti t i ti = −
Transitional Employment Cost Indexes

30 Monthly Labor Review • April 2008

Table 1. Transitional Employment Cost Indexes and 3-month percent changes, by occupation and industry,1 

 private-industry workers,2 December 1994–December 2006, not seasonally adjusted 

 Occupational group, 

 industry, and year

Indexes (December 2005 = 100) Percent changes for 3 months ended— 

March June September December March June September December

Wages and salaries3 

Occupation 

Management, business, 

and financial:

1994 ................................ — — — 67.9 — — — —

1995 ................................ 68.7 69.0 69.5 70.1 1.2 .4 .7 .9

1996 ................................ 70.8 71.4 72.5 72.7 1.0 .8 1.5 .3

1997 ................................ 74.0 74.5 75.3 76.7 1.8 .7 1.1 1.9

1998 ................................ 77.8 78.4 79.6 79.4 1.4 .8 1.5 –.3

1999 ................................ 80.3 81.8 83.2 83.9 1.1 1.9 1.7 .8

2000 ................................ 84.3 85.1 85.7 86.3 .5 .9 .7 .7

2001 ................................ 87.3 88.3 89.1 89.8 1.2 1.1 .9 .8

2002 ................................ 90.8 92.2 92.4 92.1 1.1 1.5 .2 –.3

2003 ................................ 94.8 95.5 96.4 96.7 2.9 .7 .9 .3

2004 ................................ 96.8 97.5 98.1 98.5 .1 .7 .6 .4

2005 ................................ 99.2 99.7 99.5 100.0 .7 .5 –.2 .5

2006 ................................ 101.3 102.2 102.8 103.1 1.3 .9 .6 .3

 

Professional and related:

1994 ................................ — — — 70.1 — — — —

1995 ................................ 70.5 71.0 71.5 71.9 .6 .7 .7 .6

1996 ................................ 72.7 73.4 73.9 74.1 1.1 1.0 .7 .3

1997 ................................ 74.7 75.5 76.1 76.7 .8 1.1 .8 .8

1998 ................................ 77.3 77.9 78.8 79.3 .8 .8 1.2 .6

1999 ................................ 80.0 80.7 81.4 82.1 .9 .9 .9 .9

2000 ................................ 82.8 83.9 85.1 85.8 .9 1.3 1.4 .8

2001 ................................ 86.9 87.8 88.7 89.3 1.3 1.0 1.0 .7

2002 ................................ 90.1 90.5 91.0 91.4 .9 .4 .6 .4

2003 ................................ 92.1 92.7 93.6 94.2 .8 .7 1.0 .6

2004 ................................ 95.3 95.7 96.7 97.2 1.2 .4 1.0 .5

2005 ................................ 98.2 98.8 99.6 100.0 1.0 .6 .8 .4

2006 ................................ 100.9 101.8 103.1 104.0 .9 .9 1.3 .9

 

Sales and related:

1994................................. — — — 67.1 — — — —

1995................................. 67.2 68.5 69.5 69.4 .1 1.9 1.5 –.1

1996................................. 70.6 71.8 71.5 72.7 1.7 1.7 –.4 1.7

1997................................. 73.8 74.3 75.5 76.6 1.5 .7 1.6 1.5

1998................................. 77.4 78.5 81.1 83.9 1.0 1.4 3.3 3.5

1999................................. 80.3 82.3 83.4 83.9 –4.3 2.5 1.3 .6

2000................................. 86.4 86.8 87.6 86.5 3.0 .5 .9 –1.3

2001................................. 86.8 88.0 87.9 88.6 .5 1.3 .0 .8

2002................................. 89.2 91.0 91.0 90.9 .6 2.1 .0 –.2

2003................................. 91.5 92.5 94.3 93.8 .7 1.1 1.9 –.5

2004................................. 94.4 95.7 97.4 96.6 .6 1.4 1.8 –.8

2005................................. 97.3 97.8 99.2 100.0 .7 .5 1.4 .8

2006................................. 99.8 101.3 102.0 102.6 –.2 1.5 .7 .6

 

Office and administrative

support:

1994 ................................ — — — 69.2 — — — —

1995 ................................ 69.9 70.2 70.6 71.1 1.0 .4 .6 .7

1996 ................................ 71.9 72.4 73.1 73.4 1.1 .7 1.0 .4

1997 ................................ 74.3 75.0 75.8 76.3 1.2 .9 1.1 .7

1998 ................................ 77.1 78.0 78.6 79.2 1.0 1.2 .8 .8

1999 ................................ 80.2 80.8 81.5 82.1 1.3 .7 .9 .7

2000 ................................ 83.3 84.3 85.3 85.8 1.5 1.2 1.2 .6

2001 ................................ 87.0 87.7 88.8 89.4 1.4 .8 1.3 .7

2002 ................................ 90.7 91.3 91.8 92.4 1.5 .7 .5 .7

2003 ................................ 93.1 93.9 94.4 94.7 .8 .9 .5 .3

2004 ................................ 95.6 96.4 97.1 97.6 1.0 .8 .7 .5

2005 ................................ 98.2 99.0 99.4 100.0 .6 .8 .4 .6

2006 ................................ 100.9 101.9 102.6 103.3 .9 1.0 .7 .7

See footnotes at end of table.
Monthly Labor Review • April 2008 31

Construction and extraction; farming, fishing, 

and forestry:

1994 ................................ — — — 72.2 — — — —

1995 ................................ 72.3 73.2 73.8 74.1 .1 1.2 .8 .4

1996 ................................ 74.6 75.6 75.7 76.4 .7 1.3 .1 .9

1997 ................................ 76.5 76.9 77.6 78.0 .1 .5 .9 .5

1998 ................................ 78.6 79.4 80.1 80.4 .8 1.0 .9 .4

1999 ................................ 81.1 81.9 82.5 82.8 .9 1.0 .7 .4

2000 ................................ 84.0 85.2 86.4 86.9 1.4 1.4 1.4 .6

2001 ................................ 87.8 88.9 89.8 90.0 1.0 1.3 1.0 .2

2002 ................................ 90.6 91.3 91.9 92.4 .7 .8 .7 .5

2003 ................................ 92.7 93.7 94.6 94.9 .3 1.1 1.0 .3

2004 ................................ 95.8 96.6 96.9 97.5 .9 .8 .3 .6

2005 ................................ 97.8 98.5 99.3 100.0 .3 .7 .8 .7

2006 ................................ 100.7 102.0 103.0 103.7 .7 1.3 1.0 .7

 

Installation, maintenance, 

and repair:

1994 ................................ — — — 70.5 — — — —

1995 ................................ 71.3 72.0 72.5 73.1 1.1 1.0 .7 .8

1996 ................................ 74.0 74.8 74.6 75.3 1.2 1.1 –.3 .9

1997 ................................ 75.8 77.0 77.3 77.7 .7 1.6 .4 .5

1998 ................................ 78.4 79.1 79.9 80.5 .9 .9 1.0 .8

1999 ................................ 81.6 82.2 83.1 83.6 1.4 .7 1.1 .6

2000 ................................ 84.7 85.6 86.3 86.4 1.3 1.1 .8 .1

2001 ................................ 87.4 87.9 90.1 90.1 1.2 .6 2.5 .0

2002 ................................ 90.4 92.2 92.9 92.9 .3 2.0 .8 .0

2003 ................................ 93.8 94.6 95.1 95.5 1.0 .9 .5 .4

2004 ................................ 95.9 96.8 97.3 97.4 .4 .9 .5 .1

2005 ................................ 97.8 99.1 99.5 100.0 .4 1.3 .4 .5

2006 ................................ 100.7 101.6 102.6 103.0 .7 .9 1.0 .4

 

Transportation and 

material moving:

1994 ................................ — — — 73.3 — — — —

1995 ................................ 74.2 74.8 75.3 75.4 1.2 .8 .7 .1

1996 ................................ 76.8 77.4 77.7 78.0 1.9 .8 .4 .4

1997 ................................ 78.9 79.3 80.2 80.7 1.2 .5 1.1 .6

1998 ................................ 81.4 81.9 82.7 83.0 .9 .6 1.0 .4

1999 ................................ 83.1 84.0 84.5 85.1 .1 1.1 .6 .7

2000 ................................ 85.6 86.4 87.3 88.1 .6 .9 1.0 .9

2001 ................................ 89.0 90.0 90.8 91.7 1.0 1.1 .9 1.0

2002 ................................ 92.7 93.1 93.7 94.0 1.1 .4 .6 .3

2003 ................................ 94.7 95.3 95.6 95.9 .7 .6 .3 .3

2004 ................................ 96.4 97.1 97.9 98.3 .5 .7 .8 .4

2005 ................................ 98.5 99.0 99.7 100.0 .2 .5 .7 .3

2006 ................................ 100.4 101.2 102.0 102.6 .4 .8 .8 .6

 

Industry 

Construction:

1994 ................................ — — — 70.4 — — — —

1995 ................................ 70.6 71.1 71.7 72.1 .3 .7 .8 .6

1996 ................................ 72.7 73.4 73.9 74.1 .8 1.0 .7 .3

1997 ................................ 74.8 75.7 76.2 76.5 .9 1.2 .7 .4

1998 ................................ 77.2 78.5 79.0 79.3 .9 1.7 .6 .4

1999 ................................ 80.2 81.0 81.5 81.9 1.1 1.0 .6 .5

2000 ................................ 83.5 84.8 85.8 86.4 2.0 1.6 1.2 .7

2001 ................................ 87.3 88.2 88.9 89.6 1.0 1.0 .8 .8

2002 ................................ 89.9 90.7 91.3 92.1 .3 .9 .7 .9

2003 ................................ 92.3 93.4 94.2 94.5 .2 1.2 .9 .3

2004 ................................ 95.4 95.9 97.0 96.9 1.0 .5 1.1 –.1

2005 ................................ 97.3 98.3 99.4 100.0 .4 1.0 1.1 .6

2006 ................................ 100.6 102.0 102.9 103.7 .6 1.4 .9 .8

Table 1. Continued—Transitional Employment Cost Indexes and 3-month percent changes, by occupation and 

 industry,1 private-industry workers,2 December 1994–December 2006, not seasonally adjusted

 Occupational group, 

 industry, and year

Indexes (December 2005 = 100) Percent changes for 3 months ended— 

March June September December March June September December

See footnotes at end of table.
Transitional Employment Cost Indexes

32 Monthly Labor Review • April 2008

 

Retail trade:

1994 ................................ — — — 71.3 — — — —

1995 ................................ 71.8 72.5 73.3 72.8 .7 1.0 1.1 –.7

1996 ................................ 74.4 74.8 75.6 76.1 2.2 .5 1.1 .7

1997 ................................ 76.8 77.8 78.5 78.5 .9 1.3 .9 .0

1998 ................................ 79.4 80.1 81.2 80.5 1.1 .9 1.4 –.9

1999 ................................ 81.6 83.1 83.5 83.9 1.4 1.8 .5 .5

2000 ................................ 85.7 86.3 87.2 87.5 2.1 .7 1.0 .3

2001 ................................ 88.7 89.3 90.0 91.6 1.4 .7 .8 1.8

2002 ................................ 91.5 93.2 93.2 93.0 –.1 1.9 .0 –.2

2003 ................................ 93.2 93.8 95.3 95.3 .2 .6 1.6 .0

2004 ................................ 95.8 96.7 96.9 97.4 .5 .9 .2 .5

2005 ................................ 98.0 98.8 99.6 100.0 .6 .8 .8 .4

2006 ................................ 100.5 100.9 101.9 102.8 .5 .4 1.0 .9

 

Benefits4 

 

Occupation 

Service occupations:

1994 ................................ — — — 67.9 — — — —

1995 ................................ 68.0 68.5 68.6 68.6 .1 .7 .1 .0

1996 ................................ 68.3 68.6 68.7 69.4 –.4 .4 .1 1.0

1997 ................................ 69.4 70.0 71.1 71.6 .0 .9 1.6 .7

1998 ................................ 72.1 72.1 72.5 72.4 .7 .0 –.6 .1

1999 ................................ 73.3 74.1 74.3 75.0 1.2 1.1 .3 .9

2000 ................................ 75.2 76.1 76.9 78.3 .3 1.2 1.1 1.8

2001 ................................ 79.7 80.5 81.3 82.5 1.8 1.0 1.0 1.5

2002 ................................ 83.7 84.4 85.9 86.5 1.5 .8 1.8 .7

2003 ................................ 88.8 89.4 90.7 91.7 2.7 .7 1.5 1.1

2004 ................................ 94.6 95.9 96.7 97.0 3.2 1.4 .8 .3

2005 ................................ 98.3 98.9 99.5 100.0 1.3 .6 .6 .5

2006 ................................ 101.5 102.2 103.0 103.6 1.5 .7 .8 .6

Table 1. Continued—Transitional Employment Cost Indexes and 3-month percent changes, by occupation and 

 industry,1 private-industry workers,2 December 1994–December 2006, not seasonally adjusted

 Occupational group, 

 industry, and year

Indexes (December 2005 = 100) Percent changes for 3 months ended—

March June September December March June September December

1

 Occupational groups are defined in Standard Occupational Classification Manual, United States, 2000 (Executive Office of the President, Office of Management and Budget, 2000), with the exception 

that construction and extraction is combined with farming, fishing, and 

forestry. Industry groups are defined in North American Industry Classification System, United States, 2002 (Executive Office of the President, Office of Management and Budget, 2002).

2

 Includes workers in the private nonfarm economy, except those in 

private households. 

3

 For the Employment Cost Index (ECI), wages and salaries are 

defined as the hourly straight-time wage rate or, for workers not paid 

on an hourly basis, straight-time earnings, divided by corresponding 

hours. Straight-time earnings are total earnings before payroll deductions, excluding premium pay for overtime and for work on weekends 

and holidays, shift differentials, and nonproduction bonuses such 

as lump-sum payments provided in lieu of wage increases. The ECI

includes production bonuses, incentive earnings, commission payments, and cost-of-living adjustments. 

4

 Includes paid leave—vacations, holidays, sick leave, and other 

leave; supplemental pay—premium pay for work in addition to the 

regular work schedule (such as overtime, weekends, and holidays), 

shift differentials, and nonproduction bonuses (such as referral bonuses and attendance bonuses); insurance benefits—life, health, 

short-term disability, and long-term disability; retirement and savings 

benefits—defined benefit and defined contribution plans; and legally 

required benefits—Social Security, Medicare, Federal and State Unemployment Insurance, and Workers’ Compensation.

 

NOTE: Transitional Employment Cost Indexes were developed for 

seasonal adjustment of the ECI as classified by NAICS and SOC. Tenyear historical index time spans from 1996 to 2005 and from 1997 to 

2006 were used to estimate seasonal factors by quarter for the 2006 

and 2007 Employment Cost Index, respectively. Transitional data for 

1994 through 2000 and 3-month percent changes in this table are 

informational only. Official ECI estimates are available in the Employment Cost Index news releases and historical listings. Dash indicates 

data not available. 

ficial estimates for all reference periods from the beginning 

of the ECI through 2005 are the originally published estimates based on SIC and OCS, with an index base of June 

1989 = 100.41

Comparisons

It is desirable to know how the transitional ECI estimates 

differ when classified by NAICS compared with SIC and 

when classified by SOC compared with OCS, particularly 

because of the movement of establishments and occupations among classifications. The intent of such a comparison is twofold: to bring to light the outcome of the data 

reconstruction methods relative to the existing estimates 

and to demonstrate that the estimates are reasonably 

consistent with expectations based on similarity or dif-
Monthly Labor Review • April 2008 33

ference in classifications. In this section, the difference 

between Employment Cost Indexes and 3-month percent changes of the two classification systems is measured with two absolute difference measures: the mean 

absolute difference and the maximum absolute difference.42 Together, the two statistics summarize the extent 

of the differences between estimates grouped by the two 

classifications. Put another way, they describe how the 

reclassification of establishments quantitatively changed 

the occupational and industrial estimates. The absolute 

difference measures were chosen for this analysis because 

they describe the size of the differences without regard 

to their direction. The analysis is performed over the 10-

year period from 1996 to 2005, a period that was selected 

because it is the data span used for the 2006 seasonal adjustment estimation, the first year of ECI estimates classified by NAICS and SOC.In addition to these statistics, 

selected series classified by the two systems are presented 

graphically. For the most salient private-industry series, 

3-month percent changes for the 10-year data span are 

plotted in order to display how the ECI quarterly rates 

of change differ over time between the two classification 

systems.

Analysis

Table 2 shows mean and maximum absolute difference 

statistics for selected transitional ECI estimates over the 

1996–2005 period. Results are reported for index and 3-

month percent change estimates, both seasonally adjusted 

and not seasonally adjusted. NAICS and SOC classifications 

that are completely new are not in the table, because there 

are no SIC and OCS indexes with which to compare them. 

Series not listed in the table include subcategories of the 

information industry; subcategories of natural resources 

occupations; production occupations; and transportation 

and material moving occupations. Also not in the table 

are series with standard errors and numbers of observations that do not meet publication criteria.

In table 2, the absolute mean and maximum differences 

in indexes and 3-month percent changes appear to be relatively small, but quarter-to-quarter charts show the extent 

of variation in classification system estimates over time. 

The differences, however small nominally, capture not only 

structural economic and time differences embodied in the 

classifications, but differences in ECI methodology as well. 

(There also may be differences due to rounding.) Seasonally adjusted estimates show relatively few differences in 

absolute mean differences in indexes and 3-month percent 

changes, compared with mean differences in the estimates 

that are not seasonally adjusted. These few differences reflect relatively small differences in unadjusted estimates 

and seasonal factors between the two classifications. The 

maximum-difference data show that when the data are 

seasonally adjusted, the differences between the two classification systems tend to be either the same or less than 

when the data are not seasonally adjusted.

In the analysis that follows, the original (not seasonally adjusted) transitional series will be the main focus 

because they represent the data spans used for seasonal 

factor estimation. For both private industry and State and 

local governments, in no case does the difference between 

seasonally adjusted and not seasonally adjusted mean and 

maximum absolute differences exceed 0.1 percentage 

point. 

Occupation. Among private occupational series, professional and related occupations show the largest mean 

and maximum absolute difference between OCS and SOC

indexes, and office and administrative occupations show 

the smallest. Sales and related occupations have the largest mean and maximum absolute differences for 3-month 

percent changes. To illustrate the underlying data for the 

latter occupation group, the top panel of chart 1 shows 

3-month percent changes in the OCS and SOC ECI’s for 

wages and salaries of sales and related workers, not seasonally adjusted. The chart demonstrates that rates of 

change for the two series follow a similar pattern over 

time, but include a variety of differences. In particular, the 

March 1999 decline in the SOC estimate was more than 

a percentage point more than the decline in the OCS estimate. The bottom panel of chart 1 shows similar results 

on a seasonally adjusted basis.

Industry. The transportation and warehousing industry 

shows the largest mean absolute difference, while the 

hospital industry shows the smallest, between NAICS and 

SIC indexes. (The hospital industry sample is virtually the 

same on the basis of both SIC and NAICS.) Retail trade 

shows the largest maximum absolute differences in indexes. Transportation and warehousing shows the largest mean and maximum absolute differences for 3-month 

changes. The top panel of chart 2 compares 3-month percent changes for the NAICS transportation and warehousing industry with those for the SIC transportation series, 

not seasonally adjusted. The two series occasionally mirror 

each other, but differ substantially in several instances; for 

example, the March 1997 difference is approximately a 

percentage point, and the March 2005 difference is more 

than half a percentage point. The bottom panel of chart 
Transitional Employment Cost Indexes

34 Monthly Labor Review • April 2008

 Table 2. Mean and maximum absolute difference between transitional NAICS-SOC1 and SIC-OCS2 Employment Cost

 Indexes and 3-month percent changes for wages and salaries, 1996–2005 

 Absolute difference in Indexes Absolute difference in 3-month 

 percent change 

 Series Not seasonally Seasonally Not seasonally Seasonally 

adjusted adjusted adjusted adjusted

Mean Maximum Mean Maximum Mean Maximum Mean Maximum 

 

 Private 

Occupation group:

 Management, business and financial........... 0.9 1.7 0.9 1.7 0.2 0.6 0.2 0.5

 Professional and related .............................. 1.3 2.0 1.3 2.0 .1 .6 .2 .5

 Sales and related ......................................... .7 1.3 — — .3 1.6 — —

 Office and administrative support................. .1 .4 .1 .4 .1 .3 .1 .3

 Service occupations..................................... .4 .9 — — .1 .4 — —

 Construction................................................. .5 .9 .5 .9 .1 .4 .1 .4

 Durable goods.............................................. .1 .3 .1 .3 .1 .4 .1 .3

 Nondurable goods........................................ .2 .7 .3 .6 .2 .7 .2 .6

 Wholesale trade ........................................... .6 1.4 — — .2 .6 — —

 Retail trade................................................... .6 1.7 .6 1.6 .2 .7 .2 .7

 Transportation and warehousing.................. .8 1.4 .8 1.3 .2 1.0 .2 1.0

 Utilities.......................................................... .2 .6 .2 .6 .1 .5 .1 .3

 Insurance ..................................................... .4 .9 — — .1 .4 — —

 Junior colleges, colleges, universities, 

 and professional schools ........................... .3 .7 .3 .7 .1 .4 .1 .3

 Hospitals ...................................................... 0 .2 .0 .2 .0 .1 .1 .3

 State and local governments

Occupation group:

 Management, business and financial........... .1 .4 .1 .4 .1 .5 .1 .2

 Professional and related .............................. .1 .2 .1 .2 .1 .2 .1 .2

 Office and administrative support................. .4 .7 .4 .7 .1 .4 .1 .3

 Service occupations..................................... .4 .7 .4 .6 .1 .2 .1 .2

Industry group:

Elementary and secondary schools ................ .1 .1 .1 .1 .1 .1 .0 .1

 Junior colleges, colleges, universities, and 

 professional schools .................................. .3 .7 .3 .7 .1 .4 .1 .3

 Hospitals. ..................................................... .2 .4 .2 .4 .0 .1 .1 .3

 Public administration.................................... .2 .4 .2 .4 .1 .3 .1 .3

 1

 The acronym “NAICS” refers to the North American Industry Classification System; see North American Industry Classification System, 

United States, 2002 (Executive Office of the President, Office of Management and Budget, United States, 2002). The acronym “SOC” denotes the Standard Occupational Classification system; see Standard 

Occupational Classification Manual (Executive Office of the President, 

Office of Management and Budget, United States, 2000), with the 

exception that construction and extraction is combined with farming, 

fishing, and forestry.

2 The acronym “SIC” designates the Standard Industrial Classification 

System; see Standard Industrial Classification System (Executive Office 

of the President, Office of Management and Budget, 1987). The acronym 

“OCS” refers to the Occupational Classification System; see 1990 OCSM, 

Occupational Classification System Manual for the Employment Cost Index Survey Program (Bureau of Labor Statistics, 1990).

 

NOTE: Dashes indicate that no seasonality was found for this series in 2006.

Industry group:

2 shows a similar pattern in the seasonally adjusted transportation and warehousing series.

The top panel of chart 3 shows 3-month percent 

changes for NAICS and SIC retail trade industry wages 

and salaries, not seasonally adjusted. Here again, the two 

series follow a similar pattern, but with clear differences 

in many quarters. For example, the December 2001 and 

June 2002 NAICS 3-month percent changes are at least 

half a percentage point greater than the SIC estimate. 

The bottom panel of chart 3 shows that, on a seasonally 

adjusted basis, these differences are lessened, except for 

1997, during which the SIC series appears to have been 

smoothed more than the NAICS series.

THIS ARTICLE HAS PRESENTED TRANSITIONAL INDEXES

and 3-month percent changes for selected series used for 

seasonal factor estimation as part of the seasonal adjustment 

methodology of the ECI when it was converted to NAICS

and SOC with the March 2006 estimates and their revision 

in 2007. The transitional estimates were compared with SIC

and OCS estimates, and the differences were quantified and 

observed to be, for the most part, small. Quantification of the 
Monthly Labor Review • April 2008 35

 Chart 1. Three-month percent change in transitional Employment Cost Index for SOC sales and related 

workers’ wages and salaries compared with OCS, 1996–2005

5.0

4.0

3.0

2.0

1.0

0.0

–1.0

–2.0

–3.0

–4.0

–5.0

5.0

4.0

3.0

2.0

1.0

0.0

–1.0

–2.0

–3.0

–4.0

–5.0

March March March March March March March March March March

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

 OMB Standard Occupational Classification, 2000

 BLS Occupational Classification System, 1990

Not seasonally adjusted

Percent 

change

Percent 

change

March March March March March March March March March March

19961 1997 1998 1999 2000 2001 2002 2003 2004 2005

5.0

4.0

3.0

2.0

1.0

0.0

–1.0

–2.0

–3.0

–4.0

–5.0

5.0

4.0

3.0

2.0

1.0

0.0

–1.0

–2.0

–3.0

–4.0

–5.0

BLS Occupational Classification System, 1990

 OMB Standard Occupational Classification, 2000

Percent 

change

Percent 

change Seasonally adjusted

1

Due to the design of the ECI seasonal adjustment computation system, seasonally adusted percent changes are not available for March 1996.
Transitional Employment Cost Indexes

36 Monthly Labor Review • April 2008

 Chart 2. Three-month percent change in transitional Employment Cost Index for NAICS transportation and 

warehousing workers’ wages and salaries compared with SIC, 1996–2005

Not seasonally adjusted

Seasonally adjusted

March March March March March March March March March March

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

March March March March March March March March March March

19961 1997 1998 1999 2000 2001 2002 2003 2004 2005

2.5 

2.0

1.5

1.0

0.5

0.0

–0.5

–1.0

–1.5

2.5 

2.0

1.5

1.0

0.5

0.0

–0.5

–1.0

–1.5

2.5 

2.0

1.5

1.0

0.5

0.0

–0.5

–1.0

–1.5

2.5 

2.0

1.5

1.0

0.5

0.0

–0.5

–1.0

–1.5

Standard Industrial Classification, 1987

North American Industry Classification System, 2002

Standard Industrial Classification, 1987

North American Industry Classification System, 2002

Percent 

change

Percent 

change

Percent 

change

Percent 

change

1

Due to the design of the ECI seasonal adjustment computation system, seasonally adusted percent changes are not available for March 1996.
Monthly Labor Review • April 2008 37

2.5 

2.0

1.5

1.0

0.5

0.0

–0.5

–1.0

–1.5

March March March March March March March March March March

19961 1997 1998 1999 2002 2001 2002 2003 2004 2005

 Chart 3. Three-month percent change in transitional Employment Cost Index for NAICS retail trade indexes 

for wages and salaries compared with SIC, 1996–2005

Percent 

change

Percent 

change

Seasonally adjusted

Not seasonally adjusted

Percent 

change

Percent 

change

March March March March March March March March March March

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Standard Industrial Classification, 1987

North American Industry Classification System, 2002

2.5 

2.0

1.5

1.0

0.5

0.0

–0.5

–1.0

–1.5

2.5 

2.0

1.5

1.0

0.5

0.0

–0.5

–1.0

–1.5

Standard Industrial Classification, 1987

North American Industry Classification System, 2002

1

Due to the design of the ECI seasonal adjustment computation system, seasonally adusted percent changes are not available for March 1996.

2.5 

2.0

1.5

1.0

0.5

0.0

–0.5

–1.0

–1.5
Transitional Employment Cost Indexes

38 Monthly Labor Review • April 2008

differences between NAICS and SIC and between SOC and 

OCS clarifies the need for a consistently classified series 

over time for seasonal factor estimation. Users may find 

the transitional indexes useful for time-series analysis if they 

desire consistent historical estimates.

As the ECI continues to be produced on a quarterly 

basis, the transitional portion of the 10-year data spans 

used for seasonal adjustment of the ECI will diminish, and 

Notes

1 The ECI is a Laspeyres index calculated with the use of fixed employment 

weights from the 2002 BLS Occupational Employment Statistics (OES) program. The ECI fixed weights control for employment shifts among occupations 

and industries. (See BLS Handbook of Methods (Bureau of Labor Statistics, last 

modified Apr. 25, 2007), chapter 8, pp. 1, 4–6, on the Internet at www.bls.gov/

opub/hom/pdf/homch8.pdf; see also Stephanie L. Costo, “Introducing 2002 

weights for the Employment Cost Index,” Monthly Labor Review, April 2006, 

pp. 28–32, on the Internet at www.bls.gov/opub/mlr/2006/04/art5full.pdf.)

 2 See North American Industry Classification System: United States, 2002 (Executive Office of the President, Office of Management and Budget, 2002); on the 

Internet at www.census.gov/epcd/naics02.

3 See Standard Occupational Classification Manual: 2000 (Executive Office of 

the President, Office of Management and Budget, 2000); on the Internet at 

www.bls.gov/soc. See also Federal Register Notice 62 FR 36337-36409, July 7, 

1997.

4

 See Standard Industrial Classification System, 1987 (Executive Office of the 

President, Office of Management and Budget, 1987).

5 1990 OCSM, Occupational Classif ication System Manual for the Employment 

Cost Index Survey Program (Bureau of Labor Statistics, December 1993); on 

the Internet at www.bls.gov/news.release/archives/eci_04282006.pdf.

6 For more information on changes to the ECI, see Richard E. Caroll, 

“Changes affecting the Employment Cost Index: an overview,” Monthly 

Labor Review, April 2006, pp. 3–5; on the Internet at www.bls.gov/opub/

mlr/2006/04/art1full.pdf.

7 See “Employment Cost Index—March 2006, BLS news release (Bureau of 

Labor Statistics, Apr. 28, 2006), on the Internet at www.bls.gov/ncs/ect/home.

htm#news.

8 In addition to their role in seasonal adjustment, transitional ECI estimates provided data for evaluating the impact of the switch to NAICS and SOC on ECI estimates, for assessing whether the new estimates under NAICS and SOC would meet 

publication criteria, and for checking first estimates from the new production 

system that was being designed to compute ECI estimates by NAICS and SOC.

9

 E. Raphael Branch and Lowell Mason, “Seasonal adjustment in the ECI

and the conversion to NAICS and SOC,” Monthly Labor Review, April 2006, pp. 

12–21; on the Internet at www.bls.gov/opub/mlr/2006/04/art3full.pdf.

10 Harriet G. Weinstein and Mark A. Loewenstein, “Comparing Current 

and Former Industry and Occupation ECEC Series,” Compensation and Working 

Conditions Online, Aug. 25, 2004, on the Internet at www.bls.gov/opub/cwc/

cm20040823ar01p1.htm.

11 For more details, see Branch and Mason, “Seasonal adjustment in the ECI,” 

pp. 13–15.

12 The 10-year data span used to estimate seasonal factors for the ECI is the 

by the end of 2011 (the last year of the data span for the 

2012 seasonal adjustment revision), the entire 10-year data 

span will comprise estimates based completely on NAICS

and SOC data coded by BLS field economists. Also, NAICS

and SOC are changed periodically; for instance, NAICS

2007 is now available and SOC 2010 is underway.43 The 

BLS already has begun incorporating NAICS updates into 

the NCS. 

fixed data span adopted in 2002 on the basis of an analysis of Standard Industrial Classification-based ECI data. Sliding-spans comparisons showed that 

10-year data spans gave better estimates than an 8-year alternative; that is, the 

10-year spans produced a more consistent selection of models, better quality 

control statistics, generally smaller maximum percent differences in seasonal 

factors, and more. Results of the analysis are reported in E. Raphael Branch, 

James Buszuwski, and Mark Loewenstein,” “Seasonal Adjustment Time Span 

Analysis,” unpublished manuscript, Oct. 28, 2002, available on request from the 

BLS Office of Compensation and Working Conditions, Branch of Estimation 

and Validation. At the time of annual revision, the earliest year is dropped and 

the most recent year is added to form the new time span. (For more details, see 

Branch and Mason, “Seasonal adjustment in the ECI,” pp. 12–13, 15, 20–21.)

13 For more information on X-12-ARIMA, see David F. Findley, Brian C. Monsell, William R. Bell, Mark C. Otto, and Bor-Chung Chen, “New Capabilities and Methods of the X-12-ARIMA Seasonal Adjustment Program,” Journal 

of Business and Economic Statistics, April 1998, pp. 127–77; on the Internet at 

www.census.gov/ts/papers/jbes98.pdf. The X-12-ARIMA seasonal adjustment 

program was developed by the Time Series Staff of the Statistical Research 

Division of the U.S. Census Bureau.

14 This program was developed by the Time Series Staff of the Statistical 

Research Division of the U.S. Census Bureau.

15 North American Industry Classification System, p. 18.

16 The construction and wholesale trade classifications changed substantially, 

a number of retail classifications changed, and the organization of the information sector changed. Minor boundary adjustments affect administrative and 

support services and mining. For details, see North American Industry Classification System—Revisions for 2002, on the Internet at www.census.gov/epcd/naics02. 

17 See North American Industry Classification System: United States, 1997 (Executive Office of the President, Office of Management and Budget, 1998), p. 

23. Detailed comparisons between the 2002 NAICS and the 1987 SIC are on the 

Internet at www.bls.gov/bls/naics.htm.

18 Weinstein and Loewenstein, “Comparing ECEC Series,” pp. 5–12.

19 Albert E. Schwenk and Mark A. Loewenstein, “Wage and Compensation Comparisons across SOC/OCSM Occupational Categories and to NAICS/SIC

Industry Categories,” unpublished manuscript, January 2002, p. 1. In a study 

similar to the more recent one by Weinstein and Loewenstein that used the 

ECEC sample (see note 10), Schwenk and Loewenstein used the ECI sample 

to conduct preliminary research on average wage and average compensation 

costs. (Schwenk and Loewenstein’s report is available on request from the BLS 

Office of Compensation and Working Conditions, Branch of Estimation and 

Validation.) 

20 Standard Occupational Classification Manual: 2000, p. ix.

21 Scopp, Thomas S., “The Relationship between the 1990 Census and Census 

2000 Industry and Occupation Classification Systems,” Technical Paper No. 65 
Monthly Labor Review • April 2008 39

(U.S. Census Bureau, Oct. 30, 2003), p. 8.

22 1990 OCSM, p. A-2. In 1992, the occupational weights in the ECI were updated to reflect the 1990 census. There was no change in the categories at the 

time of the updating. 

23 For more details on the major changes to the occupational classifications, 

see Scopp, “1990 Census and Census 2000.” 

 

 24 Albert E. Schwenk and William J. Wiatrowski, “Using the Employment Cost 

Index to adjust Medicare payments,” Monthly Labor Review, October 2002, pp. 

20–27; on the Internet at www.bls.gov/opub/mlr/2002/10/art3full.pdf.

25 Schwenk and Loewenstein, “Wage and Compensation Comparisons,” pp. 

4–6. In this study, natural resources and transportation and material-moving categories are covered as “blue-collar occupations,” a BLS occupational aggregation.

26 Weinstein and Loewenstein, “Comparing ECEC series,” p. 12. In this study, 

the authors identify as breaks in series the category of natural resources, construction, and maintenance, as well as selected lower level categories such as the 

category of transportation and material moving occupations. 

27 For a detailed discussion of the issues surrounding continuity and consistency in time series, see “The Impact of Classification Revisions on Time 

Series,” Issues paper No. 5 (Bureau of Economic Analysis, Economic Classification Policy Committee, July 1993), on the Internet at www.census.gov/

epcd/naics/issues5.

28 Although the indexes were computed back to December 1994, only the 

period from March 1996 to December 2005 was used for the March 2006 

estimates. Each successive year, the ECI seasonal adjustment 10-year data span 

is created by dropping the earliest year of the data span for the previous revision 

and adding a year of the most recent indexes. Having a full year of data for 1995 

made it possible to perform tests on the data prior to the March 2006 quarterly 

production run.

29 Bureau of Economic Analysis, “The Impact of Classification Revisions.” 

30 For more information on X-11, see Julius Shiskin, Allan H. Young, and John 

C. Musgrave, “The X-11 Variant of the Census Method II Seasonal Adjustment 

Program,” Technical Paper No. 15 (U.S. Census Bureau, 1967).

31 For more details on the NAICS classification structure, see North American 

Industry Classification System: United States, 2002. 

32 Details of the CES reconstruction methodology are discussed in Teresa L. 

Morisi, “Recent changes in the National Current Employment Statistics survey,” 

Monthly Labor Review, June 2003, pp. 3–13 (see especially p. 11); on the Internet at www.bls.gov/opub/mlr/2003/06/art1full.pdf. Details of the recoding 

of the ECI to NAICS and SOC are discussed in Albert E. Schwenk, “Determining 

NAICS and SOC codes for ECI sample since 1994,” internal BLS manuscript.

 33 Standard Occupational Classification Manual, p. xvi. For the ECI, the construction and extraction industry was combined with farming, fishing, and forestry.

34 The Laspeyres formula is modified to accommodate the following changing 

employer characteristics: region, metropolitan or nonmetropolitan area, establishment size, and collective bargaining status. The weights are updated approximately every 10 years, a compromise between having a pure Laspeyres index and 

changing weights each quarter. For a detailed discussion of this compromise 

and the Laspeyres index as it relates to the ECI, see Albert E. Schwenk, “Introducing new weights for the Employment Cost Index,” Monthly Labor Review, 

June 1985, pp. 22–27; on the Internet at www.bls.gov/opub/mlr/1985/06/

art3full.pdf. For more details on the current ECI computations, see BLS Handbook of Methods, chapter 8, “National Compensation Measures,” pp. 4–5.

 35 The same computation applies to compensation indexes; however, these 

indexes were not candidates for direct seasonal adjustment under the NAICS and 

SOC transition methodology.

 36 BLS Handbook of Methods, chapter 8. 

 37 Costo, “Introducing 2002 weights.” 

 38 For further details on rebasing the ECI, see Caroll, “Changes affecting the 

Employment Cost Index,” pp. 3–4.

39 In actual computations, the indexes used in estimating seasonal factors are 

retained to five decimal places. Seasonal factors for published direct-adjusted 

series are available on the Internet at www.bls.gov/ncs/ect/ectsfact.htm.

40 This limitation precluded all transitional estimates for years before 2001 

from being published as part of the ECI historical listings. 

 41 Official historical ECI estimates for periods from December 1993 through 

December 2005 are classified by SIC and OCS for an index base period of June 

1989. These estimates are available in ECI news releases archived on the Internet 

at stats.bls.gov/schedule/archives/eci_nr.htm. The official ECI historical listing of SIC and OCS data (with base period June 1989) is not on the Internet, but 

is available from the BLS on request. These SIC- and OCS-classified historical 

data have been rebased to December 2005, the same base period as estimates 

classified by NAICS and SOC; the rebased data are available on the Internet at 

www.bls.gov/web/echistry.pdf. The official data classified by NAICS and SOC

begin with the March 2006 estimates. The historical listing containing those estimates also contains the transitional 2001–05 data classified by NAICS and SOC, 

to provide context for the 2006 and later estimates. The transitional 2001–05 

data are available on the Internet at www.bls.gov/web/echistrynaics.pdf.

 42 Absolute difference statistics measure distance from zero, which, in this instance, tells how different the indexes and 3-month percent changes from the 

two classifications are from each other. A zero absolute difference indicates no 

difference between the indexes or 3-month percent changes, and a value greater 

than zero gives a numeric difference without regard to direction. The absolute 

difference is calculated by subtracting SIC or OCS indexes or 3-month percent 

changes from their NAICS or SOC counterparts, respectively, and then dropping 

the numeric sign. The mean absolute difference is an unweighted average of the 

absolute difference between estimates of the two classifications over the 10-year 

data span. The mean absolute difference is the sum of the absolute differences, 

divided by the number of observations—in this case, 10 years of estimates. The 

mean of the differences is used because it takes into account all the observations in 

the data span. The maximum value is the largest value among all the observations 

in a sample; in this case, the sample is a selected period of historical estimates. 

The maximum absolute difference is used because it is the largest absolute difference between estimates from the two classification systems over the 10-year 

data span. The minimum difference is zero for all the series observed; therefore, 

maximum absolute differences in this analysis also represent the range of individual absolute differences over the 10-year period. The mean and the maximum 

differences were calculated with the PROC MEANS procedure of the Statistical 

Analysis System (SAS), version 8.2.

43 For more details on the 2007 NAICS and 2010 SOC, see Federal Register, 

vol. 71, no. 94, parts V and VI, respectively, May 16, 2006, at www.census.gov/

epcd/naics07/naics07fr3.pdf and www.bls.gov/soc/soc_may06.pdf.