Featuring the QCEW

by Brent Pearson
January 2014

The Labor Market Information (LMI) office in the Minnesota Department of Employment and Economic Development (DEED) in conjunction with the federal Bureau of Labor Statistics (BLS) generates quarterly counts of employment and wages by industry classification, using the North American Industrial Classification System (NAICS), at the national, state, county, and local jurisdiction level.  

These data are compiled using Minnesota’s Unemployment Insurance (UI) database which covers approximately 97 percent of statewide employment and are considered a census of all jobs reported by employers covered under the UI program. While the data published on DEED’s website is published back to 2000, the Quarterly Census of Employment and Wages (QCEW) program has been collecting data for the past 72 years. 

The QCEW provides the best available employment counts for the state and particularly the smaller communities within it.  But as with any form of public data gathering, methods of collection and dissemination of QCEW data have evolved over time.  A brief history of the evolution of QCEW data:

In 1936 the Minnesota state legislature created the Unemployment Insurance Program, effectively establishing through a payroll tax system a reserve fund to benefit persons unemployed through no fault of their own.  This set the foundation for collecting employment and unemployment data.  A covered employer was defined then as any who providing employment for eight or more individuals (one of which must be employed within the corporate limits of a city) for 20 different although not necessarily consecutive weeks within the calendar year.

In 1941 statistics began to be collected from the program under the auspices and funding of the Department of Labor. Then and for many subsequent years, the report was known as the ES-202.  The Standard Industrial Classification (SIC) manual, created in 1937 by the U.S. Census to classify industries at a four-digit industry level, was used nationally to create comparable data for all states.  This system was modified several times over the years to reflect changes in the economy.

In 1959 UI coverage changed to employers with four or more employees in towns with a population fewer than 10,000, defined as “outside the corporate limits of a city, village, or borough”,  as determined by the most recent U.S. Census.  For employers within a community of 10,000 or more, coverage remained unchanged with one employee.  In 1971, however, delineations of coverage based on population was dropped entirely and changed to one or more at any firm in Minnesota.

Coverage extended to nonprofit organizations with a 501(C)3 exemption from the I.R.S. in 1972. In 1974 coverage extended to state and local government employees.  But other changes were in store as well — most notably, Minnesota added community codes to each location reported down to the level of unorganized territories and thus laid the groundwork for QCEW data as we know it today where it identifies industry-level employment both public and private aggregated to specific communities. 

The most recent changes to the ES-202 was a 1997 coding system change to define industry by  the six digit NAICS system in order to ensure full data compatibility with Canada and Mexico. In 2002 the name of the ES-202 was informally changed to QCEW.