Sources of Labor Data in the US

1
Sources of Labor Data in the US
2
Survey nature of Employment Statistics

• Bureau of Labor Statistics as the data collecting
  and reporting agency
• List of various surveys conducted by the BLS
• http//www.bls.gov/bls/proghome.htm
• Payroll data
• Current Employment Statistics
• Each month the Current Employment Statistics
  (CES) program surveys about 160,000 businesses
  and government agencies, representing
  approximately 400,000 individual worksites, in
  order to provide detailed industry data on
  employment, hours, and earnings of workers on
  nonfarm payrolls. Preliminary national estimates
  for a given reference month are typically
  published on the first Friday of the following
  month (source http//www.bls.gov/ces )
• Employment is the total number of persons on
  establishment payrolls employed full or part time
  who received pay for any part of the pay period
  that includes the 12th day of the month.
  Temporary and intermittent employees are
  included, as are any workers who are on paid sick
  leave, on paid holiday, or who work during only
  part of the specified pay period. A striking
  worker who only works a small portion of the
  survey period, and is paid, would be included as
  employed under the CES definitions. (source
  http//www.bls.gov/ces/cescope.htm )

3
Revisions of The Payroll Survey

• Initial Revisions
• Estimates are presented as soon as sufficient
  data have been collected to meet standards of
  accuracy and reliability so that they can be used
  to guide policy decisions. Aggregate level
  estimates (all 3-digit NAICS industry groups and
  above) are published with the first release of
  preliminary data, usually 3 Fridays after the
  survey reference week. At this point, about 65
  percent of the sample have been collected and
  used in the estimates. One month later, when over
  80 percent of the sample has been collected,
  estimates are published for the first time for
  all of the detailed industries, and the second
  set of preliminary estimates are published for
  the aggregate levels. The "first final" estimates
  are published the following month, when over 90
  percent of the sample reports have been
  collected. These estimates, published the third
  month after the month of reference, are the
  official estimates until the next benchmark
  revision which is published each February.
  (Source http//www.bls.gov/ces/cesmetho.htm )
• The Benchmarking
• The benchmark adjustment, a standard part of the
  payroll survey estimation process, is a
  once-a-year re-anchoring of the sample-based
  employment estimates to full population counts
  available principally through unemployment
  insurance (UI) tax records filed by employers
  with State Employment Security Agencies. By early
  October of each year, BLS completes preliminary
  tabulations of these universe counts for the
  first quarter of the year (source same as above)

4
Current Population Survey Unemployment Statistics

• Joint project between the US Census and the BLS
  http//www.census.gov/cps/
• Monthly Unemployment Statistics
• The Current Population Survey (CPS) is a monthly
  survey of households conducted by the Bureau of
  Census for the Bureau of Labor Statistics. It
  provides a comprehensive body of data on the
  labor force, employment, unemployment, and
  persons not in the labor force. Source
  http//www.bls.gov/cps/home.htm
• The Current Population Survey (CPS) is a monthly
  survey of about 50,000 households conducted by
  the Bureau of the Census for the Bureau of Labor
  Statistics. The survey has been conducted for
  more than 50 years.The CPS is the primary source
  of information on the labor force characteristics
  of the U.S. population.
• The data is available for download online at the
  Census website.

5
Basic Employment Statistics

• Labor Force
• Non-institutionalized civilian adult population
  (16 and older) that is either employed or
  unemployed
• Labor Force Participation Rate
• Fraction of the total non-institutionalized
  civilian adult population that is in the labor
  force
• Unemployed
• Those who have no work and are actively looking
  for work (picked up by the CPS survey)
• Unemployment rate
• Fraction of the labor force that is unemployment

6
Current US Employment SituationJanuary 2007

• Population of the country is estimated to be
  greater than 300 million
• Adult population is estimated to be 230,650
  thousand

Note the CES survey is used to obtain the
employment numbers, the CPS survey is used to
obtain the unemployment, the not in labor force,
and the civilian labor force numbers.
7
Basic issues

• Consider the change in employment statistics
  between January 07 and December 06
• Job growth is positive 111,000 jobs added
• Unemployment rate increased by 0.1 to 4.6
• Note, the unemployment rate increased despite the
  positive job creation. What is the explanation
  behind this strange behavior?
• Based on the level of unemployment in the US
  (7.017 million) a 0.1 represents 70,000 increase
  in the ranks of the unemployed. Given the growth
  in the US adult population this suggests that the
  US economy may need about 180,000 new jobs
  created on a monthly basis to keep up with the
  population growth. ? this explanation is probably
  most valid in this case, however alternative
  explanations can be offered as well
• One strong labor market conditions encourage
  more workers to enter the labor market, causing
  the growth in the labor force (this can be seen
  from the LFPR)
• Two Growth in self-employment maybe slowing
  down.
• the proceeding slides will elaborate on these
  alternative explanations

8
Additional explanations are possible

• Strong labor market conditions induce entry into
  the Labor Force
• Unemployment over the past year remained
  relatively low 4.4 4.8
• Using the BLS data from 2002-2006
• Correlation between the LFPR and the Unemployment
  rate is -0.611
• Regressing LFPR on Unemployment Rate
• LFPR 68.398 - 0.38 Unempl. Rate
• t statistic on Uneml.Rate is 7.48
• Note this explanation is optimistic, as it
  suggests that an increase in the unemployment
  rate is driven by an increase in the number of
  entrants into the labor market, and NOT the
  weaknesses in the labor market itself

9
LFPR
Unemployment Rate
http//www.bls.gov
10
Is this analysis correct?

• Note there are many issues involved and in all
  likelihood the analysis above is incorrect
• The analysis is limited to a relatively short
  period of time
• Other issues affect the labor force
  participation, including social factors and
  economic factors.
• The post WWII history of the US shows rapid
  changes in the labor force participation, and yet
  the unemployment rate does not show a real trend.
• Ultimately, the unemployment rate is a short-run
  aspect, while the decision to enter the labor
  force is more likely to be a long-run aspect
• Educational attainment as a reinforcing factor of
  this notion

11
LFPR
Historical US Labor Market Conditions
Unempl. R
12
Another Possible Explanation

• The payroll survey does not cover every employer
  in the US
• Growth in self-employment may turn negative
• This will effectively increase the ranks of the
  unemployed, and yet wont have a direct impact on
  the payroll survey
• Firms that came into existence earlier this year
  (after the benchmarking of the payroll survey)
  are reducing employment.
• Note, earlier, these firms were reducing the
  unemployment rate but now may be causing the
  increase in the unemployment rate.