CHAPTER 10: COMPENSATION OF EMPLOYEES
(Updated: November 2019)
Definitions and Concepts
Recording in the NIPAs
Overview of Source Data and Estimating Methods
Annual estimates
Current quarterly estimates
Table 10.A—Summary of Methodology for Wages and Salaries
Table 10.B—Summary of Methodology for Employer Contributions for Pension and Insurance
Funds
Table 10.C—Summary of Methodology for Employer Contributions for Social Insurance
Appendix A: NIPA Measures of Employment and Hours
Compensation measures the total income—both wages and salaries and supplements to
wages and salaries—earned by employees in return for contributing to production during an
accounting period. It is the largest component of gross domestic income (GDI), of national
income, and of personal income in the U.S. national income and product accounts (NIPAs).
Compensation estimates are an integral part of the NIPAs, a set of accounts that provides a
logical and consistent framework for presenting statistics on U.S. economic activity (see
“Chapter 2: Fundamental Concepts”).
BEA’s measures of compensation provide comprehensive and consistent economic
measures of the income earned by all U.S. workers. In contrast to other available measures of
compensation, the NIPA measures include not just wages and salaries but also noncash
benefits—such as employer contributions to pension plans, to health insurance, and to social
insurance programs. Thus, the NIPA measures of compensation are particularly useful in
analyses of labor’s share in the functional distribution of income. Additionally, unit labor costs—
the ratio of compensation to real output—is an important indicator of potential inflation.
Moreover, analyses of the components and supporting detail underlying the compensation
measures are useful for considering the differences between the individual experiences of
households and the picture of the economy captured in broader aggregates such as GDP and
personal income. The estimates of wages and salaries—the largest component of
compensation—are critical for projecting federal budgets and Social Security trust fund
balances.
1
Additionally, BEA prepares associated measures of employment and hours. While the
Bureau of Labor Statistics (BLS) is the principal provider of information on the labor market in
the United States (including detailed data on employment, hours, and earnings), BEA’s
1
See J. Steven Landefeld, Brent R. Moulton, Joel D. Platt, and Shaunda M. Villones, “GDP and Beyond: Measuring
Economic Progress and Sustainability,” Survey of Current Business 90 (April 2010): 12-25.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-2
supplemental measures are consistent with the NIPA compensation measures and therefore
facilitate analyses of NIPA-based compensation and productivity by employee. These measures
are described in appendix A to this chapter; they include full-time equivalent employees and
hours worked.
Definitions and Concepts
Compensation measures the total remuneration, in cash or in kind, that accrues to
employees in return for their work during the accounting period, regardless of when they are
paid. As such, the NIPA treatment of compensation is consistent with the treatment
recommended by the System of National Accounts 2008 (SNA), in which compensation reflects
total remuneration and is measured on an accrual basis.
2
Compensation consists of the earnings
of employees, but it does not include the earnings of the self-employed, which the NIPAs treat as
proprietors’ income (and the SNA treats as mixed income).
Compensation is equal to the sum of wages and salaries and of supplements to wages
and salaries. Wages and salaries, which generally accounts for over 80 percent of compensation,
consists of cash remuneration of labor (including sick or vacation pay, severance pay,
commissions, tips, and bonuses), and in-kind remuneration of labor such as transit subsidies and
meals. Supplements to wages and salaries consists of employer payments that are made on behalf
of employees but are not included in the regular wage payments provided directly to
employees—specifically, employer contributions for employee pension and insurance funds and
employer contributions for government social insurance. Because these payments are made for
the benefit of employees and because the value of the contributions is typically determined, in
some fashion, by their labor, they are treated as compensation. Table 10.1 shows the kinds of
transactions that are included in, and excluded from, compensation of employees.
Table 10.1—Content of Compensation of Employees
Category of transaction
Comments
Wages and salaries in cash
Includes monetary wages and salaries payable by employers
to employees and to corporate officers at regular intervals,
including piecework payments; overtime or unusual-hour
payments; payments for periods away from work due to
temporary discontinuation of production, such as holidays or
absences for illness; allowances for unusual location or
conditions; early retirement (buyout) payments; severance
pay; jury, witness, and other compensatory fees; and regular
2
See Commission of the European Communities, International Monetary Fund, Organisation for Economic Co-
operation and Development, United Nations, and the World Bank, System of National Accounts 2008
: paragraph 7.5.
For a discussion of the accrual and cash methods of accounting, see “Accounting principles” in chapter 2 of this
handbook.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-3
supplementary allowances, such as housing allowances.
3
Includes incentive payments, commissions, tips, and bonuses
payable to employees and to corporate officers.
Includes employee gains from exercising nonqualified stock
options (NSOs).
4
Includes wages and salaries paid to employees of
unincorporated enterprises.
Excludes the income received by the owners or associated
household members of unincorporated enterprises, which is
treated as proprietors’ income.
Excludes the income received by tax-exempt cooperatives,
which is treated as proprietors’ income.
Excludes reimbursement by employers of expenditures made
by employees in order to carry out their work (such as
purchases of tools and equipment), which are treated as
intermediate ex
penditures by the employer.
Wages and salaries in kind
Includes employer-provided in-kind earnings, such as transit
subsidies, meals, and lodging.
Excludes goods or services that employers must provide in
order for employees to perform their work, which are treated
as intermediate expenditures by the employer.
Supplements to wages and salaries
Includes employer contributions for employee pension and
insurance funds: private pension plans, government
employee pension plans, private insurance funds such as
group health and life insurance, workers’ compensation,
supplemental unemployment insurance, and publicly
administered government employee insurance plans.
Includes employer contributions for government social
insurance: old age, survivors, and disability insurance (social
security); hospital insurance; unemployment insurance;
railroad retirement; pension benefit guaranty; veterans life
insurance; workers’ compensation; military medical
insurance; and temporary disability insurance.
Employers provide employees with pension benefits largely through two mechanisms:
• Defined contribution plans provide benefits during retirement based on the
amount of money that has accumulated in an employee’s account as a result of
employer and employee contributions to the plans and the income earned from
investment of the plans’ assets.
• Defined benefit plans provide benefits during retirement based on a formula that
typically depends on an employee’s length of service and average pay, among
3
The source data underlying the estimates of wages and salaries do not provide the separate estimates of severance
payments or of payments for time away due to illness or injury that are required for excluding them from
compensation (as the SNA recommends), so they are included in the NIPA measures of compensation.
4
NSOs are regarded as additional, taxable, income at the time they are exercised; in contrast, incentive stock options
do not require the reporting of additional income and are taxed as long-term capital gains when sold. The detailed
data required for treating NSOs as compensation of employees when the options are granted (as the SNA
recommends) are not currently available. Instead, NSOs are valued at the time that they are exercised, and the
difference between the market price at the time of the exercise and the price paid by the employee at the time of the
exercise is recorded as wages and salaries. For a discussion of the SNA recommendations and BEA’s research on
NSOs, see Carol E. Moylan, “Employee Stock Options and the National Economic Accounts
,” Survey 88 (February
2008): 7-13.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-4
other factors. To fund promised benefits to retirees, defined benefit plans
primarily rely on contributions from employers and employees and on the income
earned on the financial assets that the plans hold.
The contributions made by employers to both types of plans are included in supplements
to wages and salaries; the interest and dividend income earned on the plans’ financial
assets are included in personal interest income.
The NIPAs provide two measures of compensation in order to distinguish the
compensation earned by all of the employees of resident U.S. employers from the compensation
earned by resident U.S. employees from all employers. “Compensation of employees, paid” is
the NIPA measure of the compensation paid by U.S. resident employers to their resident and
nonresident employees. That is, it excludes compensation received from the rest of the world,
and it includes compensation paid to the rest of the world.
5
“Compensation of employees” is the
NIPA measure of the compensation paid by resident and nonresident employers to U.S. resident
employees. That is, it excludes compensation paid to the rest of the world, and it includes
compensation received from the rest of the world.
Recording in the NIPAs
As described in chapter 2, the NIPAs can be viewed as aggregations of accounts
belonging to individual transactors in the economy. In the seven summary accounts of the
NIPAs, “compensation of employees, paid” appears as a component of GDI in the Domestic
Income and Product Account (account 1) and “compensation of employees” appears in the
Personal Income and Outlay Account (account 3) as a component of personal income.
6
Additionally, as “compensation of employees” reflects the compensation liabilities of both
resident and nonresident employers, it appears as a component of national income.
7
5
Compensation paid to the rest of the world consists of compensation paid to foreign residents temporarily working
in the United States (including undocumented migratory workers) and to Canadian and Mexican workers who
commute to work in the United States. Compensation received from the rest of the world consists of compensation
received by U.S. residents temporarily working abroad, working in foreign diplomatic installations, or working for
international organizations in the United States, and by workers from the United States who commute to Mexico or
Canada.
6
In addition, compensation of general government employees is a product-side component of government
consumption expenditures and gross investment in account 1; see “Chapter 9: Government Consumption
Expenditures and Gross Investment” of this handbook for more information on the NIPA presentation of
government as both a consumer/investor and a producer and on the measurement of government output as the sum
of the cost of its inputs.
7
For a discussion of the relationship between GDP, gross national product, national income, and other important
NIPA aggregates, see “Major NIPA aggregates” in chapter 2
of this handbook. For a discussion of domestic and
national measures of production, see “Geographic coverage” in chapter 2.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-5
The NIPAs present current-dollar annual estimates of GDI by type of income, national
income by type of income, and national income by sector and legal form of organization.
• The presentation of GDI by type of income includes “compensation of employees, paid”
and selected aggregate components—wages and salaries to persons, wages and salaries to
the rest of the world, and supplements to wages and salaries.
• The presentation of national income by type of income includes “compensation of
employees” and selected aggregate components—wages and salaries for government and
for the aggregate of all other sectors and supplements to wages and salaries from
employer contributions for employee pension and insurance funds and from employer
contributions for government social insurance.
• The presentation of national income by sector and legal form of organization also
includes “compensation of employees” and selected aggregate components—wages and
salaries and supplements to wages and salaries.
Additionally, annual estimates of “compensation of employees,” wages and salaries, and the
major components of supplements to wages and salaries are presented by industry.
The sector-specific estimates follow the NIPA sectors—business (including government
enterprises), households and institutions, general government, and the rest of the world; within
the business sector, the estimates by legal form are classified according to the Internal Revenue
Service (IRS) filing requirements for corporate and noncorporate business.
8
The industry-
specific estimates for 1998 forward are classified according to the North American Industry
Classification System (NAICS) at the three-digit industry level, and the estimates prior to 1998
are classified according to the Standard Industrial Classification (SIC); the estimates for 1998-
2000 are also available on an SIC basis.
9
The industry-specific estimates include estimates for
federal general government (which includes both civilian employees and military personnel), for
federal government enterprises, for state and local general government, and for state and local
government enterprises.
Estimates of “compensation of employees, paid” and “compensation of employees” and
certain aggregate components are also available quarterly. The following is a list of the principal
NIPA tables that present current-dollar estimates of compensation as a component of GDI and of
8
For descriptions of NIPA sectors and of legal forms of organization, see the section “Classification” in chapter 2 of
this handbook.
9
Time-series breaks caused by the conversion to NAICS and by previous revisions to the SIC are reflected in the
separation of es timates into dis tinct tables for each range of estimates based on a different classification. For
instance, table 6.2, Compensation of Employees by Industry, comprises four separate tables: table 6.2A, based on
the 1942 SIC; table 6.2B, bas ed on the 1972 SIC; table 6.2C, bas ed on the 1987 SIC; and table 6.2D, bas ed on the
2012 NAICS. For more information on the conversion from the SIC to NAICS, see John R. Kort, “
The North
American Industry Classification System in BEA’s Economic Accounts,” Survey 81 (May 2001): 7–13.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-6
national income.
10
1.10 Gross Domestic Income by Type of Income
1.11 Percentage Shares of Gross Domestic Income
1.12 National Income by Type of Income
11
1.13 National Income by Sector, Legal Form of Organization, and Type of Income
6.2 Compensation of Employees by Industry
6.3 Wages and Salaries by Industry
Annual estimates of supplements to wages and salaries are also presented by industry and
by detailed type of supplement in the following NIPA tables:
3.6 Contributions for Government Social Insurance
12
6.10 Employer Contributions for Government Social Insurance by Industry
6.11 Employer Contributions for Employee Pension and Insurance Funds by Industry and by
Type
7.8 Supplements to Wages and Salaries by Type
Separate receipts and expenditures accounts for defined benefit and defined contribution
pension plans are presented annually in tables 7.20-7.25 for all plans, for all private defined
benefit plans, for federal government defined benefit plans, for state and local defined benefit
plans, and for all defined contribution plans, respectively.
Annual and quarterly estimates of wages and salaries paid to the rest of the world and
wages and salaries received from the rest of the world are presented in “Table 4.1. Foreign
Transactions in the National Income and Product Accounts.”
10
As a component of the product-side measure of government consumption expenditures and gross investment,
BEA prepares real (inflation-adjusted) measures of the compensation of general government employees. For more
information on the derivation of inflation-adjusted measures, see “Price and Quantity Estimates” in “Chapter 4:
Estimating Methods.” For more information on the derivation of real compensation of general government
employees, see the section “Quantity and price estimates” in chapter 9, and see Bruce E. Baker and Pamela A.
Kelly, “A Primer on BEA’s Government Accounts,” Survey 88 (March 2008): 29-38.
11
The NIPAs also present annual and quarterly estimates of “compensation of employees” in NIPA table group 2 as
a component of personal income. Annual and quarterly estimates of “compensation of employees” are available in
NIPA table 2.1. Annual and quarterly estimates of wages and salaries are available by aggregate industry groupings
in NIPA table 2.2. Monthly estimates of wages and salaries for total private industries and for total government and
monthly estimates of total supplements are available in NIPA table 2.6. Monthly estimates of wages and salaries by
aggregate industry groupings are available in table 2.7. BEA also prepares state and local area estimates of
compensation and its components by industry and by type. For more information, see the “Regional” page at
www.bea.gov.
12
The NIPAs also present estimates of the benefits paid by government social insurance programs in table 3.12.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-7
BEA also prepares nominal, or “current-dollar” estimates of compensation of employees
that are not seasonally adjusted; these are available in Section 8 of the NIPA Interactive Data
Tables.
Additional information on compensation is available in “Underlying Detail tables.”
13
Compensation paid to general government employees—that is, both civilian and military
employees of federal and state and local agencies excluding government enterprises—is
available in several tables, but table 3.25U provides detail not found elsewhere. And while
annual estimates of employer contributions for government social insurance are available in table
3.6, quarterly estimates are available as underlying detail in table 3.6U.
In addition, BEA prepares by-industry estimates of full- and part-time employees, full-
time equivalent (FTE) employees, wages and salaries per FTE, hours worked by FTE, self-
employed persons, and persons engaged in production (see NIPA tables 6.5-6.9). For a
discussion of the derivation of the employment estimates, see appendix A to this chapter.
Other measures of compensation—or more specifically, measures of wages and
employment—are prepared by the Census Bureau’s County Business Patterns series and by
BLS’ Quarterly Census of Employment and Wages (QCEW) program.
14
The Census Bureau’s
estimates are derived from Federal administrative records and survey information from business
establishments. BEA’s statistics and BLS’ statistics on compensation are both based primarily on
BLS tabulations of employment and wage data from the unemployment insurance program; BEA
presents the relationship between them annually in “Table 7.18. Relation of Wages and Salaries
in the National Income and Product Accounts to Wages and Salaries as Published by the Bureau
of Labor Statistics.” A reproduction of table 7.18 appears below in the section “Adjustments to
the QCEW data.”
Overview of Source Data and Estimating Methods
As described earlier in the handbook, the NIPA estimates, including those for
compensation of employees, are prepared using a wide variety of source data (see “Chapter 3:
Principal Source Data”) and using estimating methods that adjust the source data to the required
NIPA concepts and that fill in gaps in coverage and timing (see “Chapter 4: Estimating
Methods”). Specifically, the compensation estimates are based on statistical reports from federal
13
BEA does not include these detailed estimates in the published tables because their quality is s ignificantly less
than that of the higher level aggregates in which they are included. Compared with these aggregates, the more
detailed estimates are more likely to be based on judgmental trends, on trends in higher level aggregates, or on less
reliable source data.
14
See “What is the difference between BEA employment and wages and BLS and Census employment and wages?”
on BEA’s Website at www.bea.gov; select “Help” and then “FAQs.”
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-8
agencies including BLS and the Department of the Treasury, on federal budget publications and
other administrative and regulatory agency reports, and on reports from private organizations
(such as trade associations).
Tables 10.A (wages and salaries), 10.B (employer contributions for pension and
insurance funds), and 10.C (employer contributions for government social insurance) at the end
of this chapter summarize the source data and estimating methods that are used to prepare the
annual estimates and the current quarterly estimates of compensation and its components. The
tables follow the categories shown in NIPA tables 6.3 (for wages and salaries), 6.11 (for
employer contributions for pension and insurance funds), and 3.6 (for employer contributions for
government social insurance).
15
The source data and methods for the current quarterly estimates
reflect both seasonally adjusted and not seasonally adjusted estimates unless otherwise noted.
Annual estimates
“Compensation of employees, paid” is measured as the sum of wages and salaries and of
supplements to wages and salaries. The primary source of information on annual wages and
salaries is the QCEW; the sources of information on supplements to wages and salaries are as
varied as the programs themselves.
Wages and salaries. The benchmark and annual estimates are derived using the same source data
and methodologies. For private industry employees and for civilian employees of federal
government, of state and local general government, and of the U. S. Postal Service, the estimates
are primarily based on the QCEW. Estimates for the military and for other government
enterprises are discussed below in the section “Adjustments to the QCEW data.” QCEW data on
wages and salaries are generally available for all four quarters of the previous year at the time of
the annual update of the NIPAs, which typically occurs in July.
The QCEW is a federal-state cooperative program in which state employment agencies
compile and report to BLS the monthly data on employment and the quarterly data on total and
15
In NIPA table 6.3, total wages and salaries on a national income basis—which includes wages and salaries
received from the rest of the world and excludes wages and salaries paid to the rest of the world—is shown on line
1. The industry-specific estimates, beginning with “Domestic industries” on line 2, include payments to the rest of
the world (and exclude receipts from the rest of the world) in order to accurately reflect each industry’s total wage
and salary liability. The offsetting entry, total wages and salaries paid to the rest of the world netted against wages
and salaries received from the rest of the world, is shown on line 97.
In NIPA table 3.6, the entry “Rest-of-the-world contributions” on line 32 recognizes the employer and employee
contributions for government social insurance from residents of the U.S. territories of Guam, American Samoa, and
the U.S. Virgin Islands and of the U.S. commonwealths of Puerto Rico and the Northern Mariana Islands. In the
NIPAs, these are treated as contributions from “nonresidents” (see the section “Geographic coverage” in chapter 2
of this handbook) and as a consequence, they are not included in the NIPA estimates of total supplements to wages
and salaries and are not shown in table 10.C.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-9
taxable wages that are reported to the states each quarter by private industries on quarterly tax
returns and by federal agencies and state and local governments on similar reports for employees
covered by state unemployment insurance (UI) laws or by the Unemployment Compensation for
Federal Employees (UCFE) program. These data cover about 97 percent of employees on
nonfarm payrolls. BLS tabulates the data by geographical categories (county, metropolitan
statistical area, combined statistical area, state, and the nation), by six-digit NAICS industry
level, and by ownership sectors (private industry, federal government, state government, or local
government).
The composition of wages reported to state employment agencies is generally consistent
with the NIPA definition of wages and salaries. The data are on a disbursement basis; they
reflect the total wages and salaries paid during a calendar quarter, regardless of when the services
were performed (although a few state laws specify that wages be reported on an accrual basis).
Conversely, the NIPAs record compensation and its components on an accrual basis; they reflect
the total wages and salaries earned during the period, regardless of when they were paid. In most
years, the pattern of wage and salary accruals and disbursements is relatively stable, with no
difference between the measures of accruals and disbursements.
16
However, when there is
evidence of a substantial departure from the usual pattern, BEA may incorporate a timing
adjustment to better reflect the earnings accrued in each period. When these adjustments are
made, they are recorded in the annual wage reconciliation table (NIPA table 7.18) discussed
below in the section “Adjustments to the QCEW data.”
17
BEA sums the quarterly QCEW data for each industry to derive annual estimates and
makes additional adjustments to account for misreporting of wages on employment tax returns
and for differences in coverage and in definitions (see the section “Adjustments to the QCEW
data”); these adjustments account for about 5 percent of the NIPA estimate of wages and salaries.
BEA uses industry payroll data from the Census Bureau’s Economic Census to aggregate the
16
As a simple example, if wages and salaries accrued annually include bonuses that typically equal $100, with one-
half of the bonuses paid in the current year and one-half paid in the following year, then each year’s disbursed wages
will include a $50 bonus payment accrued in the current year and a $50 bonus payment accrued in the previous year;
the total bonuses paid in each year—$100—equals the bonuses accrued.
17
Prior to the 2013 comprehensive update of the NIPAs, the NIPAs presented a third compensation measure,
“compensation of employees, received” that reflected estimates of wages and salaries on a disbursement basis. An
entry for “wage and salary accruals less disbursements” (WALD) in the national income tables reconciled the two
accrual-based measures with this disbursement-based measure. In practice, there was often little information on the
timing differences between accruals and disbursements, and the measure of WALD was typically zero. The new
treatment, introduced during the 2013 comprehensive update of the NIPAs , discontinued the disbursement-based
measure of “compensation of employees, received” and the measures of WALD in order to better align transactions
of the personal income and outlays account with those of the private enterprise income account, to simplify the
presentation of wages and salaries within the accounts, and to help bring the NIPAs in line with recommendations of
the SNA. See “
Preview of the 2013 Comprehensive Revision of the National Income and Product Accounts:
Changes in Definitions and Presentations,” Survey 93 (March 2013): 13-39.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-10
estimates across industries and levels of government to prepare estimates of total wages and
salaries by legal form and sector.
Supplements to wages and salaries. The benchmark and annual estimates are derived using the
same source data and methodologies. Employer contributions for employee pension and
insurance funds consists of the contributions made by private or government employers to
privately administered retirement and insurance programs and by government employers to
government employee pension plans and to publicly administered government employee
insurance programs. Employer contributions for government social insurance consists of the
contributions made by private and public employers to other publicly administered programs that
provide certain social benefits, such as social security and Medicare.
18
For employer contributions for pension funds, supplements are estimated by type of
fund—defined contribution and defined benefit pension plans—and by employer—private plans
and government employee plans. For defined contributions plans, future benefits are determined
by the contributions made by employers and employees into the plan and by the income earned
on the financial assets that the plans hold; therefore, actual contributions reflect the accrual
accounting method. For defined benefit plans, future benefit entitlements are determined
independently of actual contributions and may differ from them.
19
Thus, in order to reflect the
accrual accounting basis, the NIPA measures of employer contributions to defined benefit plans
reflect actual contributions and—when actual contributions differ from the entitlements earned in
the period—imputed contributions to reflect the value of the employers’ liability for entitlements
and for the administrative expenses of the plan that are not fulfilled by actual contributions.
20
The measurement of employer contributions for both types of plans are described below and in
table 10.B.
21
18
For descriptions of the government social insurance programs included in the NIPA measure of employer
contributions for government social insurance, see U.S. Bureau of Economic Analysis,
MP-5: Government
Transactions (Methodology Papers: U.S. National Income and Product Accounts, September 2005).
19
This is especially true in cases where the actual contributions made by employers are sporadic. For example,
employers sometimes skip contributions when the plans have enjoyed unusually good investment returns;
conversely, employers sometimes make large “catch up” contributions to pay down unfunded benefit obligations.
20
In periods where actual contributions exceed the total liability of employers , imputed employer contributions will
be negative.
21
The measurement of defined benefit pension plans on an accrual basis was introduced as part of the 2013
comprehensive update of the NIPAs to better align pension-related compensation with the timing of when
employees earned the benefit entitlements and to be consistent with the recommendations of the 2008 SNA. The
accrual-based estimates also avoid the volatility that arises when sporadic cash payments made by employers into
defined benefit pension plans are used to measure compensation. For detailed information on accrual-based
measures of benefit entitlements and contributions, see “
Preview of the 2013 Comprehensive Revision of the
National Income and Product Accounts: Changes in Definitions and Presentations,” Survey 93 (March 2013): 13-39
and Marshall B. Reinsdorf and David G. Lenze, “Defined Benefit Pensions and Household Income and Wealth,”
Survey 89 (August 2009): 50-62. With the 2014 annual update of the NIPAs, defined contribution pension plans
were also treated as part of the same subsector. With the 2018 comprehensive update, the valuation of state and local
defined benefit pensions was changed from an accumulated benefit obligation basis to a projected benefit obligation
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-11
For employer contributions to defined contribution pension plans, the estimates are
primarily based on survey and administrative data from government agencies—including the
Department of Labor, the Department of the Treasury, the Census Bureau, the Office of
Personnel Management (OPM), the Federal Retirement Thrift Investment Board, the Pension
Benefit Guaranty Corporation (PBGC), the Employment Benefits and Security Administration
(EBSA), and the Department of Health and Human Services (HHS). For employer contributions
to defined benefit pension plans, the NIPA estimates are based on actuarial estimates of the
present value of claims to benefits accrued through service in the current period—commonly
called normal costs—primarily from PBGC, EBSA, OPM, the Department of Treasury, the
Department of Defense, and reports from state and local pension plans. The employers’ portion
of the liability for these claims—referred to as employers’ normal costs—reflects actual and
imputed employer contributions.
For privately sponsored defined benefit plans, estimates of employers’ normal costs are
based on actuarial estimates of employers’ normal costs provided by the PBGC from data
collected on IRS form 5500. The PBGC adjusts the estimates to include administrative expenses,
and BEA adjusts the PBGC estimates to reflect a common discount rate based on the average
AAA corporate bond rate published by Moody’s Investors Service.
For federal government civilian employee defined benefit pension plans, estimates of
employers’ normal costs are based on OPM data published in the annual actuarial reports of the
major civilian retirement plans, supplemented by data from the Department of Treasury. The
estimates of employers’ normal costs are scaled up slightly to account for smaller retirement
plans such as those for employees of the Foreign Service and the Coast Guard that are not
included in the source data. For the military defined benefit plans, estimates of employers’
normal costs are based on Department of Defense data on normal cost rates and payroll.
For state and local employee defined benefit pension plans, the estimates of employers’
normal costs are based on the service costs and employee contribution data reported in state and
local government financial reports. BEA adjusts the estimates to reflect the same discount rate
that is used for measures of privately sponsored defined benefit plans. Separate measures of
administrative expenses are based on Census Bureau data.
For private insurance funds and publicly administered government employee insurance
plans, estimates of employer contributions are primarily based on administrative and survey data
basis.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-12
from HHS, OPM, the Department of Veterans’ Affairs, and A.M. Best’s Aggregates and
Averages.
For employer contributions for government social insurance, estimates are derived by
program. They are primarily based on administrative data from the Social Security
Administration, the Department of Labor, and the Veterans’ Administration; on survey data from
the Census Bureau; and on financial data from the Budget of the United States Government
(Budget) as published by the Office of Management and Budget.
The industry-specific estimates are prepared by allocating the estimates to three-digit
NAICS industries using industry-specific information from the source data or from other
industry-specific data that is related to the program or fund. For instance, the source data
underlying the estimates of workers’ compensation do not include industry information, so
industry ratios are derived from industry-specific data on occupational injuries and illnesses from
BLS.
Current quarterly estimates
Current quarterly estimates of wages and salaries and of supplements to wages and
salaries are published only at aggregate levels and not by detailed industries or by program. For
wages and salaries, seasonally adjusted current quarterly estimates are prepared by averaging the
monthly estimates of wages and salaries that are released as part of BEA’s monthly personal
income estimates. For the published aggregates of supplements to wages and salaries—that is,
employer contributions for employee pension and insurance funds and employer contributions
for government social insurance—seasonally adjusted current quarterly estimates are derived as
the sum of the components (or some aggregate level of the components) that are, in most cases,
prepared by extrapolation, either judgmentally or by using an indicator series (for an explanation
of this method, see “Interpolation and extrapolation using an indicator series” in chapter 4).
22
Wages and salaries. As noted above, the primary source for the annual estimates of private
wages and salaries is QCEW data. Because these quarterly data are generally available 5 months
after the end of a quarter, the estimates of private wages and salaries for the quarters for which
the QCEW data are not yet available are derived by averaging the current monthly estimates.
23
The current monthly estimates are extrapolated for each industry from the historical monthly
22
Most of the source data that are used for extrapolation are seasonally adjusted; when this is not the case, BEA
seasonally adjusts data that display seasonality (see the section “Seasonal adjustment” in chapter 4
of this
handbook). In cases where estimates are extrapolated without the use of indicator series, there is no monthly or
quarterly seasonality.
23
The monthly estimates of personal income, including compensation, are expressed at annual rates; consequently,
the current quarterly estimates, also expressed at annual rates, may be derived by averaging the monthly estimates.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-13
estimates, which are in turn based on the most recent quarterly QCEW data that are available; the
industry estimates are then summed to derive the monthly estimates for total wages and salaries.
The extrapolation is based on the most recent monthly data from the BLS current employment
statistics (CES) program and is calculated as the growth rate for employment times average
weekly hours times and average hourly earnings. Similarly, once the QCEW data are
incorporated into the quarterly estimates, the monthly estimates are interpolated based on the
same CES indicator series. For example, the end-of-November release of Personal Income and
Outlays for October contains monthly estimates of wages and salaries for July through October
that are CES extrapolations of revised monthly estimates for the second quarter that are based on
newly available QCEW data. In turn, the end-of-November release of GDP for the third quarter
(second estimate) contains third-quarter estimates of wages and salaries that are derived by
averaging the monthly Personal Income and Outlay estimates.
In general, the release of the “third” current quarterly estimate of GDP marks the last
opportunity to revise most NIPA estimates until the next annual update. However, because of the
importance of the QCEW as a data source and because of the 5-month lag in its availability, an
exception is made for private wages and salaries and for private employer contributions for
government social insurance (for which the estimates are generally based on estimates of private
wages and salaries). As part of the “second” current quarterly release of GDP, the preceding
quarter’s estimates for these series and for affected income-side aggregates are revised in order
to incorporate the newly available QCEW data.
24
Thus, continuing with the example above, the
end-of-November release of GDP for the third quarter (second estimate) also contains revised
estimates of wages and salaries for the second quarter that are based on newly available QCEW
data. The months of the second quarter are interpolated based on the QCEW-derived quarterly
control.
For federal and for state and local government employees, the current quarterly estimates
are derived by summing monthly extrapolations from the most recent annual estimates. Federal
civilian estimates for both general government and government enterprises are extrapolated
using an indicator series that is based primarily on CES employment data. Federal military
estimates are extrapolated using Department of Defense employment data. State and local
government estimates for both general government and government enterprises are extrapolated
using an indicator series that is based on CES employment data and on information on the
24
This procedure was introduced as part of the 2002 annual update in order to reduce the magnitude of revisions to
the estimates of wages and salaries. (See the box “Revisions to Wages and Salaries and to Profits” in Eugene P.
Seskin and Stephanie H. McCulla, “Annual Revision of the National Income and Product Accounts
,” Survey 82
(August 2002): 24-25.) Affected aggregates include gross domestic income, the statistical discrepancy, gross
national income, national income, personal income, disposable personal income, personal taxes, personal saving,
gross (national) saving, compensation, and gross product of corporate business. Other components that are closely
linked to wages and salaries, such as personal current taxes and employer contributions for government social
insurance, are also revised. Product-side series, including government compensation, which is a component of GDP,
are not revised.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-14
change in the cost of labor from the BLS employment cost index.
Supplements to wages and salaries. Current quarterly estimates of employer contributions for
employee pension and insurance funds are released only for the aggregate, which is prepared as
the sum of the components or aggregate levels of the components. In most cases, the component
estimates are prepared by judgmentally projecting annual estimates into the next year and then
interpolating those projected annual estimates into quarterly (and monthly) estimates.
Current quarterly estimates of employer contributions for government social insurance
funds are also prepared as the sum of its components. These components are generally
extrapolated from the annual estimates to quarterly (and monthly) estimates using indicator
series, so they are made available as part of the NIPA underlying detail (see the section
“Recording in the NIPAs”). In most cases, the indicator series are based on NIPA wage and
salary estimates or the component estimates are extrapolated without an indicator but with
information from Budget projections of relevant outlays. As mentioned earlier, the estimates of
employer contributions for government social insurance funds for the preceding quarter are
revised to incorporate newly available QCEW data as part of the “second” current quarterly
release of GDP.
The not seasonally adjusted (NSA) estimates of compensation of employees are derived
using the same methods as the seasonally adjusted estimates, using not seasonally adjusted
versions of the same indicators.
Adjustments to the QCEW data
The QCEW data on wages and salaries are largely consistent with the concepts and
definitions underlying the NIPA estimates of wages and salaries. However, in deriving the
annual estimates of wages and salaries for the NIPAs, BEA adjusts the QCEW data to account
for misreporting of wages (including tips) on employment tax returns and for differences in
coverage and in definitions. A reconciliation of the BLS and the NIPA estimates of wages and
salaries is presented annually in NIPA table 7.18, a reproduction of which is shown for a single
year in table 10.2 below.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-15
Table 10.2: Relation of BLS Wages and Salaries and NIPA Wages and Salaries
(Billions of dollars)
Line
in
NIPA
table
7.18
NIPA line item
2017
1
Total wages and salaries, BLS
1
Plus:
7,966.3
2
Adjustment for misreporting on employment tax returns
2
94.1
3
Adjustment for wages and salaries not covered or not fully covered by unemployment insurance
393.4
4
Government
151.4
5
Other
242.0
6
Timing adjustment for accrual basis
0.0
7
Equals: Wages and salaries, NIPAs
8,453.8
1
Total annual w ages of w orkers covered by state unemployment insurance (UI) law s and by the Unemployment
Compensation for Federal Employees program. Data for the most recent year are preliminary.
2
Consists of unreported w ages and salaries paid by employers and of unreported tips.
Adjustment for misreporting on employment tax returns (line 2). Adjustments are made to the
QCEW data to account for wages and salaries that are underreported on employment tax returns,
for tips that are underreported, and for wages and salaries that are not reported at all because the
employers fail to file an employment tax return.
• The estimates of underreported income are based on audits of individual employment tax
returns undertaken as part of the IRS National Research Program (NRP) for the 2008-
2010 span.
25
• The adjustment for underreported tips or gratuities is derived in the preparation of BEA’s
input-output accounts for industries—primarily accommodations, food services, taxis,
barber shops, and beauty salons—where tips are a significant factor in compensation. The
adjustment is based on the assumption that not all tips are included in the wages and
salaries reported on the employment tax returns, and it is derived using information on
industry sales and information on “tip rates” from the IRS.
• The estimates of nonreported income are based on “exact-match” studies that the Census
Bureau provides to BEA. These studies match records from the Current Population
Survey (CPS), conducted by the Census Bureau for BLS, with individual IRS tax returns
in order to estimate nonfiler income for individuals.
25
The IRS Taxpayer Compliance Measurement Program had provided estimates of misreported income for selected
years since 1963. In 2001, the IRS launched the NRP to update the research and to reflect a changing economy,
revisions to the tax code, and shifts in individual behavior.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-16
Adjustment for wages and salaries not covered or not fully covered by unemployment insurance
(line 3). The QCEW data provide almost complete coverage for most private industry
employees, federal civilian employees, and state and local government employees. However, for
military personnel and for certain private industries for which the QCEW provides little or no
coverage—railroads, farms, farm labor contractors, private elementary and secondary schools,
religious membership organizations, and private households—estimates of wages and salaries
are prepared separately using other source data.
• Government (line 4). This entry reflects the addition of the NIPA estimate for wages and
salaries of military personnel and for various other government wage and salary
payments not captured by the QCEW. The compensation paid to military personnel is
based on Budget data and includes cash wages as well as in-kind compensation such as
uniform and housing allowances and rations. The wage and salary information in the
Budget is available on a fiscal year basis; actual wage and salary expenses are provided
for one year, and projections are provided for the current year and the budget year (for
example, the FY2015 Budget provides actual expenses for FY2013 and projected
expenses for FY2014 and FY2015). BEA converts the fiscal year estimates to a calendar
year basis by allocating one quarter of the estimate for a given fiscal year to the previous
year and three quarters to the given year.
Additional government-related adjustments are made for students and their
spouses employed by public colleges or universities, for elected officials and members of
the judiciary, for intelligence agents, for interns employed by publicly administered
hospitals and by social service agencies, for judicial fees paid to jurors and witnesses, for
compensation of prison inmates, and for marriage and license fees paid to justices of the
peace. These adjustments, which comprise only a very small share of the total
government adjustment, are prepared using a variety of source data, including data from
the Census Bureau and the Department of Justice.
• Other (line 5). This entry accounts for all of the other adjustments that are made in the
estimation of NIPA wages and salaries, including estimates for employees not covered by
the QCEW and estimates for differences between the QCEW and the NIPA definitions of
wages and salaries.
Adjustments for employees not fully captured in the QCEW data are made as follows:
- for federal government enterprises excluding the U.S. Postal Service (which is
covered by the QCEW), based on Budget data.
- for farms, based on data on farm labor expenses from the U.S. Department of
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-17
Agriculture (USDA).
- for farm labor contractors, primarily based on data for contract farm labor
expenses from the Census of Agriculture.
- for private elementary and secondary schools, primarily based on annual payroll
data from the Census Bureau’s County Business Patterns; estimates of in-kind
wages are judgmentally derived.
- for religious membership organizations, primarily based on annual payroll data
from the Census Bureau’s County Business Patterns; estimates of in-kind wages
are judgmentally derived.
- for private households, primarily based on CPS data; estimates of in-kind wages
are judgmentally derived.
- for railroads, primarily based on wage and salary data from the Railroad
Retirement Board.
Adjustments for differences between the QCEW and the NIPA definitions of wages and
salaries include the following:
- An adjustment to include compensation received from foreign employers and to
exclude compensation paid to foreigners in order to make the measure consistent
with national income, derived from ITA estimates of compensation received from
foreigners. Alternatively, in gross domestic income tables, the ITA estimate of
compensation paid to the rest of the world is included and the ITA estimate of
compensation received from the rest of the world is excluded. The ITA estimates
of compensation received from, and paid to, foreigners are based mostly on data
from foreign statistical authorities and from the IRS, as well as various
demographic and labor market data from the USDA and the Department of
Labor.
26
- An adjustment to include employer contributions to “cafeteria plans” that are
excluded from the QCEW data for private industries and for state and local
governments when state laws do not count them as wages for unemployment
insurance purposes. These plans allow participating employees to use a portion of
their salaries on a pre-tax basis to pay for health insurance and for “flexible
spending accounts,” which reimburse employees for medical care and for
dependent daycare. The adjustment is based on data from the Agency for
Healthcare Research and Quality’s Medical Expenditure Panel Survey and on
trade source data.
27
This adjustment is not needed for federal employer
26
For more information on the sources and methods for estimating compensation paid to and received from the rest
of the world, see the section “Compensation of Employees” in “
U.S. International Transactions Accounts: Concepts
and Estimation Methods,” at www.bea.gov.
27
For more information, see Clinton P. McCully and Steven Payson, “Preview of the 2009 Comprehensive Revision
of the NIPAs,” Survey 89 (May 2009): 11.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-18
contributions to these plans because they are included in the QCEW data for all
states.
• Adjustment for timing for accrual basis (line 6). This adjustment accounts for differences
in the timing of wage and salary disbursements from QCEW data and the accrual basis
underlying the NIPA measure of wages and salaries. A positive adjustment reflects a net
amount of compensation that was earned, but not actually received (and therefore not
reflected in the source data) during the period, and a negative adjustment reflects a net
amount of compensation that was paid (and reflected in the source data), but not actually
earned, during the period. In practice, as reliable source data are generally lacking on
these differences, timing adjustments are infrequent.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-19
Table 10.A—Summary of Methodology Used to Prepare Estimates of Wages and Salaries
Line in NIPA
table 6.3
Component
Annual estimates
Current quarterly estimates
(Indicator series used to extrapolate)
3
Private industries
Most industries: QCEW, w ith adjustments by BEA for coverage, misreporting, and
definitions (see the section “Adjustments to the QCEW data”).
For certain other industries, or types of enterprises w ithin industries, other
sources as follow s:
Farms: USDA f arm labor expense data on cash w ages and payments-in-kind
by ow ner-operators to hired farm labor.
Farm labor contractors: For Arizona and California, QCEW. For other states,
for benchmark years, Census of Agriculture contract farm labor expenses, and
for nonbenchmark years, straight-line interpolations of benchmark-year
estimates.
Private elementary and secondary schools: For cash w ages, Census Bureau
County Business Patterns data on annual payrolls; for pay-in-kind,
judgmentally derived.
Religious membership organizations: For cash w ages, Census Bureau County
Business Patterns data on annual payrolls. For in-kind w ages, judgmentally
derived.
Private households: For cash w ages, BLS Current Population Survey data.
For pay-in-kind, judgmentally derived.
Railroads: U.S. Railroad Retirement Board data on w ages and salaries
subject to the payroll tax that supports the railroad retirement system, adjusted
to include the portion of w ages and salaries not subject to the tax, based on
the number of employees w hose w ages and salaries exceed the limit for
retirement taxation.
NSA : For historical quarters subject to revision, NSA estimates are interpolated
from the annual control value using NSA QCEW by industry as the indicator.
CES employment, hours, and earnings data.
NSA: For quarters in w hich NSA QCEW data
are available, NSA estimates are
extrapolated from the most recent estimates
not subject to revision using the quarter-to-
quarter change in NSA QCEW. For quarters
w here NSA QCEW data are unavailable,
NSA estimates are derived by industry as a
five-year moving average of the implied
seasonal factor multiplied by the CES-based
seasonally adjusted series.
86
Government:
87
Federal government:
89
Civilian general
government
For cash w ages, QCEW w ith adjustments by BEA for coverage (see the section
“Adjustments to the QCEW data”). For in-kind transit benefits, Department of
Transportation.
CES civilian employment data.
90
Military
For cash and in-kind w ages, Budget of the United States Government.
Department of Defense manpow er reports.
91
Government
enterprises
For U.S. Postal Service, QCEW data. For other enterprises, Budget data.
CES employment data for Postal Service.
92
State and local government:
93
General
QCEW data for all state and local employees allocated to general government
CES employment data and BLS employment
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-20
Table 10.A—Summary of Methodology Used to Prepare Estimates of Wages and Salaries
Line in NIPA
table 6.3
Component
Annual estimates
Current quarterly estimates
(Indicator series used to extrapolate)
government
and government enterprises using Census Bureau Public Employment payroll
data w ith adjustments by BEA for coverage (see the section “Adjustments to the
QCEW data").
cost index data.
96
Government
enterprises
QCEW data for employees allocated to government enterprises using Census
Bureau Public Employment payroll data.
CES employment data and BLS employment
cost index data.
97
Rest of the w orld:
98
Receipts from
the rest of the
w orld
ITA estimates.
ITA estimates.
99
Less: Payments
to the rest of
the w orld
ITA estimates.
ITA estimates.
BEA Bureau of Economic Analysis
BLS Bureau of Labor Statistics
CES Current Employment Statistics, BLS
ITA International Transactions Accounts , BEA
QCEW Quarterly Census of Employment and Wages, BLS
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-21
Table 10.B—Summary of Methodology Used to Prepare Estimates of Employer Contributions for Employee Pension and Insurance Funds
Line in
NIPA table
6.11
Component
Annual estimates
Current quarterly estimates*
(Indicator series used to extrapolate)
22
Employer contributions for
employee pension and
insurance funds
See method for each component.
The aggregate of unreleased measures of (1) private
employer contributions for employee pension and
insurance funds, (2) federal government employer
contributions for employee pension and insurance
funds, and (3) state and local government employer
contributions for employee pension and insurance
funds.
(1) For the aggregate of private employer contributions
for private pension and insurance funds,
judgmental trend.
(2) For the aggregate of federal employer contributions
for employee pension and insurance funds, the
sum of unreleased measures of (1) federal
government employer contributions to government
employee pension plans, (2) federal government
employer contributions to group health insurance,
(3) federal government employer contributions to
group life insurance, and (4) federal government
employer contributions to publicly administered
government employee insurance plans. See
corresponding entries below .
(3) For the aggregate of state and local employer
contributions to employee pension and insurance
funds, the sum of unreleased measures of (1) state
and local government employer contributions to
government employee pension plans, (2) state and
local government employer contributions to group
health insurance, (3) state and local government
employer contributions to group life insurance, and
(4) state and local government employer
contributions to w orkers’ compensation.
NSA : Seasonally adjusted and NSA measures of
employer contributions for employee pension and
insurance funds are presumed equal.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-22
Table 10.B—Summary of Methodology Used to Prepare Estimates of Employer Contributions for Employee Pension and Insurance Funds
Line in
NIPA table
6.11
Component
Annual estimates
Current quarterly estimates*
(Indicator series used to extrapolate)
23
Pension plans
24
Private pension plans
25
Defined benefit
For all except 2 most recent years, employers’ normal costs
based on BEA tabulations of plan-level data provided by
PBGC f rom IRS form 5500 on employer normal costs for
each plan,
adjusted to a uniform discount rate based on AAA
corporate bond rates from Moody’s Investors Service and
aggregated to the total for all industries.
28
For second most
recent year, employers’ normal costs based on BEA
tabulations of form 5500 data provided by PBGC w ith
adjustments by BEA for coverage. For most recent year,
employers’ normal costs derived as BEA’s normal cost rate
applied to total covered payroll; form 5500 data are not
available for the most recent year. Covered payroll is derived
as the product of NIPA w ages and salaries and a coverage
rate, w hich is derived as the ratio of the number of active
participants, from EBSA data, to private full-time equivalent
employees, from NIPA estimates.
Quarterly estimates are not released at this level of
detail; see line 22.
26
Defined contribution
For all except 2 most recent years, employers’ cash
contributions from EBSA tabulations of IRS form 5500 data
for three-digit NAICS industries. For second most recent
year, PBGC tabulations of IRS form 5500 data, and for most
recent year, Standard and Poor’s 500 and other corporate
financial data.
Quarterly estimates are not released at this level of
detail; see line 22.
27
Government employee
pension plans
See method for each component,
Quarterly estimates are not released at this level of
detail; see line 22.
For unreleased measures of government employee
pension plans, the sum of unreleased measures of
federal government employee pension plans and state
28
Plan-level da ta a re assigned to a 6-digit NAICS code based on the primary industry of the employer.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-23
Table 10.B—Summary of Methodology Used to Prepare Estimates of Employer Contributions for Employee Pension and Insurance Funds
Line in
NIPA table
6.11
Component
Annual estimates
Current quarterly estimates*
(Indicator series used to extrapolate)
and local employee pension plans; see lines 28 and 29.
28
Federal
Civilian: For defined contribution plans, such as Thrift
Savings Plan, actual contributions based on Federal
Retirement Thrift Investment Board data.
For defined benefit plans, for all except most recent year,
total employer contributions based on OPM estimates of
employers’ normal costs for the Federal Employees
Retirement System (FERS), and normal cost rates and
payroll data for the Civil Service Retirement System (CSRS),
adjusted to alternative discount rates. Total employer
contributions are scaled up by BEA to reflect smaller plans
not included in OPM data
. For the most recent year for both
FERS and CSRS plans, total employer contributions based
on OPM projections of normal cost rates and payroll data.
Military: For defined contribution plans, contributions to the
Thrift Savings Plan based on Federal Retirement Thrift
Investment Board data and judgmental trends.
For defined benefit plans, for all except the most recent year,
total employer contributions derived from DoD reports on
employer normal cost rates and payroll. For the most recent
year, total employers’ normal costs derived from DoD Of fice
of the Actuary projections of normal cost rates and payroll.
Quarterly estimates are not released at this level of
detail. See line 22.
For unreleased measures of federal government
employer contributions to government employee
pension plans, the sum of components:
Civilian: For defined contribution plans, CES
employment. For defined benefit plans, interpolation
w ithout indicator of annual estimates extrapolated
based on OPM projections of normal cost rates and
payroll data.
Military: For defined contribution plans, contributions to
the Thrift Savings Plan based on Federal Retirement
Thrift Investment Board data and judgmental trends.
For contributions for defined benefit plans, interpolation
w ithout indicator of annual estimates extrapolated
based on DoD projections of normal cost rates and
payroll data.
29
State and local
For defined contributions plans, ratio of employer
contributions as a percent of compensation to w ages as a
percent of compensation from BLS Employer Costs for
Employee Compensation survey data applied to NIPA w ages
and salaries.
For defined benefit plans for all except 2 most recent years,
employers’ normal cost based on financial and actuarial
reports of a sample (covering 90 percent of universe) of S&L
Quarterly estimates are not released at this level of
detail. See line 22.
For unreleased measures of state and local employer
contributions to employee pension plans, the sum of
components:
For defined contribution plans, same as annual.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-24
Table 10.B—Summary of Methodology Used to Prepare Estimates of Employer Contributions for Employee Pension and Insurance Funds
Line in
NIPA table
6.11
Component
Annual estimates
Current quarterly estimates*
(Indicator series used to extrapolate)
retirement systems scaled up to represent the universe of
systems and adjusted to reflect common actuarial cost
method and discount rate, plus administrative expenses
based on Census data. For second most recent year,
employers’ normal cost extrapolated using incomplete
sample data and administrative data based on judgmental
trend. For most recent year, judgmental trend.
For defined benefit plans, extrapolated using NIPA
w ages and salaries.
30
Private insurance funds
31
Group insurance
32
Group health insurance
For private employer contributions, Health and Human
Services’ Agency for Health Care Research and Quality’s
Medical Expenditure Panel Survey data on insurance
purchased by employers for employees and on health
insurance provided by employers w ho insure themselves
(self-insurance).
For state and local government contributions, for all except
most recent year, same as for private employers. For most
recent year, judgmental trend.
For federal government contributions, OPM internal
accounting report for the Federal Employee Health Benefits
Program.
Quarterly estimates are not released at this level of
detail. See line 22.
For unreleased aggregate of private employer
contributions for private pension and insurance funds,
judgmental trend.
For unreleased measures of state and local government
employer contributions to group health insurance,
judgmental trend.
For unreleased measures of federal government
employer contributions to group health insurance, CES
employment data.
33
Group life insurance
For private and for state and local government, for all except
the most recent year, A.M. Best’s Aggregate and Averages
Life/Health data on premiums paid. For most recent year,
extrapolated based on the percent change in net premiums
from A.M. Best data.
For federal government contributions for civilian employees,
OPM internal accounting report for the Federal Employee
Group Life Insurance Program.
For federal government contributions for active duty military
personnel and their families, Veterans’ Affairs Administration
data on premiums paid for Servicemen’s Group Life
Quarterly estimates are not released at this level of
detail. See line 22.
For unreleased aggregate of private employer
contributions for private pension and insurance funds,
judgmental trend.
For unreleased measures of federal government
employer contributions for group life insurance, CES
employment data.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-25
Table 10.B—Summary of Methodology Used to Prepare Estimates of Employer Contributions for Employee Pension and Insurance Funds
Line in
NIPA table
6.11
Component
Annual estimates
Current quarterly estimates*
(Indicator series used to extrapolate)
Insurance.
For unreleased measures of state and local government
employer contributions to group life insurance, CES
employment data.
34
Workers’ compensation
A.M. Best’s Aggregates and Averages Property/Casualty
data on premiums paid, supplemented by data from the
National Academy of Social Insurance (NA SI) for self-insured
and for large deductible policies, and by data on the
contributions made to privatized funds that are not covered
by A.M. Best or by NASI from the National Council on
Compensation Insurance, the National Association of
Insurance Commissioners, and the American Association of
State Compensation Insurance Funds.
Quarterly estimates are not released at this level of
detail. See line 22.
For unreleased aggregate of private employer
contributions for private pension and insurance funds,
judgmental trend.
For unreleased measures of state and local government
employer contributions to w orkers’ compensation, CES
employment data.
35
Supplemental
unemployment benefit
funds
EBSA tabulations of IRS form 5500 data.
Quarterly estimates are not released at this level of
detail. See line 22.
For unreleased aggregate of private employer
contributions for private pension and insurance funds,
judgmental trend.
36
Publicly administered
government employee
insurance plans
Monthly Treasury Statement data on employer contributions
to the “Medicare-Eligible Retiree Health Care Fund”
Quarterly estimates are not released at this level of
detail. See line 22.
For unreleased measures of military employment from
DoD manpow er reports.
*Quarterly estimates are provided only for the aggregate of employer contributions for pension and insurance funds.
BEA Bureau of Economic Analysis
BLS Bureau of Labor Statistics
CES Current Employment Statistics, BLS
DoD Department of Defense
EBSA Employment Benefits and Security Administration
IRS Internal Revenue Service
MTS Monthly Treasury Statement
NAICS North American Industry Classification System
NIPA National Income and Product Accounts
OPM Office of Personnel Management
PBGC Pension Benefit Guaranty Corporation
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-26
Table 10.C—Summary of Methodology Used to Prepare Estimates of Employer Contributions to Government Social Insurance
Line in NIPA
table 3.6
Component
Annual estimates
Current quarterly estimates*
(Indicator series used to extrapolate)
5
Old-age, survivors,
and disability
insurance
SSA Social Security Bulletin: Annual Statistical Supplement data
on w ages and salaries subject to OASDI taxes multiplied by
OASDI tax rate.
NIPA w ages and salaries for appropriate industries.
6
Hospital insurance
For all employees except those in the railroad industry, SSA
w ages and salaries multiplied by the hospital-insurance tax rate.
For railroad employees, U.S. Railroad Retirement Board calendar
year data on railroad w ages and salaries multiplied by the hospital
insurance tax rate.
For w orkers covered by OASDI, same as for OASDI. For
w orkers not covered by OASDI, judgmental trend.
8
State unemployment
insurance
QCEW data on total unemployment insurance taxes.
For contributions by private employers, NIPA private
w ages and salaries less those of railroad, farm, and
private household w orkers. For state and local
reimbursements, unemployment insurance rate.
9
Federal
unemployment tax
Sum of (1) Office of Workforce Security, Department of Labor
tabulations of taxable w ages and salaries by state from annual tax
returns filed by employers multiplied by the effective federal tax
rate and (2) for states that have borrow ed funds to finance
unemployment benefits, either the taxable w ages and salaries
multiplied by the surtax rate or state-provided data on the amount
of surtax.
NIPA private w ages and salaries less those of railroad,
farm, and private household w orkers.
10
Railroad employees
unemployment
insurance
Monthly Treasury Statement data on railroad unemployment tax
receipts.
NIPA railroad w ages and salaries.
11
Federal employees
unemployment
insurance
Imputation based on Office of Workforce Security data on
unemployment benefits paid to unemployed former federal
employees.
Same as for annual estimates.
12
Railroad retirement
U.S. Railroad Retirement Board Annual Report data on w ages
and salaries subject to railroad retirement multiplied by railroad
retirement tax rates.
NIPA railroad w ages and salaries.
13
Pension benefit
guaranty
Pension Benefit Guaranty Corporation monthly data on premiums
paid by employers, aligned to the calendar years in w hich the
premiums w ere accrued.
Extrapolated using information from fiscal year projections
of premium collections from the Budget of the United
States Government.
14
Veterans life
Veterans Affairs Annual Report data on premiums paid by the
Judgmental trend.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-27
Table 10.C—Summary of Methodology Used to Prepare Estimates of Employer Contributions to Government Social Insurance
Line in NIPA
table 3.6
Component
Annual estimates
Current quarterly estimates*
(Indicator series used to extrapolate)
insurance
federal government to life insurance programs for veterans.
15
Workers’
compensation
Imputation equal to benefits paid based on unpublished data on
benefits from the Department of Labor’s Employment Standards
Administration.
Extrapolated using information from fiscal year projections
of premium collections from the Budget.
16
Military medical
insurance
Imputation equal to benefits based on benefits data from the
Department of Defense Military Health System’s annual TRICARE
report.
Extrapolated using information from fiscal year projections
of premium collections from the Budget.
18
State and local
temporary disability
insurance
Required only by New Jersey and California. For New Jersey,
estimated as a percentage of Census COG/GF data on total
contributions for New Jersey. For California, estimated based on
data on total employee contributions from California Employment
Development Department.
Judgmental trend.
19
State and local
w orkers’
compensation
For state government contributions, COG/GF fiscal year data on
state and local government contributions. For local government
contributions, state government contributions multiplied by the
ratio of local government full-time equivalent employees to state
government full-time equivalent employees. For private employer
contributions, COG/GF data on premiums.
CES employment data and judgmental extrapolation of
premiums data.
*Quarterly estimates are provided as underlying detail only; these detailed estimates are not included in the published tables because their quality is significantly
less than that of the higher level aggregates in w hich they are included. Compared w ith these aggregates, the more detailed estimates are more likely to be either
based on judgmental trends, on trends in the higher level aggregate, or on less reliable source data.
BEA Bureau of Economic Analysis
COG/GF Census of Governments and Annual Surveys of Government Finances, Census Bureau
NIPA National Income and Product Accounts
OASDI Old-age, Survivors, and Disability Insurance
QCEW Quarterly Census of Employment and Wages, Bureau of Labor Statistics
SSA Social Security Administration
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-28
Appendix A: NIPA Measures of Employment and Hours
BLS is the principal provider of information on the labor market in the United States,
including detailed data on employment, hours, and earnings. BEA prepares its own measures of
employment and hours—based primarily on BLS data—to provide estimates that are consistent
with the NIPA measures of compensation. That is, the NIPA measures of compensation and of
employment and hours cover the same employees, they are adjusted consistently for
misreporting, coverage, and definitions, and they are based primarily on the BLS Quarterly
Census of Employment and Wages (QCEW) source data. Thus, the NIPA measures of
employment and hours facilitate analyses of NIPA-based compensation and productivity by
employee.
The QCEW program serves as a near census of quarterly employment information by 6-
digit NAICS industry. The data reflect the number of workers covered by the Unemployment
Insurance (UI) or the Unemployment Compensation for Federal Employees (UCFE) programs
and are derived from quarterly reports filed by almost every employer in the U.S., Puerto Rico,
and the U.S. Virgin Islands. All filled positions are included, whether full or part-time,
temporary or permanent; as such it is likely that a multi-job holder will be counted two or more
times in QCEW data. The estimates include foreign professional workers and undocumented
migratory workers employed temporarily in the United States; these are classified as “Rest of
world.”
The NIPA measures of employment by industry from 2001 forward are classified
according to the North American Industry Classification System; prior to 2001, the measures are
classified according to the Standard Industrial Classification system.
The NIPAs present current-dollar annual estimates of employment and hours by industry
in the following tables.
6.4 Full-Time and Part-Time Employees by Industry
6.5 Full Time Equivalent Employees by Industry
6.6 Wages and Salaries per Full Time Equivalent Employee by Industry
6.7 Self-Employed Persons by Industry
6.8 Persons Engaged In Production by Industry
6.9 Hours Worked by Full-Time and Part-Time Employees by Industry
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-29
BEA presents the following annual employment estimates:
Full- and part-time employees by industry. This measure is derived as the annual sum of the
QCEW tabulations of the monthly employment data reported to the states each quarter by private
industries on quarterly tax returns for employees covered by UI laws and by federal agencies and
state and local governments on similar reports for employees covered by the UCFE program.
The measure is adjusted as described in the section on “Adjustments to the QCEW employment
data.”
Full-time equivalent employees by industry. This measure equals the number of employees on
full-time schedules plus the number of employees on part-time schedules converted to a full-time
basis. For the current year, the number of nonfederal full-time equivalent employees in each
industry is the product of the total number of employees, from the QCEW, and the ratio of
average weekly hours per employee for all employees to average weekly hours per employee on
full-time schedules, based on data from the Current Population Survey (CPS) conducted by the
Census Bureau for BLS.
For previous years, the number of full-time equivalent employees in
each industry is the product of the total number of employees and the ratio of full time
employees to total employees, also from the CPS. An industry’s full-time equivalent
employment will be less than the number of its employees on full- and part-time schedules,
unless it has no part-time employees. For federal employees and for the military, the number of
full-time equivalent employees is based on data from the Budget of the United States
Government.
29
Wages and salaries per full-time equivalent employee by industry. This measure is derived as the
NIPA wages and salaries by industry divided by the NIPA measure of full-time equivalent
employees by industry.
Self-employed persons by industry. This measure consists of active proprietors or partners who
devote a majority of their working hours to their unincorporated businesses. Unpaid family
workers are not included. The measure is from BLS data on self-employment by industry and is
not adjusted by BEA.
Persons engaged in production by industry. This measure equals the NIPA measure of full-time
equivalent employees plus the number of self-employed persons in each industry.
Hours worked by full- and part-time employees by industry. For employees excluding the
military, this measure is derived as the product of total full- and part-time employees and the
number of average weekly hours per employee for all employees, multiplied by 52 weeks, based
29
For federal civilian employees, the data are from the Historical Tables of the budget, available at
http://www.whitehouse.gov/omb/budget/Historical-tables
.
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-30
on BLS data. For the military, this measure is derived as the product of the number of active duty
military members and an assumed number of hours per year, plus the product of the number of
reservists and an assumed number of hours per year.
Adjustments to the QCEW employment data
The QCEW employment data are largely consistent with the concepts and definitions
underlying the NIPA estimates of employment and hours. However, as with the QCEW wage
and salary data, BEA makes adjustments to make the data fully consistent with NIPA concepts,
definitions, and coverage. First, BEA adjusts employment so that it remains consistent with the
wages and salaries estimates adjusted for misreporting. Second, though the QCEW program
provides partial information on agricultural industries and on employees in private households,
BEA uses additional source data to estimate most or all of the employment for the same
industries for which wages and salaries are adjusted: farms, farm labor contractors, private
households, private elementary and secondary schools, religious membership organizations,
railroads, military, and U.S. residents who are employed by international organizations and by
foreign embassies and consulates in the United States.
Adjustment for misreporting. An adjustment is made to the QCEW data on private sector
employment for consistency with the misreporting adjustments made to wages and salaries. That
is, employment is adjusted in accordance with the adjustment to wages and salaries so that the
proportional relationship between them remains the same.
Adjustment for employment that is not covered or not fully covered by UI and UCFE programs.
An adjustment is made to add the employment of several industries that are not covered or that
are not fully covered by the UI and UCFE programs. Following the entries in table 10.2, the
adjustments are:
Government.—Military employment is measured as the number of military personnel
assigned to active duty units plus the number of military reserve unit members. The
estimate is based on data from the Budget.
Additional government-related adjustments are made for the employment of
students and their spouses by public colleges or universities, for elected officials and
members of the judiciary, for intelligence agents, and for interns employed by publicly
administered hospitals and by social service agencies. These adjustments, which
comprise only a very small share of the total government adjustment, are based on
CHAPTER 10: COMPENSATION OF EMPLOYEES
10-31
corresponding adjustments underlying BEA’s estimates of state personal income.
30
Other.—Other adjustments include estimates for employees not fully covered by the
QCEW, as follows:
- for federal government enterprises based on supplemental Budget data.
- for farms, based on quarterly data from USDA’s National Agricultural Statistics
Service on farm labor.
- for farm labor contractors, based on corresponding adjustments underlying
BEA’s state personal income estimates based on USDA data on expenditures for
farm contract labor.
- for railroads, based on data from the Railroad Retirement Board.
- for private elementary and secondary schools, based on corresponding
adjustments underlying BEA’s state personal income estimates, which are in turn
based on the employment reported annually by the Census Bureau’s County
Business Patterns (CBP).
- for religious organizations, based on CBP data.
- for private households, based on CPS data.
30
For more information on BEA’s estimates of state personal income, see “State Personal Income and Employment”
at www.bea.gov.
