Compensation and Working Conditions Winter 1998 31

An NCS Test

Comparing Wage

Changes in Salt Lake

City to the Nation:

An NCS Test

National Compensation Survey

How changes in earnings in Salt Lake City

compare to changes nationally: A test of the

feasibility of collecting metropolitan area data for

an earnings index.

JASON FORD

Jason Ford is an economist in the Division of Compensation Data Analysis

and Planning, Bureau of Labor Statistics.

Telephone: (202) 606-6280

E-mail: Ford_J@bls.gov

In 1996 and 1997, the Bureau of Labor Statistics (BLS)

tested the feasibility of collecting data on changes in earnings for specific job duties for sampled employees in a metropolitan area. The test, which took place in the Salt Lake

City, Utah, metropolitan area, involved the collection of

data on earnings and job duties for sampled occupations in

380 establishments.

Compensation index data

The Salt Lake City test used many of the same statistical

procedures as does the Employment Cost Index (ECI), an

ongoing BLS survey that measures the rate of change in

earnings and benefits.1 The ECI, a principle economic indicator, is commonly used to adjust pay rates and contracts.

Table 1 shows an example of ECI data.

Employment Cost Index data are not available for specific metropolitan areas.2 They show the rate of change in

compensation for the Nation as a whole and for the major

regions, but not whether it occurs at a uniform rate in different metropolitan areas. Metropolitan area ECI data could

have numerous applications, from showing changes in local economies to providing insights on the relationship between the labor markets of various cities.

The Salt Lake City test was the first attempt by BLS to

construct an earnings index for a metropolitan area. Benefit costs were excluded, so the test did not index total compensation. However, it was a step in that direction.

Earnings changes

Initial earnings data for the Salt Lake City metropolitan

area were collected for July and August of 1996. Updated

earnings data were collected in February, May, and August

of 1997.

Changes in earnings between February and May of 1997,

and May and August of 19973 are summarized in tables 2

and 3. For comparison, national ECI results are also included.4 The Salt Lake City survey months are a month

TABLE 1. Employment Cost Index for total compensation1, wages

and salaries, and benefit costs by type of worker, selected

periods, 1997-98

 (Seasonally adjusted data)

Civilian workers

 Total Compensation .................. 0.8 1.0 0.7 0.9

 Wages and salaries ............... .9 1.1 .8 .9

 Benefit costs .......................... .5 .9 .4 .8

 Private industry

 Total Compensation ............ .8 1.0 .7 .9

 Wages and salaries ........ 1.0 1.1 .8 1.0

 Benefit costs ................... .5 .9 .3 .8

 State and local government

 Total Compensation ............ .6 .6 .8 .7

 Wages and salaries ......... .7 .8 .7 .7

 Benefit costs .................... .3 .3 .8 .7

Percent changes for 3-months

ended3⁄4 Type of worker and compensation

component Sep.

1997

Dec.

1997

Mar.

1998

June

1998

1 Includes wages, salaries, and employer costs for employee

benefits.
32 Compensation and Working Conditions Winter 1998

earlier than the ECI survey months. Therefore, the time

periods in comparison are not identical.

Standard errors on the Salt Lake City test index data

were not calculated. Consequently, tests of statistical significance for comparisons between the metropolitan and

national results could not be conducted. Nevertheless, the

data can be used as a basis for further study. In both periods, the test data show an overall increase in earnings

greater than the national increase. The difference was particularly striking for white-collar workers: Salt Lake City

earnings increased 2.3 percent (table 2) between February

and May, and 2.2 percent (table 3) between May and August. Nationally, the increases were 0.7 and 1.1 percent,

respectively.

The Salt Lake City data also showed differences in results between occupational groups. For example, in May

1997, the overall average increase was 1.5 percent, compared to 0.1 percent for blue-collar occupations, 0.3 percent for service occupations, and 2.3 percent for white-collar occupations. By contrast, the national data were more

consistent across occupational groups. In June of 1997,

national earnings rose 0.7 percent over the March figures.

All occupational groups had increases close to that level:

0.5 percent for service occupations; 1.0 percent for blue-collar occupations; and 0.7 percent for white-collar occupations.

August and September data showed similar results. The

overall increase for Salt Lake City was 1.8 percent. Earnings of blue-collar workers increased by 0.6 percent; service occupations, by 1.0 percent; and white-collar occupations, by 2.2 percent. Nationally, the overall increase was

1.2 percent and was relatively consistent across occupational groups: 0.7 percent for blue-collar workers; 1.7 percent for service occupations; and 1.1 percent for whitecollar workers.

Level of earnings

The Salt Lake City test tracked changes in earnings, not

the actual level of earnings. However, the initial survey in

1996 collected publishable level of earnings data that can

be compared to national figures from another BLS survey,

Employment Cost for Employee Compensation (ECEC).

The data for Salt Lake City were collected in July and August of 1996, whereas the national data were collected in

March of 1996.5 The results are summarized in table 4.

A possibility for further study would be to determine if

metropolitan areas that have lower than average earnings

tend to have greater than average growth in earnings over

time. Future publication of metropolitan earnings indexes,

along with standard error estimates for these indexes, would

allow for the exploration of such questions.

TABLE 2. Percent change for wages and salaries for civilian, private industry, and State and local government workers

by occupational group, selected workers, selected periods, 1997

(Not seasonally adjusted data)

 All occupations ............................................... 0.7 1.5 0.9 1.6 0.1 0.2

 Excluding sales ....................................... .8 1.4 1.0 1.6 - .2

White collar ...................................................................... .7 2.3 .8 2.5 .1 .2

 Excluding sales ......................................................... .8 2.4 .9 2.8 - .2

 Professional specialty and technical ............................. .7 1.5 1.1 2.3 .1 .1

 Professional specialty ............................................... - 1.3 - 2.7 - .1

 Technical................................................................... - 1.9 - 1.9 - -.6

 Executive, administrative, and managerial .................... .8 1.6 .8 1.9 .3 .2

 Administrative support including clerical ....................... - 1.9 .4 1.9 - -

 Sales ............................................................................ .8 3.2 .8 3.3 .2 .9

Blue collar ........................................................................ 1.0 .1 1.0 .1 .2 -.2

 Precision production, craft, and repair .......................... - -.3 1.3 -.3 - 0

 Machine operators, assemblers, and inspectors .......... - 1.8 1.0 1.8 - .3

 Transportation and material moving .............................. - .6 .6 .6 - -1.6

 Handlers, equipment cleaners, helpers, and laborers ... - -.7 .7 -.7 - .6

Service ............................................................................. .5 .3 .8 .4 0 .1

Civilian Private industry State and local

government

National1 National Salt Lake 1

City National Salt Lake 1

City

Salt Lake

City

Percent changes for 3 months ended—

June May May June May June

1 National figures come from BLS non-seasonally adjusted ECI

data. Local and national surveys both used a sample of jobs from

within a sample of establishments. One difference in methodology

was that weights for the Salt Lake City data were based on the number of workers in each industry and published occupation within the

Salt Lake City Area. These weights were based on Census data provided by the National Occupational Information Coordinating Committee. Weights for national data were based on the number of workers in each industry and occupation nationwide.

NOTE: Dashes indicate data not available.

Occupational group
 Compensation and Working Conditions Winter 1998 33

An NCS Test

Duties and responsibilities

For each of the selected occupations, BLS collected data on

specific “duties and responsibilities.” These duties and responsibilities were divided into 15 levels by evaluating each

job based on 10 factors, including knowledge, complexity,

and physical demands. A level-1 job is usually an unskilled

blue-collar job or a clerical job requiring very little training. A level-15 job might be a top-level scientist or financier.

This job classification leveling method has been used

for the National Compensation Survey since its inception

in 1996. It is based in part on the Federal Government’s

Factor Evaluation System (FES) and represents a major

change in BLS methodology. In the past, jobs were classified according to factors for each occupation, rather than

for one set of factors for all occupations.6

For the Salt Lake City test, part of the purpose of the

leveling was to ensure the validity of the index. To have a

valid index, the selection of jobs must be kept constant. If

the level of the job changed from one quarter to the next,

BLS concluded that the duties and responsibilities had

changed to the point that the job was no longer the same.

Therefore, any job that changed levels in an update period

was not used in calculating the index.

TABLE 3. Percent change for wages and salaries for civilian, private industry, and State and local government workers

by occupational group, selected workers, selected periods, 1997

(Not seasonally adjusted data)

 All occupations ............................................... 1.2 1.8 1.0 1.7 1.6 2.4

 Excluding sales ....................................... 1.2 .8 1.0 .6 - 2.4

White collar ...................................................................... 1.1 2.2 1.1 2.2 1.7 2.7

 Excluding sales ......................................................... 1.1 .9 1.1 .6 - 2.7

 Professional specialty and technical ............................. 1.3 .4 1.0 -.1 1.8 1.5

 Professional specialty ............................................... - .6 - -.2 - 1.6

 Technical ................................................................... - -.1 - -.1 - -.1

 Executive, administrative, and managerial .................... 1.1 .8 1.1 -.4 1.1 4.0

 Administrative support including clerical ....................... 1.0 1.2 .9 1.1 1.5 2.4

 Sales ............................................................................ - 6.8 1.2 6.8 - -

Blue collar ........................................................................ .7 .6 .8 .6 1.1 2.2

 Precision production, craft, and repair .......................... - 2.0 .6 1.9 - 4.2

 Machine operators, assemblers, and inspectors .......... - -1.6 .8 -1.6 - -

 Transportation and material moving .............................. - .9 .9 .9 - .5

 Handlers, equipment cleaners, helpers, and laborers ... - -1.1 .7 -1.2 - 1.6

Service ............................................................................. 1.7 1.0 1.8 1.0 1.4 1.3

Civilian Private industry State and local

government

National1 Salt Lake

City

September

Percent changes for 3 months ended—

August

National1 National Salt Lake 1

City

Salt Lake

City

September September August August

Occupational group

BLS found that jobs tended not to change levels within

the time span of the study. Out of the 2,090 jobs studied, 2 were removed from the index due to job level

changes.

Lessons learned

One difficulty in constructing local indexes is that, to ensure statistical validity, data must be collected for a larger

percentage of jobs in the local economy than would be necessary for a national index. In the Salt Lake City survey,

respondents were asked about a minimum of 8 jobs, and a

maximum of 20. In the national survey (ECI), respondents

were asked to provide information on up to eight jobs.7

Establishments appeared to have difficulty updating the

larger number of records. The average “temporary

nonresponse” rate was 27 percent, as opposed to a national

average of 5.4 percent for ECI surveys.8 Temporary

nonresponse refers to establishments that are unable to provide data in a given time period, but are willing to provide

it later. However, the high nonresponse rate was probably

attributable to a range of factors including: The Salt Lake

City survey was a test survey without an established product; the data were not updated until 6 months after the initial collection period; and the initial earnings data were

 1 National figures come from BLS non-seasonally adjusted ECI

data. Local and national surveys both used a sample of jobs from

within a sample of establishments. One difference in methodology

was that weights for the Salt Lake City data were based on the number of workers in each industry and published occupation within the

Salt Lake City Area. These weights were based on Census data provided by the National Occupational Information Coordinating Committee. Weights for national data were based on the number of workers in each industry and occupation nationwide.

NOTE: Dashes indicate data not available.
34 Compensation and Working Conditions Winter 1998

TABLE 4. Hourly wages for civilian, private industry, and State and local government workers by occupational group, selected

workers, selected periods, 1996

 All occupations ............................................... $13.36 $12.77 $12.58 $12.22 $17.95 $15.82

 Excluding sales ....................................... - 12.72 - 12.07 - 15.82

White collar ...................................................................... 16.40 14.74 15.44 14.11 20.43 17.19

 Excluding sales ......................................................... - -----

 Professional specialty and technical ............................. 22.55 19.15 21.25 18.86 24.86 19.61

 Professional specialty ............................................... 23.95 21.33 22.49 22.92 25.97 19.91

 Technical................................................................... 17.36 13.61 17.90 13.72 - 11.72

 Executive, administrative, and managerial .................... 23.81 20.78 24.07 21.06 22.72 20.07

 Administrative support including clerical ....................... 10.73 9.64 10.69 9.63 10.93 9.71

 Sales ............................................................................ - 13.18 11.09 13.18 - -

Blue collar ........................................................................ 11.73 11.16 11.61 11.17 13.56 10.89

 Precision production, craft, and repair .......................... - 13.28 15.10 13.24 - 15.59

 Machine operators, assemblers, and inspectors .......... - 9.44 10.22 9.45 - -

 Transportation and material moving .............................. - 12.06 11.62 12.19 - 11.09

 Handlers, equipment cleaners, helpers, and laborers ... - 8.21 8.48 8.19 - 8.58

Service ............................................................................. 7.38 8.18 6.53 6.76 12.09 12.90

Occupational group

Civilian Private industry State and local

government

National1

March

Salt Lake

City July/

August

National1

March

Salt Lake

City July/

August

Salt Lake

City July/

August

National1

March

1 National figures come from the BLS Employer Cost for Employee

Compensation (ECEC) survey. Salt Lake City figures come from a

test survey of establishments within the Salt Lake City metropolitan

area.

NOTE: Dashes indicate data not available.

available from sources other than the respondents who furnished the update data.

Alternative means of collecting data, such as through

1

 Additional information on ECI can be found at http://www.bls.gov/

ecthome.htm or by calling (202) 606-6220. 2

 ECI data does include four regional breakouts, however: Northeast,

South, Midwest, and West. 3

 For the purposes of this study, earnings refer to wages, salaries, commissions, piece rates, and bonuses tied directly to production by formula. Discretionary bonuses based on management’s perceptions of employees were excluded. 4

 Data are also available for the western region of the United States, and

can be compared to the Salt Lake City results. These data can be found on the

Internet at http://www.bls.gov/ecthome.htm. BLS does not break out regional ECI data by occupation or industry. Earnings in the West rose 0.9

percent from the first quarter to the second quarter, and 1percent from the

second quarter to the third quarter.

5

 The national data come from the Employer Cost for Employee Compensation (ECEC) survey. In that survey, the term “earnings” includes overtime

and bonuses. To get a figure comparable to the Salt Lake City results, the

“wage and salary” numbers were used. 6

 For additional information on this type of job classification, see John

E. Buckley, “BLS Redesigns its Compensation Surveys,” Compensation

and Working Conditions, September 1996, pp. 19-21. The new system determines the level of all occupations according to a common set of factors. 7

 For further information about the methods used for the Employment

Cost Index, see chapter 8 of the 1992 edition of the BLS Handbook of Methods (Bulletin 2414).

8

 The national averages were calculated by averaging the temporary

nonresponse rate from the first quarter of 1991 to the second quarter of

1998.

the Internet, may have to be looked at in the future if timely

and reliable metropolitan compensation index data are to

be collected.