Redux: Household versus Establishment Surveys

Saturday, July 08, 2006 | 02:30 PM

One last item:

"The Labor Department's payrolls report is also at odds with its own survey of households, which is used to calculate the unemployment rate. The household survey showed employment grew by 387,000 in June, in line with ADP's figures.

The enormous disparity of recent months coupled with the ADP data supporting the household-data implications raises important questions about the reliability of all three employment counts,'' said David Resler, chief economist at Nomura Securities International in New York."    -Bloomberg

Umm, no -- that's simply incorrect (and Bloomberg and Nomura Securities ought to know better).

For the record: The Labor Department's Establishment Survey (aka NonFarm Payroll report) number of 121k WAS NOT AT ODDS with its own Household Survey of 387k. These two reports measure two very different things. The numbers can be off by a few 100k -- and still be consistent with each other. 

As we have discussed all too many times, the Household survey measures:

- Agriculture and related employment;
- Uncompensated Workers;
- Unpaid Family Employees;
- Part Time Workers;
- Workers absent without pay from their jobs;
- Self employed, Work-at-home Contractors;

-- none of which are counted in the Establishment (Non-Farm Payroll) Survey.   

In fact, the BLS specifically looked at and compared the two data series back in 2004. Once they made an adjustment so both surveys were counting the same thing, the huge gap disappeared.

I seriously challenge the expertise of any economist that fails to recognize the different data series.

This is something I would hope that mainstream economic reporters would understand -- even if they are not economists (i.e., Bloomberg!). Any reporter that dutifully repeats this tripe has been punk'd.  If this is your beat, and you are not familiar with these two survey methodologies, than you better get up to speed quickly. Especially if you are going to get dissed by some economist trying to cover his tracks on a regular basis.

Here are the graphs from the BLS report:

1994 -2004
click for larger graphics

Bls_hs_19942004


2001-2004

Bls_hp_200104

 

Note:  This isn't a new development -- these are from 2004.

>

Sources:
ADP Job Survey Loses Luster Among Economists After June Miss
Joe Richter
Bloomberg, July 7, 2006 15:09 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=aB3TRqqC9acI&refer=worldwide_news

Bureau of Labor Statistics, (PDF)
BLS report, March 5, 2004
http://www.bls.gov/cps/ces_cps_trends.pdf

BLS on Payroll vs. Household Survey
The Big Picture, March 14, 2004
http://bigpicture.typepad.com/comments/2004/03/bls_on_payroll_.html

Saturday, July 08, 2006 | 02:30 PM | Permalink | Comments (29) | TrackBack (2)
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Listed below are links to weblogs that reference Redux: Household versus Establishment Surveys:

» Redux: Household versus Establishment from A Dash of Insight
While Barry Ritholtz's blog is a big favorite for lots of us, I do not think that David Malpass, Chief Global Eocnomist for Bear Stearns, is going to drop by to comment on the employment numbers. His work in the [Read More]

Tracked on Jul 8, 2006 9:21:26 PM

» Redux: Household versus Establishment from A Dash of Insight
While Barry Ritholtz's blog is a big favorite for lots of us, I do not think that David Malpass, Chief Global Eocnomist for Bear Stearns, is going to drop by to comment on the employment numbers. His work in the [Read More]

Tracked on Jul 10, 2006 1:29:46 PM

Comments

Looks like the difference after the adjustment is roughly about 10,000 jobs per period .... job growth appears to be , for both households and payrolls , between 112k -133k / month from 1994 thru 2004 .... almost the same for Clinton and Bush ?.... am I reading this correctly?


BR: No, its not a read of monthly employment gains -- its total employment.

150,000 (in thousands) is ~150 million employed.

Posted by: pf | Jul 8, 2006 3:28:19 PM

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