Two sets of books

by John Quiggin on February 8, 2004

Anyone who’s been following recent discussion of the US economy will be aware that the Bureau of Labor Statistics produces employment statistics from two different surveys, and that the results have diverged radically since 2001. The BLS preferred numbers on employment growth come from a survey of employers (the Establishment Survey) while other numbers, including the unemployment rate are derived from a survey of households (Current Population Survey). As the BLS Commissioner’s latest statement notes (PDF file)

From the trough of the recession in November 2001 through January 2004, payroll employment decreased by 716,000. Over the same period, total employment as measured by the household survey increased by about 2.2 million (after accounting for the changes to that survey‚s population controls).

Not surprisingly supporters of the Administration have been pushing hard to discredit the Employment Survey in favour of the CPS. While noting some reasons for the discrepancy, the BLS seems to be sticking with the payroll survey, noting that there are a lot of problems in estimating employment growth from the CPS, and that the payroll data is consistent with data on new claims for unemployment benefits.

If that’s the case though, the implication appears to be that the CPS results are unreliable, and therefore that the unemployment rate (derived from the CPS) is an underestimate. Allowing for the fact that non-employed people are divided between unemployed and those not in the labour force, the discrepancy could easily be a full percentage point, implying that unemployment is now higher than when the recovery (as measured by output) began. This seems consistent with anecdotal impressions.



MDtoMN 02.08.04 at 6:12 pm

Also, Brad Delong is always posting the % of the working age population actually working graph, and recently the number has gone down. From 66% to 60%, meaning that a large number of people have left the workforce, even if they’re not technically “unemployed”, because they usually aren’t looking for work – they’re having babies or getting educated, discouraged, etc.

Another interesting place to look at for a feeling of the unemployment situation for young professionals – go to lsac – the group that runs the LSAT. They have numbers for how many people took it each year over the last decade or so. In the early 90s the number was about 150,000. Then it dipped steadily almost to 100,000 during the Clinton years. Recently it has gone back up and is hovering around 150,000. So, it appears that Young Professional types are leaving the labor market to get educated and find work, who would have been working in a better labor market.


booth 02.09.04 at 3:45 pm

If someone calls a house, and an unemployed person answers, how likely will that person tell the truth about employment? You can imagine an unemployed person having trouble with bills, and worried that this “pollster” is some kind of front for a billing company.


Jim Miller 02.11.04 at 2:45 am

Well, I glanced at the technical paper the BLS put out on the problem and concluded that they were genuinely confused on the subject. The two numbers have been diverging for about 10 years now and the obvious adjustments, which used to work fairly well, don’t seem to anymore.

The difference between the two totals is quite extraordinary by now, 8 million or something like that.

I suppose that people could be more prone to lie to the interviewers now than a decade ago, I can’t say that the idea seems very plausible.

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