Length of pay periods in the Current Employment Statistics survey

The BLS Current Employment Statistics (CES) survey produces employment, hours, and earnings data series, covering over 900 industries at various levels of aggregation. To provide this detailed information on workers on nonfarm payrolls, CES collects data from about 142,000 businesses and government agencies representing approximately 689,000 individual worksites, or establishments. ² The active CES sample includes about one-third of all nonfarm payroll employees in the nation.

Data are collected each month from establishments for the pay period that includes the 12th of the month. The length of this pay period is specific to each business and depends on how frequently it pays its employees. This means that businesses participating in the CES survey report information on total employment, hours, and earnings for various lengths of pay period. Pay periods can be weekly, biweekly (every two weeks), semimonthly (twice a month), or monthly.³

CES estimates of hours and earnings are published as weekly values. Therefore, reported data for pay periods other than weekly must be modified, or normalized, to a common weekly basis. For example, an establishment that pays employees for a 2-week pay period will need to have its reported hours divided in half in order to calculate average weekly hours. For this reason, respondents reporting hours or earnings information are also asked to provide the length of their pay periods. ⁴ In response to public interest in how frequently establishments pay their employees, CES has been producing annual length-of-pay-period data. ⁵

Each data observation used in these length of pay period calculations represents one establishment and the length(s) of pay period they use. Establishments that pay all workers for the same length of pay period are referred to as single-pay-period reporters, whereas establishments that pay some workers for one length of pay period and other workers for another length of pay period are referred to as multiple-pay-period reporters. The CES program collects data for up to two lengths of pay periods for each establishment.⁶

Each establishment in the CES survey is assigned a weight, which is determined by the establishment’s chance of being selected to be in the CES sample. The weight is the inverse of the establishment’s chance of selection; so, for example, an establishment with a one-in-five chance of selection is assigned a weight of five. ⁷ This weight is used in producing the survey’s employment, hours, and earnings estimates. CES has also applied this weight to data on the length of the establishment’s pay period. The weighted length-of-pay-period data result in estimates of the percentage of private establishments operating under each length of pay period in the United States. Government and public and private educational establishments’ hours and earnings data are out of scope for the CES survey.

In February 2019, biweekly was the most common length of pay period, with an estimated 42.2 percent of U.S. private establishments paying their employees every 2 weeks. Weekly pay periods were almost as common, with 33.8 percent of private establishments paying employees each week. Semimonthly and monthly pay frequencies were less common. Chart 1 shows the February 2019 distribution of private establishments operating under each length of pay period.

The distribution of lengths of pay period can also be examined by size and by industry.

Establishment size

The CES survey groups reporting establishments into eight different size classes based on the maximum number of employees within the business over the previous 12 months. Chart 2 displays the percentages of private establishments operating under each length of pay period by size class.

The percentage of private establishments operating under a biweekly pay period is lowest within the smallest size class (1–9 employees); this percentage increases with each move to a larger size class. In the largest size class (over 1,000 employees) over 70 percent of the establishments pay on a biweekly schedule. The reverse trend, however, is seen for the three other length-of-pay-period groups: the percentage of establishments operating with weekly, semimonthly, and monthly payrolls generally decreases as the size classes get larger. The smallest establishments tend to exhibit the most variety in paying their workers.

Industry

The CES survey classifies establishments into industry groups, based on the 2017 North American Industry Classification System (NAICS).⁸ In four industries–construction, information, education and health services, and leisure and hospitality–a majority of establishments pay their employees under one main length of pay period. The construction industry displays the most uniformity in its pay period, with 75.9 percent of establishments in the industry using a weekly pay period. Construction is also the only industry in which the majority of establishments use a weekly pay period. In the other three industries in which a single pay period is predominant, biweekly pay periods are the most common.

To summarize, there is no specific pay period used by a majority of private establishments. The biweekly pay period is the most common, followed next by weekly, then semimonthly, then monthly. Certain pay periods tend to dominate in individual industries; an example being the use of weekly pay periods by 76 percent of construction establishments. And the use of the most common pay period–biweekly–tends to increase as establishment sizes grows larger.

Length of pay period data may help users understand potential effects on CES data, for example, industries with shorter pay periods may be more likely to be impacted by severe weather events.

The information presented here may also be useful to those interested in understanding or researching pay frequencies and their impact on workers and the economy.⁹ Pay period frequency affects the timing of budgetary and financial decisions made by both workers and employers. Workers paid weekly, for example, have the most frequent access to their pay, while workers who are paid monthly may have to defer some purchases or payments until they receive their pay. Conversely, businesses paying workers every week may face short-term constraints on their ability to make non-labor expenditures that businesses with longer pay periods do not.

¹The data and analysis presented here is an update of information originally presented in Matt Burgess, “How frequently do private businesses pay workers?” Beyond the Numbers: Pay & Benefits, vol. 3, no. 11 (U.S. Bureau of Labor Statistics, May 2014), https://www.bls.gov/opub/btn/volume-3/how-frequently-do-private-businesses-pay-workers.htm.

²Data collection and industry classification for the Current Employment Statistics (CES) survey occurs at the worksite–or establishment–level. The terms “worksite” and “establishment” are used interchangeably. An establishment is not the same as a firm or company. Establishments are usually individual worksites dedicated to a single economic activity. For a more detailed explanation of CES concepts and methodology, see the CES technical notes page at https://www.bls.gov/web/empsit/cestn.htm.

³For state payday requirements, see Wage and Hour Division: state payday requirements (U.S. Department of Labor, January 1, 2019), http://www.dol.gov/whd/state/payday.htm

⁴About 53 percent of respondents reported hours and earnings data in February 2019.

⁵Length of pay period data produced by CES is a “snapshot” of specific point in time, and is not a time series. The data presented here is for February 2019.

⁶To see the specific types of data CES asks respondents to submit, see the CES report forms at https://www.bls.gov/ces/report-forms/home.htm.

⁷Information on the CES sample and its implementation are available in the CES Technical Notes at https://www.bls.gov/web/empsit/cestn.htm#section1.

⁸Information on NAICS in the CES program is available at https://www.bls.gov/ces/naics/home.htm.

⁹ See, for example, Inés Berniell, “Pay Cycles: Individual and Aggregate Effects of Paycheck Frequency,” April 2019, https://inesberniell.weebly.com/uploads/9/1/2/2/91228902/pay_cycles_berniell_ines.pdf

Last Modified Date: August 29, 2019