Answer: The Bureau of Labor Statistics measures labor market activity, working conditions, price changes, and productivity in the U.S. economy to support public and private decision making.
BLS achieves its mission through the dedicated work of over 2,000 federal employees working at headquarters in the national capital region, in six regional offices, and in localities across the country. This staff is comprised of economists, statisticians, data scientists, information technology specialists, researchers, administrative specialists, and many other professionals. To assist us in achieving our mission, we maintain partnerships with state and territorial governments, coordinate with other federal statistical agencies, and contract with private vendors for data collection, information technology, and related services
As an agency of the U.S. Department of Labor (DOL), BLS provides statistical guidance to the department and its agencies and works in partnership with those agencies to support their data needs. We support the DOL’s mission "To foster, promote, and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights."
Though part of the Executive Branch, we conduct our work with independence to ensure that our data and analyses are objective and free of partisan influence. Such independence is the hallmark of the decentralized U.S. statistical system, which includes many separate agencies typically located within cabinet-level departments.
Answer: An index is a tool that simplifies the measurement of movements in a numerical series. For example, most of the specific Consumer Price Indexes (CPIs) have a 1982-84 reference base. That is, BLS sets the average index level (representing the average price level)—for the 36-month period covering the years 1982, 1983, and 1984—equal to 100. The Bureau measures changes in relation to that figure. An index of 110, for example, means there has been a 10-percent increase in price since the reference period; similarly an index of 90 means a 10-percent decrease. Movements of the index from one date to another can be expressed as changes in index points (simply, the difference between index levels), but it is more useful to express the movements as percent changes. This is because index points are affected by the level of the index in relation to its base period, while percent changes are not.
Answer: The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
Answer: The CPI affects nearly all Americans because of the many ways it is used. Three major uses are:
As an economic indicator: The CPI is the most widely used measure of inflation and is sometimes viewed as an indicator of the effectiveness of government economic policy. It provides information about price changes in the nation's economy to government, business, labor, and other private citizens, and is used by them as a guide to making economic decisions. In addition, the President, Congress, and the Federal Reserve Board use trends in the CPI to aid in formulating fiscal and monetary policies.
As a deflator of other economic series: The CPI and its components are used to adjust other economic series for price changes and to translate these series into inflation-free dollars. Examples of series adjusted by the CPI include retail sales, hourly and weekly earnings, and components of the national income and product accounts. An interesting example of this is the use of the CPI as a deflator of the value of the consumer's dollar to find its purchasing power. The purchasing power of the consumer's dollar measures the change in the value to the consumer of goods and services that a dollar will buy at different dates. In other words, as prices increase, the purchasing power of the consumer's dollar declines.
As a means of adjusting dollar values: The CPI is often used to adjust consumers' income payments, (for example, Social Security); to adjust income eligibility levels for government assistance; and to automatically provide cost-of-living wage adjustments to millions of American workers. The CPI affects the income of about 80 million persons as a result of statutory action: 48.4 million Social Security beneficiaries, about 19.8 million food stamp recipients, and about 4.2 million military and federal Civil Service retirees and survivors. Changes in the CPI also affect the cost of lunches for 26.5 million children who eat lunch at school, while collective bargaining agreements that tie wages to the CPI cover over 2 million workers. Another example of how dollar values may be adjusted is the use of the CPI to adjust the federal income tax structure. These adjustments prevent inflation-induced increases in tax rates, an effect called "bracket creep".
Answer: The CPI frequently is called a cost-of-living index, but it differs in important ways from a complete cost-of-living measure. The Bureau of Labor Statistics has for some time used a cost-of-living framework in making practical decisions about questions that arise in constructing the CPI. A cost-of-living index is a conceptual measurement goal, however, not a straightforward alternative to the CPI. A cost-of-living index would measure changes over time in the amount that consumers need to spend to reach a certain "utility level" or "standard of living." Both the CPI and a cost-of-living index would reflect changes in the prices of goods and services, such as food and clothing, that are directly purchased in the marketplace; but a complete cost-of-living index would go beyond this to also take into account changes in other governmental or environmental factors that affect consumers' well-being. It is very difficult to determine the proper treatment of public goods, such as safety and education, and other broad concerns, such as health, water quality, and crime that would comprise a complete cost-of-living framework.
Traditionally, the CPI was considered an upper bound to a cost-of-living index in that the CPI did not reflect the changes in buying or consumption patterns that consumers would make to adjust to relative price changes. The ability to substitute means that the increase in the cost to consumers of maintaining their level of well-being tends to be somewhat less than the increase in the cost of the mix of goods and services they previously purchased.
Since January 1999, a geometric mean formula has been used to calculate most basic indexes within the CPI; in other words, the prices within most item categories (e.g., apples) are averaged using a geometric mean formula. This improvement moves the CPI somewhat closer to a cost-of-living measure, as the geometric mean formula allows for a modest amount of consumer substitution as relative prices within item categories change.
Since the geometric mean formula is used only to average prices within item categories, it does not account for consumer substitution taking place between item categories. For example, if the price of pork increases compared to those of other meats, shoppers might shift their purchases away from pork to beef, poultry, or fish. The CPI formula does not reflect this type of consumer response to changing relative prices. In 2002, as a complement to the CPI-U and CPI-W, BLS began producing a new index intended to more closely approximate a cost-of-living index by reflecting substitution among item categories. It is unlikely, however, that the difficult problems of defining living standards and measuring changes in the cost of their attainment over time will ever be resolved completely.
Answer: The CPI represents all goods and services purchased for consumption by the reference population (Consumer Price Index for All Urban Consumers or Consumer Price Index for Urban Wage Earners and Clerical Workers). The Bureau of Labor Statistics has classified all expenditure items into more than 200 categories, arranged into eight major groups. Major groups and examples of categories in each are as follows:
Also included within these major groups are various government-charged user fees, such as water and sewerage charges, auto registration fees, and vehicle tolls. The CPI also includes taxes, such as sales and excise taxes, that are directly associated with the prices of specific goods and services. However, the CPI excludes taxes, such as income and Social Security taxes, not directly associated with the purchase of consumer goods and services.
The CPI does not include investment items, such as stocks, bonds, real estate, and life insurance. (These items relate to savings and not to day-to-day consumption expenses.)
For each of the more than 200 item categories, BLS has chosen samples of several hundred specific items within selected business establishments frequented by consumers, using scientific statistical procedures, to represent the thousands of varieties available in the marketplace. For example, in a given supermarket, BLS may choose a plastic bag of golden delicious apples, U.S. extra fancy grade, weighing 4.4 pounds to represent the "Apples" category.
Answer: Each month, BLS releases thousands of detailed CPI numbers to the media. However, the media usually focuses on the broadest, most comprehensive CPI. This is "The Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-84=100." These data are reported on either a seasonally adjusted, or not seasonally adjusted, basis. Often, the media will report some, or all, of the following:
Answer: No, an individual area index measures how much prices have changed over a specific time period in that particular area. It does not show whether prices or living costs are higher or lower in that area relative to another. In general, the composition of the market basket and relative prices of goods and services in the market basket during the expenditure base period vary substantially across areas.
Answer: Inflation has been defined as a process of continuously rising prices, or equivalently, of a continuously falling value of money.
Various indexes have been devised to measure different aspects of inflation. The CPI measures inflation as experienced by consumers in their day-to-day living expenses; the Producer Price Index (PPI) measures inflation at earlier stages of the production and marketing process; the Employment Cost Index (ECI) measures it in the labor market; the Bureau of Labor Statistics' International Price Program measures it for imports and exports; and the Gross Domestic Product Deflator (GDP-Deflator) measures combine the experience with inflation of governments (federal, state and local), businesses, and consumers. Finally, there are specialized measures, such as measures of interest rates and measures of consumers' and business executives' inflation expectations.
The "best" measure of inflation for a given application depends on the intended use of the data. The CPI is generally the best measure for adjusting payments to consumers when the intent is to allow consumers to purchase, at today's prices, a market basket of goods and services equivalent to one that they could purchase in an earlier period. It is also the best measure to use to translate retail sales and hourly or weekly earnings into real or inflation-free dollars.
Answer: The CPI measures the average change in the prices paid for a market basket of goods and services. These items are purchased for consumption by the two groups covered by the index: All Urban Consumers (CPI-U) and Urban Wage Earners and Clerical Workers, (CPI-W).
Escalation agreements often use the CPI—the most widely used measure of price change—to adjust payments for changes in prices. The most frequently used escalation applications are in private sector collective bargaining agreements, rental contracts, insurance policies with automatic inflation protection, and alimony and child support payments.
The following are general guidelines to consider when developing an escalation agreement using the CPI:
DEFINE clearly the base payment (rent, wage rate, alimony, child support, or other value) that is subject to escalation.
IDENTIFY precisely which CPI index series will be used to escalate the base payment. This should include: The population coverage (CPI-U or CPI-W), area coverage (U.S. City Average, West Region, Chicago, etc.), series title (all items, rent of primary residence, etc.), and index base period (1982-84=100).
SPECIFY a reference period from which changes in the CPI will be measured. This is usually a single month (the CPI does not correspond to a specific day or week of the month) or an annual average. There is about a 2-week lag from the reference month to the date on which the index is released (e.g., the CPI for May is released in mid-June). The CPI's for most metropolitan areas are not published as frequently as are the data for the U.S. City Average and the 4 regions. Indexes for the U.S. City Average, the 4 regions, 3 city-size classes, 10 region-by-size classes, and 3 major metropolitan areas (Chicago, Los Angeles, and New York) are published monthly. Indexes for the remaining 23 published metropolitan areas are available only on a bimonthly or semiannual basis. Contact the BLS address at the end of this fact sheet for information on the frequency of publication for the 26 metropolitan areas.
STATE the frequency of adjustment. Adjustments are usually made at fixed time intervals, such as quarterly, semiannually, or, most often, annually.
DETERMINE the formula for the adjustment calculation. Usually the change in payments is directly proportional to the percent change in the CPI index between two specified time periods. Consider whether to make an allowance for a "cap" that places an upper limit to the increase in wages, rents, etc., or a "floor" that promises a minimum increase regardless of the percent change (up or down) in the CPI.
PROVIDE a built-in method for handling situations that may arise because of major CPI revisions or changes in the CPI index base period. The Bureau always provides timely notification of upcoming revisions or changes in the index base.
The CPI and escalation: Some points to consider
The CPI is calculated for two population groups: All Urban Consumers (CPI-U) and Urban Wage Earners and Clerical Workers (CPI-W). The CPI-U represents about 87 percent of the total U.S. population and is based on the expenditures of all families living in urban areas. The CPI-W is a subset of the CPI-U and is based on the expenditures of families living in urban areas who meet additional requirements related to employment: more than one-half of the family's income has to be earned from clerical or hourly-wage occupations. The CPI-W represents about 32 percent of the total U.S. population.
There can be small differences in movement of the two indexes over short periods of time because differences in the spending habits of the two population groups result in slightly different weighting. The long-term movements in the indexes are similar. CPI-U and CPI-W indexes are calculated using measurement of price changes for goods and services with the same specifications and from the same retail outlets. The CPI-W is used for escalation primarily in blue-collar cost-of-living adjustments (COLA's). Because the CPI-U population coverage is more comprehensive, it is used in most other escalation agreements.
The 26 metropolitan areas for which BLS publishes separate index series are by-products of the U.S. City Average index. Metropolitan area indexes have a relatively small sample size and, therefore, are subject to substantially larger sampling errors. Metropolitan area and other sub-components of the national indexes (regions, size-classes) often exhibit greater volatility than the national index. BLS strongly recommends that users adopt the U.S. City Average CPI for use in escalator clauses.
The U.S. City Average CPI's are published on a seasonally adjusted basis as well as on an unadjusted basis. The purpose of seasonal adjustment is to remove the estimated effect of price changes that normally occur at the same time and in about the same magnitude every year (e.g., price movements due to the change in weather patterns, model change-overs, holidays, end-of-season sales, etc.). The primary use of seasonally adjusted data is for current economic analysis. In addition, the factors that are used to seasonally adjust the data are updated annually. Also, seasonally adjusted data that have been published earlier are subject to revision for up to 5 years after their original release. For these reasons, the use of seasonally adjusted data in escalation agreements is inappropriate.
Escalation agreements using the CPI usually involve changing the base payment by the percent change in the level of the CPI between the reference period and a subsequent time period. This is calculated by first determining the index point change between the two periods and then the percent change. The following example illustrates the computation of percent change:
CPI for current period
Less CPI for previous period
Equals index point change
Divided by previous period CPI
Result multiplied by 100
0.047 x 100
Equals percent change
The Bureau of Labor Statistics neither encourages nor discourages the use of price adjustment measures in contractual agreements. Also, while BLS can provide technical and statistical assistance to parties developing escalation agreements, we can neither develop specific wording for contracts nor mediate legal or interpretive disputes which might arise between the parties to the agreement.
For any additional information about the CPI, please call (202) 691-7000, or write to:
Bureau of Labor Statistics
Office of Prices and Living Conditions
2 Massachusetts Avenue, NE., Room 3615
Washington, DC 20212-0001
Answer: We do not have ECEC data by state. We published one table in this series in which the data are shown by region, such as Midwest, Northeast and so on. This Table is included in the quarterly Employer Costs for Employee Compensation news release.
Answer: No. The QCEW/ES-202 program does not reveal company information. The Bureau of Labor Statistics collects data under a pledge of confidentiality.
Answer: The benchmark adjustment, a standard part of the Current Employment Statistics (CES) survey estimation process, is a once-a-year re-anchoring of sample-based employment estimates to full population counts available principally through Unemployment Insurance (UI) tax records filed by employers with state labor market information agencies. More information about the CES benchmarking process is available in the CES Frequently Asked Questions at www.magnetmusik.com/web/empsit/cesfaq.htm#Benchmarking and in the CES Technical Notes at www.magnetmusik.com/web/empsit/cestn.htm#section6b.
Answer: The Current Employment Statistics (CES) program’s National estimates branch publishes estimates of hours and earnings for all employees and for production and nonsupervisory employees. The estimates of average weekly hours and average hourly earnings are published for a broad range of industries; for manufacturing industries, average weekly overtime hours are also available. More information about hours and earnings estimates available from the CES program is available at www.magnetmusik.com/web/empsit/cesprog.htm#Data_Available.
Information about how hours and earnings estimates are derived is available in the CES Technical Notes at www.magnetmusik.com/web/empsit/cestn.htm#section4b.
Answer: In general, differences between universe counts and sample-based estimates result from both sampling and nonsampling error. Although sampling error is present in the payroll survey, as it is in all surveys, the Current Employment Statistics (CES) sample is so large (covering approximately one-third of universe employment) that sampling error is not usually an important factor in explaining the differences.
Nonsampling error arises in the survey estimates, and in the universe counts, from both the Unemployment Insurance (UI) data and from the alternative sources CES uses to establish the noncovered population benchmarks. Nonsampling error is a more significant cause of benchmark revisions. Sources of nonsampling error include coverage, response, and processing errors in both data series. Additionally, the survey is potentially subject to sample design and estimator biases.
More information about the CES benchmarking process is available in the CES Frequently Asked Questions at www.magnetmusik.com/web/empsit/cesfaq.htm#Benchmarking and in the CES Technical Notes at www.magnetmusik.com/web/empsit/cestn.htm#section6b.
Answer:: Any employee who receives pay for the CES reference period—the pay period that includes the 12th of the month—is represented in CES employment estimates. Therefore, to be excluded from CES estimates, workers on strike or out of work due to lockouts or strike-related layoffs must not have received any pay for the entirety of the establishment’s pay period that includes the 12th of the month. It is important to understand that the length of pay periods vary from one establishment to another, and that CES collects data from an establishment based on its specific pay period. So, for an establishment with a one-week pay period, workers must be out for the entirety of that week to be excluded from estimates; for an establishment with a two-week pay period, they must be out for the entire two weeks.
It is also worth noting that workers who received payments such as sick or vacation pay during the reference period are included in CES estimates, even if they did not actually work. However, workers receiving payments from sources other than establishment payrolls, such as union strike funds, are not included in estimates.
More detailed information on CES and strikes, including potential effects on hours and earnings data, is available in the Monthly Labor Review article, Understanding strikes in CES estimates.
Answer: No. Data are collected under a pledge of confidentiality. We cannot reveal either the companies that participate or the data they provide.
Answer: The Producer Price Index is a family of indexes that measures the average change over time in the selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. This contrasts with other measures, such as the Consumer Price Index (CPI), that measure price change from the purchaser's perspective. Sellers' and purchasers' prices may differ due to government subsidies, sales and excise taxes, and distribution costs.
Over 10,000 PPIs for individual products and groups of products are released each month. PPIs are available for the products of virtually every industry in the mining and manufacturing sectors of the U.S. economy. New PPIs are gradually being introduced for the products of industries in the transportation, utilities, trade, finance, and services sectors of the economy.
Answer: PPI data are widely used by the business community as well as government.
Three major uses are:
As an economic indicator: The PPIs capture price movements prior to the retail level. Therefore, they may foreshadow subsequent price changes for businesses and consumers. The President, Congress, and the Federal Reserve employ these data in formulating fiscal and monetary policies.
As a deflator of other economic series: PPIs are used to adjust other economic time series for price changes and to translate those series into inflation-free dollars. For example, constant-dollar gross domestic product data are estimated using deflators based on PPI data.
As the basis for contract escalation.: PPI data are commonly used in escalating purchase and sales contracts. These contracts typically specify dollar amounts to be paid at some point in the future. It is often desirable to include an escalation clause that accounts for increases in input prices. For example, a long-term contract for bread may be escalated for changes in wheat prices by applying the percent change in the PPI for wheat to the contracted price for bread. For more information on contract escalation and PPIs, see Escalation Guide for Contracting Parties.
Answer: While both the PPI and CPI measure price change over time for a fixed set of goods and services, they differ in two critical areas: (1) the composition of the set of goods and services, and (2) the types of prices collected for the included goods and services.
The target set of goods and services included in the PPIs is the entire marketed output of U.S. producers. The set includes both goods and services purchased by other producers as inputs to their operations or as capital investment, as well as goods and services purchased by consumers either directly from the service producer or indirectly from a retailer. Because the PPI target is the output of U.S. producers, imports are excluded.
The target set of items included in the CPI is the set of goods and services purchased for consumption purposes by urban U.S. households. This set includes imports.
The price collected for an item included in the PPIs is the revenue received by its producer. Sales and excise taxes are not included in the price because they do not represent revenue to the producer. The price collected for an item included in the CPI is the out-of-pocket expenditure by a consumer for the item. Sales and excise taxes are included in the price because they are necessary expenditures by the consumer for the item.
The differences between the PPI and CPI are consistent with the different uses of the two measures. A primary use of the PPI is to deflate revenue streams in order to measure real growth in output. A primary use of the CPI is to adjust income and expenditure streams for changes in the cost of living.
The composition of items in the Finished Goods Price Index differs from that of the All Items Consumer Price Index in two major respects. First, the Finished Goods Price Index includes price changes for producers' durable equipment, which are not purchased by typical consumers and, therefore, are not included in the CPI. Second, the All Items CPI includes services which are not reflected in the Finished Goods Price Index. An additional difference is that the Finished Goods Price Index is only available at the U.S. level, while the All Items CPI is available at the regional, metropolitan area, and U.S. levels.
Answer: The primary source of hours and employment data is the Bureau of Labor Statistics Current Employment Statistics (CES) program, which provides data on total employment and average weekly hours of production and nonsupervisory workers in nonagricultural establishments.
For the quarterly productivity measures, information from the National Compensation Survey (NCS) is used to convert the CES hours to hours at work by excluding all forms of paid leave. Average weekly hours for nonproduction and supervisory workers are estimated by using data from the Current Population Survey (CPS), the NCS and the CES. Because CES data include only nonagricultural wage and salary workers, data from the CPS are used for farm employment as well as for nonfarm proprietors and unpaid family workers. Government enterprise hours are developed from the National Income and Product Account estimates of employment combined with CPS data on average weekly hours.
For the industry productivity measures, average weekly hours for nonproduction and supervisory workers are estimated using data from the CPS and the CES. The labor input measures for many of the nonmanufacturing industries also include estimates of the hours of proprietors and unpaid family workers from the CPS. Data on the relationship between hours worked and hours paid are not available at the detailed industry level to convert CES paid hours to hours at work.
Answer: The primary use for the International Price Program's import and export price indexes is to deflate various foreign trade and growth statistics produced by the U.S. government. Other uses include measuring inflation, as an input to fiscal and monetary policy, forecasting future prices, performing elasticity studies, deriving terms of trade indexes, analyzing exchange rates, negotiating trade contracts, and analyzing import prices by locality of origin.
Answer: For more than 50 years, the Occupational Outlook Handbook has been a nationally recognized source of career information. It describes what workers do on the job, working conditions, the training and education needed, earnings, and expected job prospects for a variety of occupations.
Answer: Wages for the OES survey are defined as straight-time, gross pay, exclusive of premium pay.
Included in the collection of wage data are:
Excluded from the wage data are:
Answer: The Bureau of Labor Statistics' Employee Benefits Survey is an annual survey of the incidence and provisions of selected benefits provided by employers to their employees. The survey collects data from a sample of approximately 6,000 private sector and state and local government establishments. The data are presented as a percentage of employees who participate in a certain benefit, or as an average benefit provision (for example, the average number of paid holidays provided to employees per year).
The survey collects incidence and provisions of the following benefit areas: Paid holidays, paid vacations, paid personal leave, paid funeral leave, paid military leave, paid jury-duty leave, paid and unpaid family leave, paid sick leave, short-term disability insurance, long-term disability insurance, medical care, dental care, vision care, life insurance, defined benefit pension plans, defined contribution plans, flexible benefits plans, and reimbursement accounts.
Data are also collected on the incidence of the following additional benefits: Severance pay, supplemental unemployment benefits, travel accident insurance, nonproduction cash bonuses, child care, adoption assistance, long-term care insurance, subsidized commuting, flexible work place, wellness programs, fitness center benefits, job-related and non-job-related educational assistance, and employee assistance programs.
Answer: The official concepts and definitions of the labor force components used in the Current Population Survey (CPS) are described below. For a complete description, see Definitions of Labor Force Concepts (PDF 102K).
Answer: "Household" data, as from the Current Population Survey (CPS), pertain to individuals and relate to where they reside. "Establishment" data, such as those from the Current Employment Statistics (CES), a survey of businesses, pertain to jobs (persons on a payroll) and where those jobs are located. More information on these surveys and how they differ is available at www.magnetmusik.com/bls/empsitquickguide.htm.
The data developed through the Local Area Unemployment (LAUS) program are based on the household concept of the CPS and the data developed through the Current Employment Statistics (CES) State and Area program are based on the establishment concept of the CES survey. More information on the differences between the data developed by the LAUS program and the CES State and Area program is available at www.magnetmusik.com/lau/lauhvse.htm#hvse.
Answer: Seasonal adjustment is a statistical technique which eliminates the influences of weather, holidays, the opening and closing of schools, and other recurring seasonal events from economic time series. This permits easier observation and analysis of cyclical, trend, and other nonseasonal movements in the data. By eliminating seasonal fluctuations, the series becomes smoother and it is easier to compare data from month to month.
Last Modified Date: January 2, 2020