QUALITY OF THE BUREAU OF LABOR STATISTICS’ BUSINESS ESTABLISHMENT LIST AS A

SAMPLING FRAME

Michael A. Searson, Tracy E. Farmer, U. S. Bureau of Labor Statistics

Michael A. Searson, BLS, 2 Massachusetts Ave. NE, Room 4840 Washington, DC 20212

Key Words: coverage, establishments, firms,

addresses, editing

I. Introduction

 The Business Establishment List (BEL) is one of

the outputs of the Bureau of Labor Statistics’ (BLS)

Covered Employment and Wages (ES-202) program.

The ES-202 program is a Federal/State statistical

program managed by BLS and the State Employment

Security Agencies (SESA) in the 50 States, the District

of Columbia, Puerto Rico, and the Virgin Islands. The

BEL is used as the sampling frame for most of the

BLS’ programs. Nationwide, in 1996, Federal and

State Unemployment Insurance (UI) programs covered

118 million full- and part-time workers who received

$3.42 trillion in pay.1 ES-202 program data were

collected for approximately 7.2 million employer

establishments in 1996.2 The BEL is the most

complete and timely source of business establishment

information used as a sampling frame.

 The SESAs conduct four principal ES-202 program

activities: data collection; assigning industrial and

geographical codes; periodic review of these codes

including review of the business identification

information (names, addresses, etc.); and, micro/macro

data editing. The SESAs submit both micro-level data

(Quarterly Unemployment Insurance Name and

Address File-QUI) and macro-level data (ES-202

Report) to BLS. The QUI is an input to the BEL.

 Beginning with the 1997 third quarter data (due

February 22, 1998), the SESAs will submit only one

file, the Enhanced Quarterly Unemployment Insurance

(EQUI), to the BLS each quarter. The EQUI is similar

to the QUI; however, it contains additional data

elements extracted from the SESA UI files. BLS will

use the EQUI file to create the macro level data for the

ES-202 Report. The code change information which

has been submitted on a separate file (Annual Refiling

Survey Control File) to BLS, will now be captured on

the first quarter 1998 EQUI file (due August 22, 1998).

 New data processing and editing procedures both in

the SESAs and BLS will be implemented with the

 

1

 Preliminary 1996 Employment & Wages Data

2

 Preliminary 1996 Employment & Wages Data

production of the 1997 third quarter EQUI. These new

systems will accommodate the approaching

implementation of the North American Industry

Classification System (NAICS). NAICS will replace

the current SIC system. More details on the editing

procedures and the EQUI file will be presented later in

the paper.

II. Data Sources of the Sampling Frame

 As stated above, the QUI File and the ES-202

Report are products sent by the SESAs to BLS each

quarter which contain data from the administrative

files of the State UI programs. They are supplemented

by data from the Multiple Worksite Report and the

Report of Federal Employment and Wages both, of

which are described in detail in Section 6.

 The employment and wages data produced by the

ES-202 program represent the universe of workers

covered under State UI laws (this includes the private

sector, State and local governments) as well as civilian

workers covered by the program of Unemployment

Compensation for Federal Employees (UCFE). Since

coverage is so broad (approximately 98 percent of all

non-farm wage and salary employment), the ES-202

program provides a virtual census of these employees

and their wages. It is the most complete and timely

source of monthly employment and quarterly wages

information by detailed industry and county.

Consequently, ES-202 data are used extensively in

many economic and statistical applications. These

include UI program administration, macro-economic

research, survey employment benchmarking, and

micro-economic analysis. The Bureau of Economic

Analysis uses the macro level ES-202 data in the

preparation of the Personal Income component of the

Gross Domestic Product. BLS programs and surveys

use the micro level ES-202 data for sampling purposes.

These BLS programs and surveys are Current

Employment Statistics; Occupational Employment

Statistics; Producer Price Index; Occupational Safety

and Health Surveys; Occupational Compensation

Survey; Employer Benefits Survey; Employment Cost

Index Survey; and, Productivity Surveys. BLS also

will use the micro level ES-202 data as an input to the

Longitudinal Database (LDB). In 1998, the LDB will

produce a new data series to analyze the job creation

and job destruction process.
 BLS, a user of UI program data, does not control

the procedures and processes SESAs use for collecting

and maintaining the UI administrative and accounting

data. For example, BLS has no control over the

assignment of the UI account numbers used by the

SESAs to identify employers. BLS does, however,

contract with each State's LMI unit to provide selected

UI data for statistical purposes. The contract, called

the LMI Cooperative Agreement, specifies the quality

standards and the types and timing of data submitted

for the five Federal/State statistical programs.

 All of the ES-202 program data originates from

employers. Since these data are collected and

processed by both UI and LMI staff, it is important to

note the distinction between the two units because the

UI unit is not under the control of BLS. Each State's

UI program collects and maintains administrative

record data and business identification information on

employers who are subject to State UI laws. The UI

program provides these micro, or employer-level, data

to the LMI unit of the respective SESAs. The LMI

unit then supplements, edits, and processes these data

for use in the ES-202 program. Included in these

administrative data are the registration information

that is obtained from every new employer. All new

employers are required to file a "Status Determination

Form" to obtain a UI account number and UI tax rate.

Information from this form is also used to assign to

each establishment a set of classification codes

(industrial, geographical, ownership, and auxiliary).

 All covered employers are also required to file a

"Quarterly Contribution Report (QCR)." The

employers must report the total wages paid to all

workers during the calendar quarter; the wages that are

subject to UI taxes; and the UI taxes that are due to the

State. These forms are described in more detail later in

this paper.

 The LMI unit's activities are centered on four

primary areas from the UI administrative files. First,

the LMI staff uses information collected on the Status

Determination Form to assign the classification codes

previously mentioned. Second, the LMI staff

supplements the data provided by UI to obtain a greater

level of geographic and industry detail for selected

employers’ classification codes. Specifically, they

collect employment, wages, and business identification

information for the individual establishments of most

multi-establishment employers, which are not

separately reported on UI administrative records (see

section on the Multiple Worksite Report (MWR)).

Third, the LMI staff directly collects data from Federal

government agencies each quarter to add the

employment, wages and business identification

information of workers covered under the UCFE

program, as they are not included in the State UI

administrative database (see section on the Report of

Federal Employment and Wages (RFEW)). Fourth, the

LMI staff is responsible for conducting the Annual

Refiling Survey (ARS). The survey’s purpose is to

contact one-third of all the establishments each year to

verify and update, if necessary, their location (county

code), industrial activity, auxiliary status, type of

ownership, and both physical location and mailing

address information. The updated classification

information from the survey is incorporated in the ES202 program with the data submitted for the first

quarter of each year (see section on the ARS form). In

addition to the ARS, the BLS regional staff conduct an

annual quality assurance review in each SESA for SIC

coding for two purposes: 1) to improve the quality and

consistency of assigned SIC codes; and, 2) to provide

information regarding quality measures of these codes

at the national level. The accurate assignment of SIC

codes is crucial since most BLS data collection

programs derive samples based upon these

characteristics.

III. Data Element Definitions

 All of the data elements listed below have the

potential to be updated each quarter, since the main

source of the data for the BEL is the administrative tax

records that the employers file with the SESAs for tax

purposes each quarter. Generally, the SIC,

geographical and ownership codes are only updated

with the data being submitted for the first quarter of

each year. Thus, any break in the series caused by an

update to one of these data elements will occur between

calendar years.

 BLS follows the 1987 SIC Manual's definition of

establishment (including auxiliary establishments) in

its BEL. Thus, an establishment is defined as an

economic unit, generally located at a single physical

location, where business is conducted or services or

industrial operations are performed. If different

business activities are conducted at the same site and

individual payrolls are maintained, then these units

will be reported separately.

 An auxiliary establishment is primarily engaged

in performing management or support services for

other establishments of the same enterprise. Some

examples of activities commonly performed by
auxiliaries are management and other general

administrative functions, such as accounting, data

processing, and legal services; research, development,

and testing; and warehousing. Each auxiliary

establishment is assigned a four-digit SIC code on the

basis of the primary activity of the operating

establishments that they serve. In addition, they are

sub-classified further through the assignment of a onedigit auxiliary code based on the primary activity

performed by the auxiliary establishment.

 The BEL also contains a Multi-Establishment

Employment Indicator (MEEI) code which

designates whether the employer is one of the

following: a) single establishment employer; b) multiestablishment employer reporting their sub-units on the

MWR or RFEW (i.e., master record or parent record);

c) establishment of a multi-establishment employer; d)

sub-unit of a multi-establishment employer that

includes more than one establishment for reporting

purposes; e) multi-establishment employer reporting as

a single unit because it does not meet the minimum

criteria for filing the MWR or RFEW; and, f) multiestablishment employer reporting as a single unit

because the employer refuses to complete the MWR or

RFEW.

 Also collected on the BEL are two types of business

names. The first is the legal or corporate name

whereas the second is the trade name, which is

essentially the name that the employer is using to

conduct its business. The trade name is also frequently

referred to as the "trading as,” "known as,” or "doing

business as” name. In addition to these names, the

BEL also collects a Reporting Unit Description

(RUD) for each establishment of a multi-establishment

employer. The purpose of this field is to further

delineate these units by using terminology (store or

unit number, plant name, etc.,) provided by the

employer, and thus familiar to them, to separately

identify each of the establishments in the event that

only one of their establishments is selected for a

survey. In the event that an employer is reporting data

for more than one establishment as a combined subunit (see item d above), the RUD should provide

information on the establishments covered in this subunit.

 On the Multiple Worksite Report, employers that

have employees that move from place to place on a

daily or weekly basis (e.g., utility repair persons, sales

representatives, etc.) are instructed to report these

persons at the worksite to which they are based or

receive supervision. If the sales representatives have

no base within the State and operate out of their

residences, the employer is instructed to report these

employees as "sales representatives-statewide" in the

RUD on their MWR.

 The BEL does not currently collect information on

the type of legal entity that the business or employer

represents. The EQUI file that the States will provide

in early 1998 will capture this information, if it is

available from the State's employer master file. The

types of legal entities that will be included on the

EQUI are 1) Individual; 2) Partnership; 3)

Corporation; and, 4) Other (limited partnership, Scorporation, household, etc.).

 A number of addresses for each establishment are

also stored on the BEL. One of these addresses can be

described as the tax mailing address that is carried on

the State's UI employer master file. This is the address

that the employer has supplied for the purpose of

communicating with the agency for filing UI reports

and other correspondence. Two other addresses are

obtained by the LMI staff as part of the ARS. The

ARS questionnaire asks the respondent if the address

to which the form was mailed is the correct mailing

address for that employer and to update it, if

necessary. The employer is also requested to review

and update a physical location address that was

preprinted on the form for each establishment.

IV. Measures of Size

 With regard to measures of size, the BEL contains

values that assist the mathematical statisticians in their

selection of establishments for various surveys. Data

for each establishment includes an employment size

class code in addition to the posting of employment

for all three months of each quarter. The first ten size

class values designated by the Office of Management

and Budget (OMB) are used in these assignments.

Although wage size class values are not assigned to

each establishment, the BEL does include an average

monthly wage value for each quarter. Total Wages

for the establishment is not stored but an

approximation for this figure can be derived by

multiplying the average employment for the quarter by

the average monthly wage for the quarter. This

product is then multiplied by three to derive total

wages.

 Employment, wage, or establishment count data

are not included on the BEL for a firm at the State

level or nationwide; however, it is easily derivable by
extracting the firm's establishments using the State UI

account number for a State total or Federal Employer

Identification Number (EIN) for a National total.

These records would then be summed to determine the

values for this firm at the State and National levels. To

the extent that a firm has only one EIN, this method

has proven quite successful for a nationwide count. It

does have some limitations if the firm has more than

one EIN at the national level or more than one UI

account number at the State level and, all of the EINs

or UI account numbers are not known. The BEL does

not contain any corporate links other than the EIN.

Initial work in this area several years ago using the

Dun & Bradstreet Corporate Affiliate File looked

promising but budget cutbacks forced elimination of

these research activities. Sales volume data are not

collected by any BLS survey nor is this information

collected by the SESAs; therefore, the BEL does not

store any data on sales or sales volume.

V. Data Coverage

 UI coverage is quite broad and comprehensive

covering approximately 98 percent of all non-farm

wage and salary workers. All employers who have one

or more workers employed on one day in 20 weeks or

more in a calendar year or who have a payroll of more

than $ 1,500 in a calendar quarter are required to have

their workers covered by UI. Under the Federal

Unemployment Tax Act (FUTA), nonprofit

organizations who employ more than 4 workers

during the same time period just cited or who meet the

same payroll requirement must also cover their

workers. Many States, however, have extended this

coverage to the “one or more worker criteria” and thus

draw no distinction between profit and nonprofit

businesses.

 Agricultural coverage also has different coverage

requirements from nonagricultural employers. The

agricultural employers are required to be covered if

they employ ten or more workers on one day in 20

weeks in a calendar year or have more than a

$20,000 payroll in a quarter. Some of the more

densely populated States have also chosen to extend

coverage beyond the Federal minimum, resulting in an

agricultural coverage rate of 47 percent.

 Private households, social clubs, and college

fraternities and sororities which employ domestic help

and pay wages less than $1,000 in a quarter are

excluded from UI laws.

 State and local government employers are also

required to cover their workers with only a few minor

exceptions. These exceptions are principally students

who work part-time at the colleges or universities

that they attend (approximately 495,000 for State and

40,200 for local); student nurses and interns

(approximately 17,600 for State and 21,600 for local);

elected officials (approximately 18,200 for State and

108,700 for local) and temporary emergency

employees hired to handle disaster relief activities

(varies from year to year). Many States also exclude

from coverage the spouses of students who work at the

university if the employment is part of a program to

provide financial assistance to the student. The same

exceptions apply to these type of students, nurses and

interns owned by private sector interests

(approximately 445,000 and 29,200, respectively).

Other State and local employees exempted from UI

coverage include members of the judiciary; State

national and air national guardsmen; and policy and

advisory positions.

 Military personnel are covered under a separate

program, Unemployment Compensation for Ex-Service

members (UCX) and their counts are not included on

the BEL. Civilian defense workers, however, and all

other Federal employees are covered under the

Unemployment Compensation for Federal Employees

(UCFE). These employees are included on the BEL.

Exclusions to coverage for Federal workers are minor.

 The major exclusions to coverage are workers in

selected industries, such as nonprofit organizations

that employ less than 4 workers (approximately

1,358,000 workers). Railroad workers

(approximately 252,200) are also excluded from UI

coverage. These workers are covered under the

Railroad Unemployment Insurance Act and their

establishment’s data are not included on the BEL.

Also excluded are workers in school systems that are

owned and operated by religious institutions

(approximately 193,200). Selected classes of workers

are also excluded from coverage with the major group

being straight commission life insurance agents

(approximately 135,400). These agents are viewed as

being self-employed, which also represents another

class of workers excluded from Federal coverage

requirements. Proprietors of the businesses that they

own are also excluded from coverage. The total

number of self-employed that are not included on the

BEL is estimated to be approximately 8.9 million

workers. Unpaid family workers (approximately
200,000) who work at a business owned by the family

are also excluded from coverage.

 Employees of firms who provide contract services to

other companies and who work on-site at the

companies purchasing the services are considered

employees of the contractor. The contractor would be

requested to file an MWR showing the work locations

of their employees and then providing the employment

and wages for these locations on the MWR each

quarter. Their SIC code would be determined by the

type of services that they are providing (e.g.

programming or systems analysts services) rather than

the SIC of the purchasing company. An exception to

this policy is work performed by temporary help

agencies. These workers are assigned SIC code

7363—Help Supply Services and are reported

geographically from where they are based or

supervised.

VI. Data Collection

A. Status Determination Form

 All new employers which become subject to UI

coverage are required to file a Status Determination

Form with the UI unit of the SESA. This form, which

varies in content from State to State, is used to

determine an employer's tax liability under the State's

UI laws and to collect administrative information such

as the employer's EIN. The Status Determination

Form also requests information on which the

classifications for industrial activity, county (township

in the New England area), auxiliary (i.e., warehouse,

central administrative office, research and development

office, etc.), and ownership (private sector, or Federal,

State or local government) codes are based. These

codes are assigned by the LMI staff. The assignment

of the SIC code is based on the establishment’s primary

economic activity, which is determined by its principal

product or group of products produced or distributed,

or services rendered. If there is insufficient

information on the Status Determination Form, the

employer will either be contacted by telephone or

mailed the Industry Classification Statement to obtain

the necessary information. In a sense, it is the State’s

equivalent of Social Security’s Form SS-4, Application

for a Federal EIN.

 After employer liability is determined, the SESA UI

unit assigns a UI account number. Most new

employers are aware of their UI liability and request

the SESA to supply a Status Determination Form when

they begin their business operations. Some liable

employers, usually small ones, fail to file a Status

Determination Form. These employers may be

discovered through information on new firms applying

for EINs supplied by the Internal Revenue Service

(IRS) to the SESA each quarter. Other means of

discovering liable employers are through the UI claims

process, the UI field auditor investigations, and an

initial filing of the QCR without an UI account

number.

B. Quarterly Contribution Report

 All liable employers are required to file a QCR with

the SESAs for their UI accounts. These reports, like

the Status Determination Forms, are administered by

the UI program and also differ slightly in design for

each State. All of the QCR forms, however, request

employment values for each month of the quarter and

total wages, taxable wages, and UI taxes due for the

quarter. This information and the taxes that are due

are necessary for the operation of the UI tax system but

they are also important for statistical purposes for the

ES-202 program. Employers are asked to report,

among other items, the total number of covered

workers (full and part-time) who earned wages (subject

to UI taxes) during the pay period(s) which includes

the 12th of each month in the quarter and the total

payroll for the quarter. This report is mandatory for

employers with a single location as well as employers

with multiple locations in the State. The latter group

of employers report a summary of these data for all of

their establishments covered under the same State UI

account on the QCR. Therefore, establishment-level

data for these employers do not exist in most State UI

administrative files.

C. Multiple Worksite Report

 Major changes in the collection of data from multiestablishment employers were introduced with the

implementation of the BLS Business Establishment

List (BEL) project in 1990 and 1991. Prior to that

time, the detail of data for employers operating in more

than one location and/or industry in a State was

limited. Only those multi-establishment employers

who had 50 or more employees in the sum of secondary

county locations and/or four-digit industries were

asked to provide a breakdown of employment and

wages data by county and industry. This information

was collected on forms referred to as "Statistical

Supplements" to the QCR. A different version of this

form existed in each State.

 Under the BEL project, multi-establishment

employers which have 10 or more employees in the

sum of their secondary physical locations and/or

industrial activities covered under one UI account, are
requested to provide establishment level data. This

more comprehensive disaggregation of multiestablishment accounts has created a database (the

BEL) which is almost entirely at the establishment

level and thus provides more accurate industrial and

geographic information for all establishments. The

BEL project instituted the use of a BLS-standardized

collection form to gather the additional data from

multi-establishment employers. The MWR replaced

the State-specific Statistical Supplement forms that the

LMI units previously used to collect county-level data

from multi-establishment employers.

 Data collection procedures for multi-establishment

employers differ from those for single units. For multiestablishment employers, the LMI unit of the SESA is

responsible for the mail-out, processing, and review of

the MWR forms each quarter. As part of this process,

multi-establishment employers are asked to verify the

business identifying information (trade name, worksite

description, and physical location address) for each

establishment (worksite) that is pre-printed on the

MWR. In addition, the employer is requested to

provide the employment for each month (using the

proper reference period) and total wages for each

worksite for the given quarter. New worksites are

manually added to the MWR by employers. The State

LMI unit then adds these worksites to their database.

When that employer receives the next quarter’s MWR,

these new worksites will be pre-printed on the MWR

along with their other worksites. The situation for

deaths or business transfers is handled in the same

manner. The employer provides the information on

the affected worksite and the LMI staff deletes the

worksite from that employer’s file. Thus, the MWR

captures business births and deaths for these multiestablishment employers on an on-going quarterly

basis.

 In 1992, BLS began emphasizing the collection of

the MWR in a standardized electronic/magnetic media

format. By 1995, BLS provided employers located in

multiple States with the option of sending their MWR

for all States to the Electronic Data Interchange Center

(EDIC) located in Chicago, IL. The EDIC receives

and edits these data and then forwards them to the

appropriate States. This process greatly reduces the

employer costs (manually posting the MWR data to the

forms) and the State’s costs (printing, handling,

postage, data entry, etc.). BLS has also been working

closely with the companies providing payroll/tax

services and those who develop payroll/tax software to

have the electronic transmission of the MWR data

added to their services or software. Two payroll

software developers have already released these

programs to their clients whereas three others are

scheduled to provide this option in 1997. Similarly,

three payroll/tax provider firms have informed BLS of

their intention to add this service in the near future.

D. Report of Federal Employment and Wages

 Federal agencies, whose civilian employees are

covered under the separate but comparable UCFE

program, do not file QCR forms with State UI

programs but instead report employment and wages

data directly to the SESA's LMI unit. Since 1993, all

States have been using a standardized form, the

RFEW, that was developed by BLS to collect these data

each quarter. The RFEW was modeled after the MWR

to facilitate its use in the State processing systems.

Likewise, the Federal agencies providing the RFEW

data have been requested to use the electronic

transmittal procedure.

E. Annual Refiling Survey

 The purpose of the Annual Refiling Survey is to

review and update, if necessary, the classification codes

(industrial, geographical, ownership and auxiliary)

currently assigned to the establishments stored on the

BEL. The survey, conducted by the State LMI units, is

initiated in October of each year with approximately

one-third of the establishments being reviewed

annually. The establishments are selected on the basis

of the 7th and 8th digit of their Federal EIN, which are

essentially random digits within the nine digit number.

This selection process ensures that the industrial

distribution of the survey respondents is proportional to

the establishments in the economy. In other words, no

industrial sector is specifically targeted in any one

year.

For an employer currently coded as a single

establishment, the ARS questionnaire requests that the

respondent review an industrial classification

statement. This statement is a general description of

the economic activities for that 4 digit SIC code

followed by some specific economic index items that

comprise the industry. If the statement reflects the

establishment's previous 12 month economic activity,

then the respondent simply checks the "Yes" box and

underlines the relevant wording that applies to their

economic activity. If the employer thinks that the

description is not correct or is unsure, then they are

requested to check the "No" box and provide a

description of the economic activities of their business

along with an approximate percentage of the sales for

each activity listed. The LMI staff then review this

information and determine whether the SIC code needs

to be updated. The current SIC code may have been
assigned from the Status Determination Form or it may

have been updated from a previous ARS questionnaire.

In addition to the industrial classification review, the

respondent is also requested to review and update the

following, or provide the information if it is not

preprinted: 1) physical location address; 2) mailing

address; and, 3) county in which the establishment is

located.

 The respondent is also requested to answer a

question concerning whether they provide support

services for other units of the same enterprise or to the

general business community or the public. This

information is used to update the auxiliary code, if

necessary. The ARS questionnaire also helps identify

new multi-establishment employers. Employers are

asked if the establishment whose listed physical

location address is the only establishment in that State

under that UI account number. If no, then the

employer is requested to complete the back of the ARS

form which provides space to list the physical location

address, economic activity and employment for each of

the previously unidentified establishments. This

information is then reviewed by State staff to determine

if the employer should file a MWR form each quarter.

 The ARS procedures for known multi-establishment

employers is quite similar to that for single

establishment employers. The main difference is that

the former group will receive a separate 4 digit

industry description for each SIC code currently

assigned to that employer in that State under that UI

account number. The questions on the survey form are

identical to those for a single establishment employer

described previously. The States are required to

achieve a 75 percent usable response rate to the ARS.

Most States conduct at least one, and sometimes two,

follow-ups to achieve the required response rates.

VII.Data Editing Procedures

A. Current Editing Procedures

 Micro data collected on the QCR, MWR, and

RFEW are edited by the State LMI staff and corrected,

as necessary. The micro data, including imputed

values, are then aggregated to the appropriate ES-202

macro-level cells, including the size class break-outs

for first quarter. The State LMI unit then edits and

updates these macro records, where necessary, using

one of the standard data editing systems. Both the

micro and macro edits include checks for invalid and

inconsistent data as well as checks for large and

unusual employment and wages fluctuations between

and within quarters.

 Every quarter, a relatively small number of

employers fail to submit either a QCR, MWR, or

RFEW. Others may submit incomplete reports,

typically QCRs with missing employment data.

Delinquent and missing data notices are sent to these

employers, as appropriate. Usually the SESA unit

which initially mailed the form is responsible for this

follow-up. Therefore, the UI unit generally contacts

employers who do not complete the QCR, while the

LMI unit pursues delinquent MWRs and RFEWs. The

follow-up procedures for delinquent and incomplete

reports vary slightly in each State, but every attempt is

made to minimize the amount of missing data on the

ES-202 file. For those employers who fail to respond

to follow-up requests, the data are imputed, generally

by employing methods that use historical data for the

establishment. This imputation procedure is automatic

for one quarter. If the report remains delinquent for a

second quarter, the record will be flagged for further

review. A State LMI analyst will determine the status

of the establishment (i.e., active or inactive). If it is

determined that the establishment is still active, the

data will be imputed. A new imputation methodology

that emphasizes a current quarter industry’s trend has

been tested with data from several States. This new

methodology will be included in a future revision of the

States’ standardized systems.

 After making corrections and adding comments to

the summarized file, States submit the macro data on a

computer tape or cartridge in the standardized ES-202

Report format to the BLS national office, where it is

due approximately five months after the end of the

reference quarter. A long-term goal is to ultimately

have a four month lag in the receipt date. This process

began in FY 1996 but is currently on hold until after

the implementation of the EQUI. The earlier submittal

of these data would greatly assist the Bureau of

Economic Analysis in their estimate of the Gross

Domestic Product, and the BLS’ Current Employment

Statistics program.

 Standardized ES-202 systems were developed to

improve standardized processing, editing, and

imputation methodology in the SESAs; improve the

data quality of the BEL; and, control program

maintenance costs. Furthermore, this approach permits

a more timely introduction of program changes in a

more cost effective manner. These standardized ES202 State processing systems were developed by Utah

and Maine staff. These original system requirements

were developed by the State staff and approved by BLS.

Improvements to the systems are implemented with
new versions. The system requirements for these

versions are developed jointly by BLS and the State

developers.

B. Future Editing Procedures

 BLS data processing systems and the SESA

standardized data processing systems have been

extensively revised to efficiently edit the micro and

macro data and to produce only one file (the EQUI) for

submittal to BLS. This file will replace the QUI, the

ES-202 Report and the ARS Control File. The EQUI

file contains more information on addresses, dates

(setup date, initial date of liability, end of liability date,

and reactivation date), old SIC codes, new SIC codes,

NAICS codes, contributions, taxable wages, and types

of coverage.

 Two major goals for developing the EQUI file are to

achieve consistency between micro and macro files and

to ensure that the data are processed using the same

editing criteria. All macro data will be system derived

from micro data, eliminating independent macro

corrections. Micro level corrections which are

processed on the State files will be mechanically

captured and electronically forwarded to BLS. A

correction policy will be in place to ensure that updates

to the State files (maximum of three preliminary

quarters of data and the current quarter data) are

forwarded to BLS.

 Both BLS and State system developers (Utah and

Maine staff) use the same edit specifications. As a part

of the EQUI deliverable, the States will include

information on their State-specific edit parameters and

tolerances. These will be used by BLS to ensure that

the same standards are used for BLS processing.

VIII. Linkages between Establishments and Firms

 Upon receipt each quarter, the records on each

State's QUI file are edited by BLS for validity, accuracy

and reasonableness. Following a correction process,

the records are then matched to the prior quarter's data

on the BEL using the Continuous Unit Match System,

a multi-stage record linkage process. The first stage of

the process matches the records by the "SESA ID,"

which consists of the appropriate Federal Information

Processing Standard (FIPS) State code, the

establishment's UI number and the establishment's

Reporting Unit Number (RUN). The UI number is the

number assigned to that employer by the UI staff to

conduct its business with the SESA in that State. It is

the State equivalent of the Federal EIN. The RUN is

the number that is assigned by the State LMI staff to

make each establishment unique within the same UI

number. The RUNs in the current BEL are three-digit

alpha/numeric codes but will be converted to a fivedigit numeric code with the submittal of the new EQUI

file beginning in February, 1998.

 The SESA ID component matches approximately

95.2 percent of the QUI records to a record on the BEL

in the fourth quarter to first quarter match. Matching

the other three quarters results in approximately 96.5

percent of the records matching based on the SESA ID.

The resulting non-matches (potential births and

deaths) are then processed through the second

component which screens the predecessor and

successor fields provided by the States on the QUI

tapes. These relationships are examined and records

that are matched using this process will have their

Universe Data Base (UDB) number transferred from

the old SESA ID to the new SESA ID. A UDB

number is assigned to each record on the BEL and is

the only means of tracking an establishment that is

sold from one business to another on the BEL. Most

States require that new UI numbers be assigned when

business transfers occur. Between 7 and 11 percent of

the potential QUI birth records match on predecessor

codes, with more matching in the first quarter. This

accounts for 17,000 to 40,000 matches each quarter.

Some of these matches are legal changes because they

occur at the beginning of the calendar year.

 After the predecessor/successor relationships

provided by the States have been linked, the remaining

non-matched records enter the third stage of the record

linkage process--the weighted matching portion of the

system. This component is a statistical matching

technique that assigns point values to matches on

various characteristics of the non-matched units. For

example, if an apparent establishment birth has certain

characteristics that are very similar to an apparent

establishment death, can it be assumed that it is the

same unit? The matched characteristics include the

physical location address, four digit SIC code, county

(FIPS) code, telephone number, trade name, etc. A

point value is assigned for each matching characteristic

and if the total point value for a match meets or

exceeds the minimum requirement pre-selected for a

"true match," then the system assumes that there is a

predecessor/successor relationship. The UDB number

is then transferred from the death unit to the apparent

birth unit, which now becomes a transfer of ownership

record, rather than a business birth.
 The final stage of the record linkage process

attempts to link units that have undergone changes

within the most recent quarter. The remaining records

are matched using predecessor codes and the weighted

matching routine. One requirement for units to link at

this stage is that predecessors have zero employment in

the third month and successors have zero employment

in the first month. Between 11,000--16,000 matches

are recorded from the weighted and within-quarter

match processes each quarter with more discovered in

the first to fourth quarter match. These matches

account for 4.5 to 5.5 percent of potential births on the

QUI file. The records for the current quarter that are

not matched as a result of this matching effort are then

determined to be "true births" and are assigned a new

UDB number. The records for the prior quarter that

did not match a record for the current quarter are

considered deaths.

 The Continuous Unit Match System is currently in

the process of being revised to address the additional

needs of the Bureau's new Establishment Longitudinal

Database Program. The new system uses purchased

software that standardizes the trade names and

addresses of the establishments to be matched.

Another purchased software package (AUTOMATCH)

will be used to perform the actual matching. This

software allows more flexibility in selecting sorting

criteria used in the weighted match process. A

research paper on this subject was recently presented

by BLS staff at the 1997 Record Linkage Workshop.

More details are presented in that paper titled

"Improvements in Record Linkage Processes for the

Bureau of Labor Statistics' Business Establishment

List." The only linkage that exists between

establishments of the same firm in the BEL are the UI

account number within the State and the Federal EIN

when examining the same firm across the States. To

the degree that firms have more than one Federal EIN,

the BEL has no corporate affiliate linking mechanism.

IX. Timing of Entry of New Establishments and

Exit of Dead Establishments

 Prior to 1989 BLS only required the States to

provide the QUI data for the first quarter of the year.

In May 1987, the Economic Policy Council

recommended to OMB that BLS be given additional

funding to collect these data each quarter and to move

the data collection from a county/industry level to the

establishment level. Congress provided the funds and

from that point forward, BLS has been collecting these

data each quarter. The advantages to this data

collection are notable. Analyzing quarterly data

reveals more of the dynamics of the U.S. economy as

opposed to annual data analysis. For instance,

quarterly data analysis measures between 200,000 and

300,000 new establishments. Annual data analysis

would mask some of these changes between quarters.

Thus, collecting data on births and deaths as well as

changes in the other continuing business

establishments on a quarterly basis is superior to an

annual update. For survey sampling purposes, new

establishments that opened during the second quarter

of the year at least have a chance of being selected as

opposed to no chance if the sample frame is only

updated once a year using data for the first quarter.

The converse of this situation is also true in that units

that died would still appear to be active if the sample

frame is only updated for the first quarter of the year.

This situation could result in closed establishments

being selected for the survey because the frame did not

receive quarterly updates.

 A number of BLS survey programs are now

drawing their sample from the BEL, conducting their

sample refinement procedures, then reviewing the next

quarter's data to determine if any of the establishments

selected have gone out of business. If that is true, then

the supplemental sample establishments are

immediately used. This procedure reduces survey costs

and leads to higher initial response rates.

 It would be difficult to measure the percentage of

new employers that enter the BEL in the same quarter

that the business actually started operations. It is

important to note that the term “employers” was used

rather than “establishments.” The primary reason is

that almost 100 percent of new establishments where

employers are submitting a MWR will be recorded in

the same quarter as they began operations. Delinquent

MWR respondents would cause this to be less than 100

percent. As stated earlier, BLS is dependent upon the

SESAs to capture the new employers. As part of their

FUTA oversight responsibilities, the Employment and

Training Administration has required the States to

meet certain performance measures. The most

appropriate measure for this activity requires that a

minimum of 80 percent of status determinations of

employer liability (new and successor employers)

should be made within 180 days of the initial liability

date. For the last measurement period available, 48

States met or exceeded this requirement with the

national average equal to 86.2 percent.

X. Limitations
 Some limitations of the data and areas that need

improvement have been noted since BEL’s inception.

One of these areas is the need for better identification

of predecessor/successor information in the States.

State laws and practices regarding legal successors

vary. Consequently, some establishments that would

be designated as predecessor/successor relationships

for statistical purposes are not identified as such for

either legal reasons or the States regard this activity

with less of a priority. The new matching system

should help reduce the number of false births and

deaths.

 An area that needs additional attention is the

inconsistency in SIC coding among the States for

businesses that conduct the same economic activity in

different States. The current decentralization of SIC

coding activities can lead to these situations. A review

of these situations is scheduled to begin in 1998.

 Another opportunity for improvement is the lack of

a formal survey feedback system. Users of the BEL as

a sampling frame do not have a systematic procedure

to transmit potential updates to the establishment data

that were discovered during their survey or sample

refinement activities. Prior discussions on this issue

focused on the confidentiality aspect of providing this

information to the States. Each survey would need to

specify the potential sharing of these data (i.e.,

updates) with the States in future OMB clearances.

The States would need these data to update their files

for subsequent transmittals each quarter. Regardless of

these issues, a formal mechanism should be established

to utilize the additional information that is gleaned

from the surveys.

XI. Summary

 The BEL is the most complete and timely source of

business establishment data. The primary data source

of the BEL is the State UI administrative records.

These quarterly data are supplemented with multiworksite information collected on the MWR and the

Federal data collected on the RFEW. The industrial

and geographic information is reviewed and updated,

as necessary, every third year. Quality assurance

programs are conducted to measure the accuracy of the

State industrial coding. In addition, standardized State

operating systems have been exported to the States to

improve standardized processing, editing, and

imputation methodology in the SESAs; improve the

data quality of the BEL; and, control program

maintenance costs. Beginning with the third quarter

1997 submittal of the first EQUI file, the BEL will

contain more data elements; be processed more

efficiently; and, be edited in a more efficient manner.

Note: Any opinions expressed in this paper are

those of the authors and do not constitute policy of

the Bureau of Labor Statistics.

Acknowledgments

We would like to thank Timothy R. Pivetz for his

assistance in preparing this paper.

References

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OFFICE OF MANAGEMENT AND BUDGET (1987),

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