A M O N T H L Y N E W S L E T T E R O F T H E T E X A S W O R K F O R C E C O M M I S S I O N L A B O R M A R K E T R E V I E W

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1 JANUARY 2004 A M O N T H L Y N E W S L E T T E R O F T H E INDICATORS Texas Unemployment Rate Not Seasonally Adjusted December % November % December % Seasonally Adjusted December % November % December % U.S. Unemployment Rate Not Seasonally Adjusted December % November % December % Seasonally Adjusted December % November % December % Texas Nonagricultural Wage & Salary Employment Not Seasonally Adjusted 9,530,300 OTM Change 11,300 OTY Change 45,100 Seasonally Adjusted 9,464,100 OTM Change -7,500 OTY Change 43,900 Initial Claims for Unemployment Benefits December ,489 November ,569 December ,257 Consumer Price Index (CPI) Annual Change U.S. (Dec.) 1.9% Dallas-Fort Worth (Nov.) 1.3% Houston-Galveston (Dec.) 2.7% IN THIS ISSUE Texas & U.S. Unemployment Rates 2 Nonagricultural Wage & Salary Employment (Seasonally Adjusted) 2 Highlights of the Texas Labor Force 3 County Unemployment Rates 4 City Unemployment Rates 5 Featured Article: Why Are Employment Estimates Revised? 6 Happenings Around the State 7 Nonagricultural Wage & Salary Employment (Not Seasonally Adjusted) 8 MSA Nonagricultural Wage & Salary Employment (Not Seasonally Adjusted) Labor Market Information Release Dates 12 TEXAS L A B O R M A R K E T R E V I E W Texas Nonagricultural Wage and Salary Employment (Seasonally Adjusted) Total Nonagricultural Employment fell by 7,500 jobs in December. However, this decline was smaller than the 26,600 and 16,100-job decreases seen in December 2001 and Professional and Business Services posted the largest loss, while Education and Health Services added the most jobs. The annual growth rate for Total Nonagricultural Employment ended the year at 0.5 percent, an improvement over the December 2002 rate of 0.1 percent. Following a decrease of 4,500 jobs in November, Professional and Business Services employment fell by an additional 5,400 jobs in December. Though this was the third straight December decline for this industry, it was smaller than the losses posted in December 2001 and Education and Health Services employment grew for the third consecutive month, gaining 4,600 jobs Metropolitan Statistical Area (MSA) Employment (Not Seasonally Adjusted) Total Nonagricultural Employment in the MSAs rose by 6,400 jobs during December. This marked the largest December increase since 2000 and was an improvement over the 3,900-job decline in December The Houston MSA led the way with an over-the-month gain of 5,600 jobs, while the Austin-San Marcos MSA posted the largest job loss with a decrease of 2,700 positions. December s employment growth was driven by a seasonal increase in Retail Trade as retailers continued to add staff for the holidays. The MSAs gained 15,500 jobs in this industry, 1,700 more than were added in December The largest increases in Retail Trade employment were seen in the Dallas and Houston MSAs. Government employment in the MSAs fell by 5,700 jobs in December. The Austin-San Marcos in December. This industry added 29,500 jobs during 2003, the most of any industry group with the exception of Government. Government employment declined by 1,600 jobs in December, marking only the second over-themonth decrease in Despite this loss, the annual growth rate rose from 1.8 percent in November to 2.1 percent in December, with 33,600 jobs gained over the year. Construction employment ended the year on a positive note by gaining 1,500 jobs in December. This industry added 11,300 jobs during 2003, following declines of 4,800 and 1,800 jobs in 2001 and The annual growth rate stood at 2.5 percent after having been as low as 2.3 percent during MSA experienced a decrease of 3,400 State and Local Government jobs, while the Houston MSA posted a decline of 1,100 State Government Education jobs. Employment in Professional and Business Services fell for the second consecutive month in December with a decline of 3,300 positions. The Dallas MSA lost 1,700 jobs, with the majority coming from the Employment Services industry. For the first time since 1999, Construction employment in the MSAs grew during December. Although the increase of 400 jobs was small, it was a marked improvement over the December declines of 5,200 and 3,500 jobs posted in 2001 and The Houston MSA registered the largest December gain with an addition of 500 Construction jobs. L A B O R M A R K E T & C A R E E R I N F O R M A T I O N D E P A R T M E N T

2 L A B O R M A R K E T R E V I E W J ANUARY 2004 Total Nonagricultural Employment in Texas Trends Upward in 2003 (Statewide, Seasonally Adjusted) Construction Shows Signs of Recovery in 2003 (Statewide, Seasonally Adjusted) 30,000 25,000 20,000 15,000 10,000 5, ,000-10,000-15,000 Over-the-Month Employment Change Annual Growth Rate 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% 0.0% Annual Growth Rate 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 TEXAS AND U.S. CIVILIAN LABOR FORCE ESTIMATES TEXAS* UNITED STATES** Not Seasonally Adjusted CLF Employment Unemp. Rate CLF Employment Unemp. Rate December ,013,800 10,371, , ,501, ,556,000 7,945, November ,038,600 10,364, , ,969, ,700,000 8,269, December ,783,100 10,145, , ,807, ,599,000 8,209, Seasonally Adjusted CLF Employment Unemp. Rate CLF Employment Unemp. Rate December ,033,000 10,330, , ,878, ,479,000 8,398, November ,032,000 10,333, , ,187, ,533,000 8,653, December ,807,300 10,107, , ,157, ,459,000 8,698, Note: Only the actual series estimates for Texas and the U.S. are comparable to sub-state estimates. Current month estimates for Texas are preliminary. All estimates are subject to revision. In seasonally adjusted estimates, all elements of seasonality are factored out to achieve an estimate which reflects the basic underlying trend. *Source - Labor Market Information Department, Texas Workforce Commission (model-based methodology) **Source - Bureau of Labor Statistics, U.S. Department of Labor (Current Population Survey) TEXAS NONAGRICULTURAL WAGE AND SALARY EMPLOYMENT SEASONALLY ADJUSTED + Nov. '03 to Dec. '03 Dec. '02 to Dec. '03 INDUSTRY TITLE Dec. 2003* Nov Dec Absolute Percent Absolute Percent Change Change Change Change TOTAL NONAG. W&S EMPLOYMENT 9,464,100 9,471,600 9,420,200-7, , GOODS PRODUCING Natural Resources & Mining 142, , , , Construction 585, , ,100 1, , Manufacturing 903, , ,900-2, , SERVICE PROVIDING Trade, Transportation, & Utilities 1,939,800 1,941,400 1,956,800-1, , Financial Activities 587, , ,500 1, , Professional & Business Services 1,045,000 1,050,400 1,045,800-5, Education & Health Services 1,141,800 1,137,200 1,105,200 4, , Leisure & Hospitality 858, , , , Government 1,671,400 1,673,000 1,637,800-1, , Note: The number of nonagricultural jobs in Texas is without reference to place of residence of workers. Total Nonagricultural employment is independently seasonally adjusted and employment for the individual sectors is not additive to the total. Seasonally adjusted estimates are not calculated for all industry sectors. *Estimates for the current month are preliminary. All estimates are subject to revision. +All elements of seasonality are factored out to achieve an estimate which reflects the basic underlying trend. 2

3 J ANUARY 2004 L A B O R M A R K E T R E V I E W by Bryce Bayles Highlights of the Texas Labor Force (Not Seasonally Adjusted) The Texas jobless rate fell to its lowest level of the year in December, dropping from 6.1 percent in November to 5.8 percent in December. This monthly decrease was consistent with a normal seasonal decline of three-tenths of a percentage point. For the second consecutive month, the rate showed an overthe-year decline a first since The United States jobless rate slipped from 5.6 percent in November to 5.4 percent in December. December s rate is three-tenths of a percentage point lower than last year s 5.7 percent. The number of jobholders rose by 7,200 over the month, from 10,364,200 in November to 10,371,400 in December. December s gain was the first for the month since 2000; the past two years have averaged losses of 3,300. The gain in employed was aided by a larger increase in seasonal workers this year as compared to last. Since January, employment has risen by 288,700 the largest twelve-month gain since The number of unemployed decreased for the sixth straight month, falling by 32,000 in December to 642,400 the lowest level for the year. This decline was larger than the average November-to-December seasonal reduction of 26,400. Since July 2003, unemployment has fallen each month by an average of 33,300. However, December s level was still 4,400 higher than last year s level of 638,000. The largest number of job seekers for the year occurred in June when the level reached 842,300. The civilian labor force fell for the sixth consecutive month in December, the longest streak of monthly declines since Since June, the labor force has fallen by 160,100. These reductions followed a downward trend in the number of job seekers over the period. The number of people receiving unemployment benefits rose for the first time in four months, from 157,500 in November to 157,700 in December. Eleven of the twenty-seven MSAs registered increases in claims over the month. The Houston MSA had the largest December reduction with 700 fewer claims, while McAllen-Edinburg-Mission registered the largest increase for the second consecutive month with 700 claims. Of the major industries, only Trade, Transportation and Utilities; Public Administration, and Nonclassifiable experienced decreases in claims over the month. Construction posted the largest over-the-month gain with 2,600 claims. Civilian Labor Force Estimates for Texas Metropolitan Statistical Areas (In Thousands) December 2003* November 2003 December 2002 C.L.F. Emp. Unemp. Rate C.L.F. Emp. Unemp. Rate C.L.F. Emp. Unemp. Rate State of Texas 11, , , , , , Abilene Amarillo Austin-San Marcos Beaumont-Port Arthur Brazoria Brownsville-Harlingen Bryan-College Station Corpus Christi Dallas 2, , , , , , El Paso Fort Worth-Arlington Galveston-Texas City Houston 2, , , , , , Killeen-Temple Laredo Longview-Marshall Lubbock McAllen-Edinburg-Mission Odessa-Midland San Angelo San Antonio Sherman-Denison Texarkana Data Not Available Data Not Available Tyler Victoria Waco Wichita Falls *Estimates for the current month are preliminary. All estimates are subject to revision. Estimates reflect actual (not seasonally adjusted) data. Civilian Labor Force (C.L.F.) includes wage and salary workers, self-employed, unpaid family, domestics in private households, agricultural workers, workers involved in labor disputes and the unemployed, all by place of residence. Employment and Unemployment data are first rounded then added together to derive the rounded CLF total. Because of this rounding technique, this rounded total of the CLF may not agree with a rounding of the CLF total itself. Percent Unemployed is based upon unrounded Labor Force, Employment and Unemployment numbers. Estimates of the TWC are in cooperation with the Bureau of Labor Statistics, U.S. Department of Labor. 3

4 L A B O R M A R K E T R E V I E W J ANUARY 2004 Employment and Unemployment Estimates for Texas Counties - December 2003 County Emp. Unemp. Rate County Emp. Unemp. Rate County Emp. Unemp. Rate County Emp. Unemp. Rate Anderson 18, Donley 1, Kaufman 33,377 2, Real Andrews 5, Duval 4, Kendall 18, Red River 4, Angelina 35,500 1, Eastland 10, Kenedy Reeves 4, Aransas 9, Ector 59,460 3, Kent Refugio 2, Archer 4, Edwards Kerr 17, Roberts Armstrong 1, Ellis 54,654 3, Kimble 2, Robertson 6, Atascosa 18, El Paso 278,489 24, King Rockwall 25,166 1, Austin 15, Erath 16, Kinney 1, Runnels 5, Bailey 3, Falls 7, Kleberg 12, Rusk 21,680 1, Bandera 8, Fannin 11, Knox 1, Sabine 3, Bastrop 30,878 1, Fayette 11, Lamar 19,976 1, San Augustine 3, Baylor 1, Fisher 1, Lamb 6, San Jacinto 8, Bee 9, Floyd 3, Lampasas 10, San Patricio 28,341 1, Bell 97,494 4, Foard La Salle 2, San Saba 2, Bexar 694,638 36, Fort Bend 197,375 10, Lavaca 8, Schleicher 1, Blanco 3, Franklin 4, Lee 6, Scurry 6, Borden Freestone 9, Leon 6, Shackelford 1, Bosque 6, Frio 5, Liberty 29,671 3, Shelby 9, Bowie 39,160 2, Gaines 7, Limestone 9, Sherman 1, Brazoria 106,625 8, Galveston 113,943 9, Lipscomb 1, Smith 94,335 4, Brazos 85,364 1, Garza 2, Live Oak 4, Somervell 1, Brewster 6, Gillespie 11, Llano 5, Starr 20,834 5, Briscoe Glasscock Loving Stephens 3, Brooks 3, Goliad 2, Lubbock 129,964 4, Sterling Brown 16, Gonzales 8, Lynn 2, Stonewall Burleson 7, Gray 8, Mc Culloch 3, Sutton 2, Burnet 17, Grayson 48,732 3, Mc Lennan 103,726 4, Swisher 3, Caldwell 15,527 1, Gregg 56,882 3, Mc Mullen Tarrant 792,676 44, Calhoun 6, Grimes 7, Madison 4, Taylor 59,087 2, Callahan 6, Guadalupe 48,933 1, Marion 3, Terrell Cameron 132,937 15, Hale 15, Martin 1, Terry 4, Camp 5, Hall 1, Mason 1, Throckmorton Carson 3, Hamilton 4, Matagorda 12,491 1, Titus 13, Cass 14, Hansford 2, Maverick 13,927 4, Tom Green 50,448 1, Castro 3, Hardeman 1, Medina 15, Travis 493,873 23, Chambers 12, Hardin 21,352 1, Menard Trinity 4, Cherokee 19, Harris 1,799, , Midland 62,036 2, Tyler 6, Childress 2, Harrison 27,989 1, Milam 9, Upshur 16, Clay 5, Hartley 3, Mills 2, Upton 1, Cochran 1, Haskell 2, Mitchell 2, Uvalde 10, Coke 1, Hays 55,569 2, Montague 6, Val Verde 19,654 1, Coleman 3, Hemphill 2, Montgomery 153,222 7, Van Zandt 22, Collin 303,500 15, Henderson 28,953 2, Moore 9, Victoria 43,864 2, Collingsworth 1, Hidalgo 202,851 31, Morris 5, Walker 23, Colorado 7, Hill 15, Motley Waller 14, Comal 43,174 1, Hockley 9, Nacogdoches 25,504 1, Ward 3, Comanche 6, Hood 18,251 1, Navarro 21,867 1, Washington 15, Concho 1, Hopkins 14, Newton 5, Webb 78,980 5, Cooke 15, Houston 9, Nolan 6, Wharton 18,163 1, Coryell 20,798 1, Howard 13, Nueces 145,205 8, Wheeler 2, Cottle Hudspeth 1, Ochiltree 4, Wichita 58,808 2, Crane 1, Hunt 35,451 2, Oldham 1, Wilbarger 7, Crockett 1, Hutchinson 7, Orange 37,064 4, Willacy 4, Crosby 2, Irion Palo Pinto 10, Williamson 160,202 6, Culberson Jack 4, Panola 7, Wilson 16, Dallam 3, Jackson 6, Parker 44,197 1, Winkler 2, Dallas 1,182,813 83, Jasper 13,665 1, Parmer 4, Wise 26,873 1, Dawson 4, Jeff Davis 1, Pecos 6, Wood 14, Deaf Smith 6, Jefferson 110,600 10, Polk 14, Yoakum 2, Delta 2, Jim Hogg 2, Potter 53,976 3, Young 7, Denton 265,137 11, Jim Wells 15,932 1, Presidio 2, Zapata 5, De Witt 8, Johnson 63,529 3, Rains 3, Zavala 4, Dickens Jones 9, Randall 59, Dimmit 3, Karnes 5, Reagan 1, Estimates reflect actual (not seasonally adjusted) data. Estimates are preliminary and subject to revision. To obtain the civilian labor force, add total employment to total unemployment. Estimates of the TWC are in cooperation with the Bureau of Labor Statistics, U.S. Department of Labor. 4

5 J ANUARY 2004 L A B O R M A R K E T R E V I E W Employment and Unemployment Estimates for Texas Cities - December 2003 City Emp Unemp Rate City Emp Unemp Rate City Emp Unemp Rate City Emp Unemp Rate Abilene 52,181 2, Deer Park 17, Kirby 5, Quanah 1, Addison 7, Del Rio 16,253 1, Knox City Rankin Alamo 2, Denison 10, Kyle 1, Raymondville 2, Alamo Heights 4, Denton 58,963 3, La Joya 1, Rendon 4, Albany Diboll 1, La Marque 6, Richardson 55,503 2, Aldine 6, Dickinson 4, La Porte 17, Richland Hills 5, Alice 8, Donna 6,141 1, Lago Vista 1, Richmond 7, Allen 20, Dripping Springs Lake Jackson 14, Rio Grande City 5,823 1, Alton 1, Dumas 6, Lakeway 3, River Oaks 3, Alvarado 1, Duncanville 23,362 1, Lamesa 3, Roanoke 1, Alvin 11, Eagle Pass 8,275 2, Lampasas 4, Robert Lee Amarillo 94,803 3, Edcouch 1, Lancaster 13, Robinson 4, Anderson Mill 11, Edinburg 17,770 2, Laredo 74,036 4, Robstown 4, Andrews 3, El Campo 4, League City 18, Rockdale 1, Angleton 9, El Paso 251,167 21, Leander 3, Rockwall 10, Anson 1, Eldorado Leon Valley 6, Rosenberg 16,510 1, Arlington 193,657 9, Electra 1, Levelland 5, Round Rock 36,579 1, Athens 5, Elgin 3, Lewisville 47,266 1, Rowlett 16, Atlanta 3, Elsa 2, Liberty 4, Saginaw 5, Austin 399,355 20, Ennis 8, Linden 1, San Angelo 42,708 1, Azle 5, Euless 30,602 1, Littlefield 2, San Antonio 544,548 30, Balch Springs 10, Everman 3, Live Oak 7, San Benito 10,149 1, Bastrop 3, Fabens 2, Llano 1, San Juan 5, Bay City 6, Fairfield 1, Lockhart 5, San Marcos 23,221 1, Baytown 35,864 2, Falfurrias 2, Longview 38,505 2, Santa Fe 4, Beaumont 54,535 4, Farmers Branch 16, Lubbock 109,772 3, Schertz 8, Bedford 34,950 1, First Colony 16, Lufkin 15, Seabrook 5, Beeville 5, Flower Mound 14, Lumberton 4, Seagoville 4, Bellaire 10, Forest Hill 7, Mc Allen 52,533 5, Seguin 12, Bellmead 4, Fort Stockton 3, Mc Gregor 2, Seminole 3, Belton 6, Fort Worth 273,911 20, Mc Kinney 20,201 1, Sherman 16,418 1, Benbrook 14, Fredericksburg 4, Mansfield 10, Silsbee 3, Bertram Freeport 5, Marble Falls 3, Sinton 2, Big Lake 1, Friendswood 14, Marlin 2, Smithville 2, Big Spring 9, Frisco 6, Marshall 11, Snyder 4, Blanco Gainesville 6, Marshall Creek Socorro 9,591 1, Boerne 4, Galena Park 4, Mason Sonora 1, Bonham 2, Galveston 29,596 3, Mathis 1, South Houston 7, Borger 4, Garland 120,810 6, Memphis 1, South Padre Island 1, Bowie 1, Gatesville 3, Menard Southlake 5, Brady 2, Georgetown 15, Mercedes 6,073 1, Spring 22, Breckenridge 2, Gladewater 2, Merkel 1, Stafford 7, Brenham 6, Glen Rose Mertzon Stamford 1, Bridge City 3, Graham 3, Mesquite 66,863 3, Stanton Bridgeport 2, Granbury 2, Mexia 2, Stephenville 8, Brownsville 49,113 6, Grand Prairie 63,409 4, Midland 52,313 2, Sterling City Brownwood 8, Grapevine 22, Midlothian 3, Sugar Land 22, Bryan 40, Greenville 12, Mineral Wells 6, Sulphur Springs 6, Buda 1, Gregory 1, Mission Bend 20, Sweetwater 4, Burkburnett 5, Groesbeck 1, Mission 14,713 1, Taylor 10, Burleson 10, Groves 7, Missouri City 34,190 1, Temple 28, Cameron 2, Haltom City 21,457 1, Monahans 1, Terrell 7, Canyon 7, Hamlin 1, Mount Pleasant 7, Texarkana 14, Canyon Lake 7, Harker Heights 6, Mount Vernon 1, Texas City 20,140 1, Carrollton 72,542 2, Harlingen 28,215 2, Nacogdoches 14, The Colony 20, Carthage 2, Haskell 1, Navasota 2, The Woodlands 25, Cedar Hill 12, Haslet Nederland 8, Throckmorton Cedar Park 5, Henderson 5, New Braunfels 21, Tomball 3, Channelview 15, Henrietta 1, Nocona 1, Trophy Club 3, Clarksville 1, Hereford 5, N Richland Hills 33,757 1, Tyler 46,806 2, Cleburne 13,013 1, Hewitt 6, Odessa 45,696 2, Universal City 8, Clifton 1, Hidalgo 1, Olney 1, University Park 13, Cloverleaf 11, Highland Park 4, Orange 8, Uvalde 6, Clute 5, Highland Village 6, Ozona 1, Vernon 5, Clyde 1, Hillsboro 3, Paducah Victoria 32,528 1, Coleman 1, Houston 1,033,619 80, Paint Rock Vidor 5, College Station 33, Humble 8, Palacios 1, Waco 52,098 3, Colleyville 8, Huntsville 12, Palestine 8, Waller Columbus 1, Hurst 24,230 1, Pampa 7, Watauga 14, Commerce 3, Iowa Park 3, Paris 10, Waxahachie 11, Conroe 23,091 1, Irving 112,342 6, Pasadena 70,889 4, Weatherford 9, Converse 5, Jacinto City 4, Pearland 12, Webster 3, Cooper 1, Jacksonville 5, Pearsall 2, Wells Branch 7, Coppell 12, Jasper 3, Pecan Grove 8, Weslaco 11,421 2, Copperas Cove 10, Johnson City Pecos 3, West Odessa 7, Corpus Christi 130,567 7, Jonestown 1, Perryton 3, West University Pl 8, Corsicana 12, Junction 1, Pflugerville 4, Wharton 3, Cotulla 1, Katy 5, Pharr 15,665 2, White Settlement 9, Crane 1, Keller 9, Plainview 10, Wichita Falls 45,438 1, Crockett 3, Kennedale 2, Plano 149,667 6, Wink Crowley 4, Kermit 2, Pleasanton 4, Woodway 5, Cuero 2, Kerrville 7, Port Arthur 23,083 3, Wylie 9, Dalhart 4, Kilgore 6, Port Isabel 2, Yoakum 2, Dallas 649,853 53, Killeen 28,014 2, Port Lavaca 3, Daingerfield 1, Kingsville 10, Port Neches 6, De Soto 20, Kingwood 23, Portland 7, Estimates reflect actual (not seasonally adjusted) data. Estimates are preliminary and subject to revision. To obtain the civilian labor force, add total employment to total unemployment. Estimates of the TWC are in cooperation with the Bureau of Labor Statistics, U.S. Department of Labor. 5

6 L A B O R M A R K E T R E V I E W J ANUARY 2004 Why Are Employment Estimates Revised? by Mark Dermit Each year, the Labor Market and Career Information Department (LMCI) of the Texas Workforce Commission (TWC) releases revised employment estimates for the state and each of its 27 Metropolitan Statistical Areas (MSAs) for the preceding two years. Not surprisingly, following the release of these new employment figures, the question arises, Why did you change the data? Sometimes this is followed by questions concerning the accuracy of sample survey-based estimates in general. While these questions are not always easy to answer, an understanding of the process and need for revising employment figures will enable users to more accurately interpret and use the data. In this article, we will cover several aspects of the revision process, also known as benchmarking, that should lend clarity to why the data that we produce undergoes regular revisions. Understanding the process The process that the LMCI department uses to develop and publish current employment estimates for Texas is not a self-derived methodology. The Bureau of Labor Statistics (BLS), a division of the U.S. Department of Labor, administers several programs that produce employment, unemployment, and wage statistics. These programs have been tested and validated to ensure that they conform to established statistical processes. Since developing estimates for all states would be very time consuming, the Bureau contracts with each state to gather and validate data that it uses for national statistics, as well as to develop state-level data using BLS s methodological guidelines. In effect, the BLS pays each state to prepare employment data using a standardized methodology, thereby ensuring that all states data is prepared using comparable methods. Understanding the Estimate To begin, the most important concept to understand is that the employment data released each month by the agency is strictly an estimate derived from a sample of employers from across the state. There are approximately 500,000 employers in the state of Texas, of which about 25,000 supply the LMCI Department with information each month from which non-farm wage and salary employment estimates are generated. Employment estimates are produced for the state as well as the 27 MSAs in the following categories: Natural Gas and Mining; Construction; Manufacturing; Wholesale Trade; Retail Trade; Transportation, Warehousing, and Utilities; Information; Financial Activities; Professional and Business Services; Educational and Health Services, Leisure and Hospitality; Other Services; and Government (which includes federal, state, and local government). This sample-based methodology is the most cost efficient way to measure the entire state or MSA because it would be too costly and time consuming to complete an economic census for each area every month. It simply isn t possible or practical. However, because we only look at a sample, or sub-set of employers in Texas, the process lends itself to sample error, a statistical term used to describe that portion of the estimate that is not realized or covered by the sample. We hope that the sample is representative enough to capture most of the change that occurs within an area or industry, but it won t capture all of it. We try to lessen the magnitude of sample error by researching each area prior to producing employment estimates to verify business openings, closures, or any other significant economic events to ensure we include as much information as possible. While this process provides data users with up-to-date, monthly estimates of employment by area and by industry, a procedure for periodically adjusting these estimates is necessary to bring the estimates back into alignment with actual employment levels. This can only be achieved by comparing the estimates to another data source a process known as benchmarking. Understanding the Benchmark Not only does the BLS prescribe a methodology for developing estimates, it also provides the methodology for revising them. The benchmark is an annual process during which BLS reviews each states employment estimates and compares them to a universal employment count known as the Quarterly Census of Employment and Wages (QCEW formerly known as ES-202, or Covered Employment and Wages). This data comprises the most complete count of employment since it is derived from the quarterly tax records submitted by employers covered by the Texas Unemployment Compensation Act (or TUCA). A portion of the quarterly report requires the tabulation of employment for each month of the quarter being filed. Since TUCA covers approximately 98% of employers who do business within the state of Texas, this data provides the most comprehensive count of jobs available. However, even these records are subject to error and must be reviewed and adjusted as warranted. For example, an employer may indicate that they had 100 employees for two months of a quarter but for the third month a 10 was entered instead of 100. Was this a layoff or was it supposed to be 100 and the zero was left off? Or an employer may have indicated 25 employees one month and then 314 the next. Was this a seasonal increase, a new store opening, or should the employment level had been 31 and not 314? After all records have been reviewed and edited, each state uses these records to compute the total employment, by industry, for each area. However, even the QCEW records have one significant drawback. Because they re derived from employer tax records submitted by employers covered under TUCA, it takes several months to process and validate the data (and to complete the review mentioned above.) Therefore, it is not possible to use the QCEW information to develop and publish current estimates. So what does this mean? It means that while we re producing estimates for September, we know what the true employment level was only for March. It will be February of the following year before we will know what the true employment level was for September. Then, and only then, will we able to compare our estimates against the total QCEW employment for September to see how close the estimate was to the true level of employment. In effect, there is a six-to-nine month lag between when a current estimate is made and when the QCEW data for that month is available for comparison. But the states themselves do not determine if an estimate warrants a revision. Each year, the BLS reviews and validates all estimates in consultation with each state and determines through that review what data will be changed. The states must be able to explain large Continued on page 7 6

7 J ANUARY 2004 L A B O R M A R K E T R E V I E W Continued from page 6 adjustments or revisions that may be necessary and provide corrective action if there is a significant revision to the data. The states will then incorporate these changes and the benchmarked data will then become the official estimates for the state and areas. The BLS considers revisions that are + or - 2% to be within an acceptable range, however, the goal is always to have as little revision as possible. This year, Texas expects it s overall revision to be 0.6%, well within the acceptable range, but not the 0% revision for which we constantly strive. The chart shows the revisions for Texas over the past several years, the average (mean) revision for all states, as well as a comparison with California, Florida, and New York. Texas Revisions (% Change) Texas Mean (all States) Range (all States) -1.2: : : : :2.1 California Florida New York BLS uses March as the benchmark month. Adjustments are made to, and revised estimates emanate from, March. Because March s employment levels may be adjusted, that will affect how April s employment estimates will be re-computed. If April is changed, then May will be affected and so forth. So once March s new employment levels are established through the benchmark, then the estimates for April through December can be recomputed based upon this new level. So, the revision process looks like this: 1. April 2002 March 2003: Estimates for these months are benchmarked against available QCEW data. 2. April 2003 December 2003: Employment estimates for these months are re-calculated based on changes to the March 2003 levels. 3. Next year, April December 2003 estimates will potentially be changed again as QCEW data becomes available for comparison. Note: Revised employment estimates are released beginning in March of each year. Other Data Affected Up until now, we have discussed revisions to the monthly non-farm wage and salary employment estimates. But the revision process does not stop there. The non-farm employment estimates, such as those for the Dallas, Houston, Waco, or Corpus Christi metropolitan areas, are also used in the computation of the unemployment rate. When the non-farm employment estimates are revised through the benchmark process, those new estimates must then be incorporated into the program that produces estimates of the labor force (number of people living in the area who are either employed or unemployed). This program, known as the Local Area Unemployment Statistics (LAUS) program, incorporates these changes as well as updated claims for unemployment benefits and other statistical components to generate new estimates of the civilian labor force. However, the size of the revision may or may not have an impact on an area s unemployment rate since other factors are also used in the development of these estimates. In Review The Texas LMCI Department regularly receives praise from the Bureau of Labor Statistics for the accuracy of its employment estimates. It is important for users of employment estimates to remember that because these are estimates and do not represent a complete census of employment activity, a regular revision process is both necessary and beneficial. Because each state produces and revises employment estimates using the same methodology in accordance with strict BLS guidelines, employment data is comparable across all states. Through sample surveys and other data our economists constantly strive to produce the best estimates to describe the current state of the labor market in Texas. Central to this effort is the revision or benchmarking process. Using this process ensures that our customers are provided with the most accurate data available. This is a very abbreviated description of the benchmark and revision process. A more detailed paper will be available soon on our website at. Additional information can also be found at the Bureau of Labor Statistics website at 790over.htm#intro. HAPPENINGS AROUND THE STATE Texas Counties Rank High in Employment and Wage Growth WASHINGTON, D.C. (Bureau of Labor Statistics) Williamson County in Texas ranked fourth nationally in average weekly wage growth from June 2002 to June 2003, growing by 6.6 percent. The average growth of 315 of the nation s largest counties was 2.2 percent. Williamson County also ranked fourth in actual average weekly wage growth of $46 over the year, compared to the national average county growth of $15. Hidalgo County finished ninth based on percent change among the nation s largest counties with a June-to-June growth rate of 3.6 percent. The average county growth rate dropped 0.5 percent during the same period. Harris County ranked fourth and Dallas County ranked sixth in large county employment growth in the nation. Exxon Mobil Plans $600M Natural Gas Facility CORPUS CHRISTI, TX (Dallas Business Journal) Exxon Mobil Corp. says affiliate Vista del Sol LNG Terminal LP, plans to build a Liquefied Natural Gas (LNG) terminal in the Corpus Christi metropolitan area. The facility, located two miles west of Ingleside in San Patricio County, will take nearly three years to build and could involve roughly 600 workers during peak construction periods, according to the Irving-based oil and gas company. The facility will process LNG for distribution through Texas and the United States and is expected to have a processing capacity of one billion cubic feet per day, according to Exxon-Mobil. The project has garnered support from the Port of Corpus Christi board of commissioners. Oil Rig Count Up HOUSTON, TX (Houston Business Journal) Houston-based Baker Hughes Inc. reports that the number of U.S. oil and gas rigs in use rose 18 percent in mid-january compared to the same time last year. For the week ending January 16 th, there were 1,127 rigs in use compared to 845 last year. 7

8 L A B O R M A R K E T R E V I E W J ANUARY 2004 Texas Nonagricultural Wage and Salary Employment (Not Seasonally Adjusted) 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% Annual Growth Rates Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Nov '03 to Dec '03 Dec '02 to Dec '03 Dec '03* Nov '03 Dec '02 Change % Change Change % Change TOTAL NONFARM 9,530,300 9,519,000 9,485,200 11, % 45, % TOTAL PRIVATE (total nonfarm less government) 7,835,500 7,817,600 7,824,800 17, % 10, % GOODS PRODUCING 1,629,100 1,631,700 1,643,400-2, % -14, % Natural Resources and Mining (NAICS 1133 [logging], NAICS 21) 142, , , % -2, % Mining (NAICS 21) 140, , , % -2, % Oil and Gas Extraction (NAICS 211) 64,300 64,000 63, % % Support Activities for Mining (NAICS 213) 67,400 67,300 68, % -1, % Construction (NAICS 23) 580, , , % 14, % Construction of Buildings (NAICS 236) 148, , , % 3, % Heavy and Civil Engineering Construction (NAICS 237) 99,000 99,400 96, % 3, % Specialty Trade Contractors (NAICS 238) 333, , , % 8, % Manufacturing (NAICS 31-33) 906, , ,700-2, % -26, % Durable Goods 559, , , % -16, % Wood Product Manufacturing (NAICS 321) 27,400 27,400 27, % % Nonmetallic Mineral Product Manufacturing (NAICS 327) 43,200 43,500 44, % -1, % Primary Metal Manufacturing (NAICS 331) 24,600 24,800 25, % % Fabricated Metal Product Manufacturing (NAICS 332) 106, , , % -2, % Machinery Manufacturing (NAICS 333) 79,700 79,600 81, % -2, % Computer and Electronic Product Manufacturing (NAICS 334) 113, , , % -8, % Electric Equipment, Appliance, and Component Mfg (NAICS 335) 19,700 19,400 18, % % Transportation Equipment Manufacturing (NAICS 336) 78,900 79,300 79, % % Furniture and Related Product Manufacturing (NAICS 337) 32,200 32,100 31, % % Miscellaneous Manufacturing (NAICS 339) 33,600 33,600 35, % -1, % Nondurable Goods 346, , ,300-1, % -10, % Food Manufacturing (NAICS 311) 96,500 96,000 94, % 1, % Beverage and Tobacco Product Manufacturing (NAICS 312) 10,800 11,000 11, % % Paper Manufacturing (NAICS 322) 24,000 23,700 25, % -1, % Printing and Related Support Manufacturing (NAICS 323) 39,700 39,600 40, % % Petroleum and Coal Products Manufacturing (NAICS 324) 24,100 23,900 24, % % Chemical Manufacturing (NAICS 325) 77,500 77,700 78, % % Plastics and Rubber Manufacturing (NAICS 326) 47,300 47,500 47, % 0 0.0% 20,000 Over-the-Month Change 15,000 10,000 5, ,000-10,000 Natural Resources and Mining Construction Manufacturing Wholesale Trade Retail Trade Transportation and Warehousing Information Financial Activities Professional and Business Services Educational and Health Services Leisure and Hospitality Other Services Government *Estimates for the current month are preliminary. All estimates are subject to revision. The number of nonagricultural jobs in Texas is without reference to place of residence of workers. Estimates of the TWC are in cooperation with the Bureau of Labor Statistics, U.S. Department of Labor. 8

9 J ANUARY 2004 L A B O R M A R K E T R E V I E W Texas Nonagricultural Wage and Salary Employment cont. (Not Seasonally Adjusted) Nov '03 to Dec '03 Dec '02 to Dec '03 Dec '03* Nov '03 Dec '02 Change % Change Change % Change SERVICE PROVIDING 7,901,200 7,887,300 7,841,800 13, % 59, % Trade, Transportation, and Utilities (NAICS 42,44,45,48,49,22) 1,990,200 1,970,500 2,008,600 19, % -18, % Wholesale Trade (NAICS 42) 460, , , % -1, % Merchant Wholesalers, Durable Goods (NAICS 423) 262, , , % -4, % Merchant Wholesalers, Nondurable Goods (NAICS 424) 153, , , % 1, % Retail Trade (NAICS 44-45) 1,151,600 1,134,000 1,158,300 17, % -6, % Motor Vehicle and Parts Dealers (NAICS 441) 153, , , % % Furniture and Home Furnishings Stores (NAICS 442) 43,600 42,500 43,500 1, % % Electronics and Appliance Stores (NAICS 443) 46,000 45,400 45, % % Building Material and Garden Equipment and Supplies (NAICS 444) 85,800 85,000 82, % 3, % Food and Beverage Stores (NAICS 445) 201, , ,900 1, % -1, % Gasoline Stations (NAICS 447) 70,800 70,700 69, % 1, % Clothing and Clothing Accessories Stores (NAICS 448) 108, , ,100 6, % % Sporting Goods, Hobby, Book, and Music Stores (NAICS 451) 44,000 41,600 44,800 2, % % General Merchandise Stores (NAICS 452) 248, , ,200 4, % -11, % Miscellaneous Store Retailers (NAICS 453) 66,200 64,900 66,600 1, % % Transportation, Warehousing, and Utilities (NAICS 48-49,22) 377, , ,000 1, % -10, % Transportation and Warehousing (NAICS 48,49) 326, , ,100 1, % -9, % Air Transportation (NAICS 481) 65,300 65,300 71, % -5, % Rail Transportation (NAICS 482) 14,600 14,600 14, % % Truck Transportation (NAICS 484) 102, , , % % Pipeline Transportation (NAICS 486) 14,500 14,600 15, % % Support Activities for Transportation (NAICS 488) 56,200 55,200 56,700 1, % % Couriers and Messengers (NAICS 492) 36,600 36,200 36, % % Warehousing and Storage (NAICS 493) 21,200 21,200 21, % % Utilities (NAICS 22) 51,200 51,400 51, % % Information (NAICS 51) 230, , , % -11, % Publishing Industries (Except Internet) (NAICS 511) 50,100 50,200 51, % -1, % Telecommunications (NAICS 517) 95,100 96, ,200-1, % -10, % Internet Service Providers, Web Search Portals (NAICS 518) 37,900 38,000 38, % % Financial Activities (NAICS 52,53) 589, , ,900 2, % 6, % Finance and Insurance (NAICS 52) 417, , ,800 1, % 6, % Credit Intermediation and Related Activities (NAICS 522) 205, , , % 4, % Insurance Carriers and Related Activities (NAICS 524) 161, , , % % Real Estate and Rental and Leasing (NAICS 53) 171, , , % % Real Estate (NAICS 531) 109, , , % % Rental and Leasing Services (NAICS 532) 57,800 57,500 58, % % Professional and Business Services (NAICS 54,55,56) 1,050,200 1,052,500 1,050,600-2, % % Professional, Scientific and Technical Services (NAICS 54) 442, , ,400 1, % -7, % Management of Companies and Enterprises (NAICS 55) 35,800 35,700 36, % -1, % Admin and Support and Waste Mgmt and Remediation (NAICS 56) 572, , ,400-3, % 7, % Administrative and Support Services (NAICS 561) 547, , ,000-3, % 6, % Educational and Health Services (NAICS 61,62) 1,146,100 1,144,900 1,109,500 1, % 36, % Educational Services (NAICS 61) 141, , , % 3, % Health Care and Social Assistance (NAICS 62) 1,004,500 1,002, ,100 2, % 33, % Ambulatory Health Care Services (NAICS 621) 428, , ,900 2, % 17, % Hospitals (NAICS 622) 259, , , % 7, % Nursing and Residential Care Facilities (NAICS 623) 148, , , % 2, % Social Assistance (NAICS 624) 167, , , % 5, % Leisure and Hospitality (NAICS 71,72) 842, , , % 10, % Arts, Entertainment, and Recreation (NAICS 71) 91,800 93,300 91,400-1, % % Accommodation and Food Services (NAICS 72) 750, , ,700 1, % 9, % Accommodation (NAICS 721) 87,700 87,900 87, % % Food Services and Drinking Places (NAICS 722) 662, , ,400 1, % 9, % Other Services (NAICS 81) 358, , , % 2, % Repair and Maintenance (NAICS 811) 104, , , % % Personal and Laundry Services (NAICS 812) 88,500 88,500 92, % -3, % Religious, Grantmaking, Civic, Prof Organizations (NAICS 813) 165, , , % 5, % Government (defined by ownerships 1,2,3) 1,694,800 1,701,400 1,660,400-6, % 34, % Federal Government 175, , , % -2, % State Government 353, , ,600-1, % 5, % Local Government 1,166,200 1,171,200 1,134,900-5, % 31, % *Estimates for the current month are preliminary. All estimates are subject to revision. The number of nonagricultural jobs in Texas is without reference to place of residence of workers. Estimates of the TWC are in cooperation with the Bureau of Labor Statistics, U.S. Department of Labor. 9