geographic areas, in addition to the
generic factor levels of the job of

' Historical Statistics of the United States:
Colonial Times to 1957, Department of Com-
merce, Bureau of the Census, 1960, p. 101 ff.

2 Joseph D. Weeks, “Report on the Statistics
‘of Wages in Manufacturing Industries,” Tenth
Census, 1880, vol. 20, Department of Commerce,
Bureau of the Census, 1886.

? Commissioner of Labor, First Annual Re-
ort, 1886, Industrial Depressions.

“ Additional discussion of the combining of
these programs may be found in John E. Buckley,
“BLS Redesigns Its Compensation Surveys,”
Compensation and Working Conditions, Septemn-
ber 1996, pp. 19-21.

5 The Standard Occupational Classification
‘System is being revised and the COMP2000 pro-
gram will convert to the new system when it is
available.

© The Federal Factor Evaluation System is
used to assure comparability in levels among oc-
cupations under the General Schedule. Actual
grades for individual occupations are based on
more specific descriptions relating to an occopa-

interest. The system will combine
the above with related information

—Endnotes—

7 ‘The General Schedule Supervisory Guide
uses six elements: Program scope and effect, or-
‘ganizational setting, supervisory and managerial
authority exercised, personal contacts, difficulty
of typical work directed, and other.

© For a discussion of job evaluation plans,
‘see Thomas H. Patton, Fair Play, Jossey-Bass, San
Francisco, 1988.

° Results will be available in several formats
including ASCTI files on the World Wide Web,
and also as bulletins available for sale from the
Bureau of Labor Statistics, Publications Sales
Ceater, P.O. Box 2145, Chicago, IL 60690-2145.
ASCII files are available on the Bureau's Web site:
\http://stats.bis.gov,

® A consolidated metropolitan statistical area
(CMSA) is any area with over 1 million inhabit-
ants that includes separate component areas or

statistical areas (PMSA‘'s)

example is the Washington-Baltimore, DC-MD-

to provide estimated wages and a
measure of the estimate’s reliability.

VA-WV CMSA which consists of the Washing-
ton, DC-MD-VA-WY, Baltimore, MD, and
MD PMSA's. A metropolitan statis-
tical area has $0,000 to 1 million inhabitants such
as Albany-Schenectady-Troy, NY or a freestand-
ing area with 1 million or more inhabitants such
as Atlanta, GA. The criteria for defining metro-
tan areas are published in the Federal Regis-
ter (55 FR 12143-12160, March 30, 1990). The
nine economic regions are New England, Middle
Atlantic, East South Central, South Atlantic, East
North Central, West North Central, West South
Central, Mountain, and Pacific.

1 Fora comparison of area pay levels to holi-
day and vacation provisions, see John E. Buckley,
“Variations in Holidays, Vacations, and Area Pay
Levels,” Monthly Labor Review, February 1989,
pp. 24-30.

1 Federal General Schedule workers are clas-
sified in grades 1 through 15 using nine factors.
Within grades, workers can advance from steps 1
through 10 through perfomance and length of ser-
vice.

Compensation and Working Conditions December 1996 8

11


Table 1. Average hourly earnings in Albuquerque, NM, February-March 1996

1 Estimates of earnings by level were not
Published for individual occupations in the

the Bureau is developing indexes
that would allow comparisons of
geographic areas, Comparisons of
average wages and benefits among
areas would be useful to workers and
firm managers deciding where to
locate, those interested in local area
development, and those responsible
for setting up area pay differentials,
among others. Such users might
also be interested in similar esti-
mates that abstract from interarea
differences in jobs. For example,
Detroit might be a much higher
wage area than Atlanta in part
because of the industries that locate
in Detroit, or because Atlanta area
jobs are somewhat more likely to be
part time.

Of course, there are not always
enough data to publish reliable
comparisons of every narrowly
defined job, ¢.g., part-time secretar-
ies in the communications industry.
Furthermore, many users are not
interested in that level of detail.
They may prefer an average differ-
ence for a combination of jobs.
Users also may not have enough
information to know how jobs
should be weighted when construct-
ing an average. Yet such averages
would be helpful to those who wish
to abstract from interarea differences
in job characteristics. The averages
would, for example, tell users how
much jobs in Detroit pay relative to
similar jobs elsewhere.

Although the research is de-

survey bulletin for Albuquerque. Such infor-
mation will be published in future bulletins.

signed, in part, to make improve-
ments in the technical aspects of
constructing these comparisons—
finding proper weights for construct-
ing averages, discovering useful job
categorizations, and so forth—the
goal is to provide the user with
accurate and useful information on
local area differences in wages and
benefits.

Benefits and total compensation.
When the consolidation of
COMP2000 with the Employment
Cost Index and Employee Benefit
survey is complete, it will be possible
to relate wages to employee benefits
and total compensation. For
example, BLS will be able to
determine whether high wages are
offset by relatively lower benefits or
whether workers receiving high
wages are more likely to also receive
above average benefits."' Likewise,
BLS will be able to determine how
not only wages, but also benefits and
total compensation differ among
Occupational groups.

When completed, the data base
from this program will be so large
that it will be impractical to publish
all information that meets the
Bureau’s criteria for reliability.
Additional publishable information
will be available in its entirety
through the Bureau’s Web site.

Calibration. As mentioned earlier,
results of surveys conducted by the

7 Compensation and Working Conditions December 1996

OCS program have been used to set
the pay of Federal workers under the
Federal Employees Pay Comparabil-
ity Act of 1990. In order for the
information to be useful, the generic
leveling results must be translated
into the equivalent of Federal
General Schedule grade levels
similar to those obtained from the
OCS." To do so, BLS is comparing
the results of over 1,500 leveling
decisions made under the OCS.
method and through generic
leveling.

A mathematical formula similar
to the one underlying the 1977
Federal Factor Evaluation System
will be used to translate generic
factor point levels into Federal grade
equivalents. The parameters from
the formula will be statistically
adjusted to maximize the similarity
between the Federal grade equivalent
from the new generically leveled
data and the Federal grade equiva-
lent assigned in the OCS program.

Regression. Regression techniques
will also be used to see how the 10
leveling elements (knowledge,
complexity, etc.) explain wage
variability in the non-Federal
sectors. By comparing the results of
the calibration analysis with the
results of the regression analysis, the
Bureau hopes to gain insight into
whether the Federal Government
puts the same importance on
elements such as complexity as does
the non-Federal sector.

Information on other characteris-
tics, such as full-time/part-time,
time/incentive, and union/nonunion
status, are also being collected to
determine how these characteristics
affect wages. The relationship
between these characteristics and
the 10 leveling elements also can be
studied.

Wage estimation. BLS also hopes to
develop a user-friendly wage
calculator that provides users with
specific information for particular
occupations, levels, industries, and



New Approach to
Measuring Occupational
Wages BY KENNETH HOFFMANN

he Bureau recently initiated major changes in the way in which it collects and

disseminates occupational wage information. Instead of surveying a pre-selected

list of fewer than 50 commonly found occupations, occupations now will be
randomly selected from each sampled establishment’s workforce. The new survey,
tentatively entitled COMP2000, provides an opportunity for virtually thousands of
occupations in the nonagricultural economy to be selected. Selected occupations, in
turn, will be assigned to any of approximately 450 occupations representative of 9 major

occupational groups.

Occupations will be further
classified into work levels using
generic descriptions of factors such
as the knowledge required by the job
and the job’s level of complexity. In
the past, occupations were leveled
using descriptions unique to each
occupation.

Background

Information on wages was first
collected by the Federal Government
in the 1850 Census,’ and on
occupational wages in the 1880
Census? BLS’s first study of
occupational wages, conducted in
1885, measured the wages in 582
establishments in 40 industries.
The Federal Government, however,
did not begin development of job
descriptions for occupational wage

Kenneth Hoffmann is an economist in the
Division of tion Data Analysis and Plan-
ning, Bureau of Labor Statistics. Telephone (202)
606-6201.

surveys until World War II, when the
Bureau began collecting occupa-
tional wage data for the War Labor
Board’s wage stabilization program.
Following the war, this work evolved
into the Industry Wage Survey (IWS)
program, which studied the wages of
workers in individual industries and
provided information on the occupa-
tions found in them.

The 1950s gave birth to the Area
Wage Survey (AWS) program, which
provided information for cross-
industry occupations such as
secretary and janitor for specific
localities. The National Survey of
Professional, Administrative,
Technical and Clerical Pay (PATC)
was instituted in 1960 to be used in
setting salaries of Federal General

as it becomes available.

This article and the following one, entitled “COMP2000: Designing a
New Wage Survey” by Beth Crimmel, focus on the Bureau’s recent
changes in the collection of compensation data. As detailed in the
articles, the new program combines three existing programs—the
Occupational Compensation Survey, Employment Cost Index, and
Employee Benefits Survey. By consolidating the programs, BLS hopes to
not only streamline data collection, but also provide a wider range of
statistical outputs and reduce respondent burden.

Additional information on COMP2000 in available in COMP2000-
Pilot Survey, Albuquerque, NM, February-March 1996, Bulletin 3082-1.
Information and analysis will also be published in future issues of CWC

— Editor’s Note —-

_——————

Compensation and Working Conditions December 1996 4


Schedule (white-collar) workers. It
included almost all of the white-
collar jobs in the AWS program, in
addition to numerous other profes-
sional and administrative ones. The
AWS and PATC programs were later
combined into the Occupational
Compensation Survey (OCS)
program. The IWS program, which
had grown to about 50 manufactur-
ing and 20 nonmanufacturing
industries surveyed on a 5-year cycle
in the 1960s, was drastically reduced
due to budgetary constraints in the
late 1980s and early 1990s. The
AWS and PATC were combined to
provide local pay data suitable to set
salaries of General Schedule
employees on a locality basis as
required by the Federal Employees
Pay Comparability Act of 1990.

Redesign of surveys

In 1987, at the request of the
House and Senate Appropriations
Committees, the Bureau began
planning the consolidation of the
Employment Cost Index (ECI), the
Employee Benefits Survey (EBS),
and the OCS program to produce
information on total compensation
for white-collar workers. The plans
expanded, but did not drastically
change, the products published in
the past. However, in the 1990s
because of decreasing resources, the
Bureau decided on an even more
comprehensive consolidation of
programs which would yield
products markedly different from
those published in the past. This
consolidation of programs, known as
COMP2000, must reconcile three
major differences among programs:
Occupational coverage, occupational
definitions, and levels within
occupations.

This article describes how
differences will be reconciled for the
wage portion of compensation; a
later article will discuss plans for the
reconciliation of the employee.
benefits portion.

Occupational coverage. The ECL
gathers data on the vast majority of

civilian nonagricultural workers and
classifies them into about 450
occupations using a Census system
based on the Standard Occupational
Classification System.’ In contrast,
the OCS studies 45 selected occupa-
tions making up about 7 percent of
total civilian nonagricultural
employment. Under COMP2000,
earnings and benefits data will be
collected for randomly selected
occupations in over 35,000 establish-
ments nationwide. Therefore, the
data can be combined and weighted
to represent individual occupations,
Major occupational groups, and all
workers within the scope of the
study. BLS will publish data for
Major occupational groups, such as
precision production, craft, and
Tepair, and, where possible, subsets
of the major groups, such as con-
struction trades occupations. In
some cases the Bureau will be able to
publish data on individual occupa-
tions such as carpenter.

Occupational descriptions. The
occupational definitions used in the
ECI are short and may include
workers in many establishments,
while the OCS definitions, typically,
are more detailed and have specific
inclusions and exclusions.

Occupational definitions in the
ECI were designed to be inclusive of
all occupations in the economy. For
this reason, the ECI system has
several residual categories for
workers who do not fit into any of
the specific occupations. For
example, order clerks are part of a
family of related occupations called
records processing clerks, except
financial. This family of occupa-
tions contains five occupations in
addition to order clerks, as well as
the residual category, records clerks,
not elsewhere classified. In contrast
to the limited set of occupations
included in the OCS, the ECI allows
a more complete and systematic
classification of the Nation's
workforce.

Because of the large number of
occupations that will be studied and

5 Compensation and Working Conditions December 1996

the new program’s emphasis on
including all workers, the shorter,
more inclusive ECI descriptions will
be used. Thus, where data are
sufficient, BLS will be able to
publish data for the individual
occupation, order clerk; the aggre-
gate group, records processing
clerks, except financial; the major
group, administrative support
occupations, including clerical; and
for the even broader group, white-
collar workers.

Levels within occupations. The
method of determining the level of
skills and responsibility of a job also
will change drastically. The ECI
does not distinguish among levels.
for occupations; the OCS does. The
OCS classifies occupations into
individual work levels based on
descriptions of work duties, respon-
sibilities, and skills that are specific
to the occupation. For example,
order clerks are classified into one of
two levels depending on the judg-
ment required to perform the duties;
buyer/contracting specialists are
placed in four levels according to the
type of purchases they make; and
general maintenance workers are
given one of three levels depending
on the types of repairs they make. In
order to place a job within the
appropriate level, it is necessary to
‘be completely familiar with the
unique criteria for each occupation.
Although “leveling” with specific
criteria for each occupation would be
almost impossible to apply to the full
range of occupations in the economy,
occupational information by level,
nevertheless, is important to a
variety of users. These include the
President’s Pay Agent in setting
salaries for Federal General Sched-
ule workers, and salary administra-
tors who not only need to know what
engineers average but also need to
have pay rates for engineers with
differing levels of experience,
expertise, and responsibility. For
example, under the OCS program,
BLS collected and provided to the
President’s Pay Agent earnings



information for five distinct levels of
secretaries differentiated by the
secretary’s responsibility and the
level of the supervisor.

To provide information by level
for occupations while keeping the
data collection process manageable,
the Bureau began testing a process
called “generic leveling,” which uses
the same process and definitions for
levels in all occupations studied.
Generic leveling is an adaptation of
the Factor Evaluation System,° a
point factor system devised by the
Office of Personnel Management
(OPM) in 1977 as a master evalua-
tion system to ensure equity among
occupations when assigning General
Schedule grade levels for white-
collar occupations. The OPM point
factor system is based on 9 elements:

* Knowledge—nine levels
telating to the nature and
extent of information or
facts which the worker must
understand to do acceptable
work;

¢ Supervision received—five
levels relating to the nature
and extend of direct or indirect
controls exercised by the
employee's supervisor;

* Guidelines—five levels
relating to the nature of
instructions and the judgment
needed to apply them;

* Complexity—six levels
relating to the nature, variety,
and intricacy of the work
performed;

* Scope and effect—six levels
relating to the nature of the
work and its effect within and
outside the organization;

* Personal contacts—four levels
Telating to the difficulty and
setting of contacts;

© Purpose of contacts—four
levels relating to the difficulty

of working with contacts and
the significance of those
contacts;

° Physical demands—three
levels relating to the job’s
physical requirements; and

* Work environment—three
levels relating to the job’s risks
and discomforts.

A tenth element, supervisory
duties, which distinguishes between
five levels of supervision, was added
to measure the extent of workers’
supervisory responsibilities. The
Office of Personnel Management has
a separate classification system for
supervisors and managers.’

To determine the overall level for
an establishment’s occupations, the
level and corresponding point value
are determined for each factor. The
points are summed for all factors.
Each overall level is defined by a
minimum and maximum number of
points. Test descriptions for the
factors, levels, the number of points
for each level, and the point ranges
for overall levels, are available on
request.

Like other point factor systems,
such as the widely used Hay Guide
Chart-Profile Method, this system
focuses on the requirements of the
job rather than on the performance
of individual workers. Systems
differ, however, in factors studied,
complexity, and specificity to a
particular occupational group or
industry.

Product research

Over the past months, BLS has
Tesearched how companies compen-
sate workers for performing supervi-
sory functions. In a test study of
supervisory practices, BLS obtained
information from almost 170
establishments on their pay prac-
tices. Almost three-fourths of them
determined the pay of supervisors on
an individual basis or had no
established relationship between the
pay of supervisors and those super-

vised. Further research is now being
conducted on the effect of supervi-
sory duties on pay.

Until research leads to a structure
more relevant to current salary
administration practices, BLS will
use the nine leveling factors devel-
oped by OPM with the number of
points presently used under the
Federal system. The supervisory
factor will be leveled, but points will
not be applied until research
produces an appropriate answer.

Area tests. The Bureau’s field staff
has tested the random selection of
occupations, classification of
workers, and determination of work
levels in six areas: Albuquerque,
NM; Allentown—Bethlehem—
Easton, PA; New Orleans, LA;
Raleigh—Durham—Chapel Hill,
NC; Rochester, NY; and Salt Lake
City—Ogden, UT. Table 1 provides
examples of survey results for
Albuquerque. Results of each of the
other five test surveys will be
published in the future by the
Bureau.?

Because the occupational base of
about 450 occupations and industrial
base of all industries, excluding
agriculture, private households, and
the Federal Government, is so broad,
the framework exists for a very wide
variety of data analyses. The
limiting factor will be the number of
observations found, which will vary
by occupation, industry, and geo-
graphic location. The framework
also permits the aggregation of data
to provide estimates for groups of
occupations or industries.

The geographic areas to be
surveyed are statistically selected so
it will be possible to publish data for
at least 13 metropolitan statistical
areas, all 18 consolidated metropoli-
tan statistical areas, the 9 economic
Tegions (as defined by the Bureau of
the Census), and the United States.
Data may also be published for other
metropolitan statistical areas and
some nonmetropolitan counties."

Interarea comparisons. Currently,

Compensation and Working Conditions December 1996 6