Much is being made of the employment numbers these days. Employment numbers are among the most important indicators we have to gauge economic performance so it is not surprising that they receive constant attention in the media, among political leaders and business executives.

The U.S. Department of Labor has two primary measures – nonfarm jobs and resident employment – that are cited frequently but are not often well understood. Because the two measures look at information provided by different sources, the numbers are different and they can occasionally appear to conflict one another. Complicating things further is the process by which each measure is revised to include seasonal factors and new information that is obtained from sources following the release of a monthly estimate.

Nonfarm payroll employment is based on a monthly scientific survey of about 2,000 employers in Maine where payroll information (employment and earnings) is collected. In addition to the survey information, the measure is adjusted over time to reflect additional information gathered from a much larger pool of employers who report employment and payroll numbers under the Maine Employment Security law.

Resident employment measures employment through a monthly survey of nearly 1,000 households in Maine. Information is solicited through the survey on each household member, including detailed questions about employment status and job search behaviors. The resident employment survey counts some workers not counted in the nonfarm payroll survey including, the self-employed, agricultural workers, private household workers, and Maine residents who are employed by out of state firms. The U.S Census estimated that that the number of self employed residents increased from 52,602 in 1990 to 58,183 in 2000. In addition, the number of Maine residents working out of state increased from 19,254 in 1990 to 24,200 in 2000.

Between 2002 and 2005, Maine shows an official employment increase of 5,200 non-farm, payroll jobs based upon annual average employment of 606,500 in 2002 and 611,700 in 2005. During the same time frame, resident employment has increased by 22,000 from 655,000 in 2002 to 677,000 in 2005.

Each state reports nonfarm payroll numbers and resident employment monthly as part of a tightly controlled process with methodologies uniformly specified by the U.S. Department of Labor, Bureau of Labor Statistics. Generating the official numbers involves multiple steps over many months, including revisions based on new information, before the final numbers are published.

Both estimating procedures take into account seasonal factors that impact employment at different times during the year. Before estimates are finalized for the official count, the federal Bureau of Labor Statistics further adjusts state date leading to revised numbers. There is a lag of 12-18 months between when the monthly estimates are released and the final employment numbers are reported.

Payroll and resident employment concepts are each valuable but focus on different employment definitions. They produce employment estimates subject to the complexities of statistical interpretation. State and federal statistical agencies work cooperatively to improve these measures and to help interpret them for the public.

The reporting cycle takes months to complete in the interests of accuracy. We are confident that methods used to generate them provide us with the means to gauge economic and labor market performance.

In a time of structural economic shifts and changing relationships, however, it becomes more important not only to understand the numbers but to examine a spectrum of indicators for gauging the economic performance. These numbers serve a larger purpose in the overall scheme of things. Not only do they provide a snapshot of how workers and the economy are faring, they guide critical decisions about people and their future economic well being.

John Dorrer is director of Labor Market Information at the Maine Department of Labor. He is an economist and research administrator focused on work force development, human capital and labor market policies at the state and local level. He previously served as deputy director of work force development at the National Center on Education and the Economy in Washington, D.C.