The Big Picture

« Jobs and Consumer Spending | Main | The Fed, Elections and Rate Changes »

BLS on Payroll vs. Household Survey

Sunday, March 14, 2004 | 08:09 PM

The Bureau of Labor Statistics weighs in on the now thoroughly discredited Payroll vs. Household Survey pseudo-controversy.

Economists Arnold Kling and Steve Antler each point to a recent Bureau of Labor Statistics analysis on the divergence between the payroll survey and the household survey of employment. The BLS (led by the hardly apolitcal Elaine Chao) observes:

"As part of its annual review of intercensal population estimates, the U.S. Census Bureau determined that a downward adjustment should be made to the household survey population controls. This adjustment stemmed from revised estimates of net international migration for 2000 through 2003. In keeping with usual practice, the new controls were used in the survey starting with data for January 2004. Estimates for December 2003 and earlier months were not revised to reflect the new (lower) population controls.

...As a convenience to its data users, BLS created a research series that smoothes the level shifts in employment resulting from the January 2000, 2003, and 2004 population control adjustments."
--BLS

Federal Reserve Chairman Alan Greenspan has noted that the Payroll survey is much more reliable than the household survey. That hasn't stopped several economists -- some of whom have an explicit political agenda -- from arguing that the divergence between the two surveys is understating the strength of the economy.

As if Greenspan didn't resolve the issue in his recent statements, the BLS itself has now weighed in. As these following charts make clear, when "modified to make it more "similar in concept and definition" to the payroll survey," the divergement all but disappears.

The BLS did this by subtracting from the Household Survey:

1) Total agriculture and related employment;
2) Self-employed, unpaid family and private household workers (nonagriculture);
3) Workers absent without pay from their jobs.

BLS then added back in nonagriculture wage and salary multiple job holders.

The use of the broader standard (including farm and unpaid family workers) is what apparently created the divergement, as shown by the Green lines. Using data "similar in concept and definition" to the Payroll Survey "magically" eliminates the phantom missing jobs, as seen in the Red lines:

Household and Payroll Survey employment, Seasonally Adjusted, 1994-2004

Source: Bureau of Labor Statistics, March 5, 2004

The BLS notes about both charts (above and below): The household series presented here has been smoothed for population control revisions. The "adjusted" household series has been smoothed for population control revisions and adjusted to an employment concept more similar to the payroll survey. Shaded area indicates recession.

Household and Payroll Survey employment, Seasonally Adjusted, March 2001 - February 2004

Source: Bureau of Labor Statistics, March 5, 2004

The BLS has now formally resolved the Household/Payroll Survey discrepancy. Let's see who has the intellectually honesty to step up to the plate with a big mea culpa. You may assume any of the original advocates of this now totally untenable position who adhere to it are little more than partisan hacks, and disregard them as appropriate.

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

If the BLS file doesn't download, here's a local copy: PDF

Employment Situation Explanatory Note
BLS report, March 5, 2004
http://bls.gov/news.release/empsit.tn.htm

Mad props to Steve Antler for the awesome pick up . . .

TrackBack

TrackBack URL for this entry:
https://www.typepad.com/services/trackback/6a00d8341c52a953ef00d83420961653ef

Listed below are links to weblogs that reference BLS on Payroll vs. Household Survey:

» Payroll Vs. Household Put To Rest from Industry - The Joe Hill Dispatch - Journal of Business, Finance and Economics
Barry Ritholtz at the Big Picture lays out the case that BLS has made resolving the psuedo controversy over the divergence between the Payroll vs.... [Read More]

Tracked on Mar 15, 2004 8:51:52 AM

» The Last Word on the Employment Survey Controversy from Barefoot And Naked
There has been a lot of noise over in Goperland that the payroll survey does not capture new business start-ups and the self employed. Of course, this is a lie. The payroll survey takes great care to capture new businesses... [Read More]

Tracked on Mar 15, 2004 5:37:54 PM

» BLS Adjusts The Household Survey from nyc99
Barry Ritholtz at The Big Picture reports and comments on the BLS and the Payroll vs. Household Survey controversy and explains the BLS remedy.... [Read More]

Tracked on Mar 15, 2004 9:35:26 PM

Comments

could be me, but it stikes me that the most partisan use of the statistics has been by democrats with their "millions of jobs destroyed by Bush" agenda. (As a Brit I have no agenda other than an unbiased reporting of the data.) In fact, even on these revised numbers, the HH survey shows jobs created not destroyed, so it will be interesting to see how they (Krugman et al) respond. Of course this has not been a typical upturm because it wasn't a typical downturn. But that's another story.

Posted by: Mark T | Mar 15, 2004 7:28:50 AM

The comments to this entry are closed.