Employment Situation Frequently Asked Questions
- 5 - Frequently Asked Questions about Employment and Unemployment Estimates Why are there two monthly measures of employment? The household survey and establishment survey both produce sample-based estimates of employment and both have strengths and limitations. The estab- lishment survey employment series has a smaller margin of error on the mea- surement of month-to-month change than the household survey because of its much larger sample size. An over-the-month employment change of 104,000 is statistically significant in the establishment survey, while the threshold for a statistically significant change in the household survey is about 400,000. However, the household survey has a more expansive scope than the establish- ment survey because it includes the self-employed, unpaid family workers, agricultural workers, and private household workers, who are excluded by the establishment survey. The household survey also provides estimates of employment for demographic groups. Are undocumented immigrants counted in the surveys? Neither the establishment nor household survey is designed to identify the legal status of workers. Thus, while it is likely that both surveys include at least some undocumented immigrants, it is not possible to determine how many are counted in either survey. The household survey does include questions about whether respondents were born outside the United States. Data from these ques- tions show that foreign-born workers accounted for 15.7 percent of the labor force in 2007 and 47.7 percent of the net increase in the labor force from 2000 to 2007. Why does the establishment survey have revisions? The establishment survey revises published estimates to improve its data series by incorporating additional information that was not available at the time of the initial publication of the estimates. The establishment survey revises its initial monthly estimates twice, in the immediately succeeding 2 months, to incorporate additional sample receipts from respondents in the survey. For more information on the monthly revisions, please visit http://www.bls.gov/ces/cesrevinfo.htm. On an annual basis, the establishment survey incorporates a benchmark revision that re-anchors estimates to nearly complete employment counts available from unemployment insurance tax records. The benchmark helps to control for sampling and modeling errors in the estimates. For more information on the annual benchmark revision, please visit http://www.bls. gov/web/cesbmart.htm. Has the establishment survey understated employment growth because it excludes the self-employed? While the establishment survey excludes the self-employed, the household survey provides monthly estimates of unincorporated self-employment. These estimates have shown no substantial growth in recent years. - 6 - Does the establishment survey sample include small firms? Yes; about 40 percent of the establishment survey sample is comprised of busi- ness establishments with fewer than 20 employees. The establishment survey sam- ple is designed to maximize the reliability of the total nonfarm employment esti- mate; firms from all size classes and industries are appropriately sampled to achieve that goal. Does the establishment survey account for employment from new businesses? Yes; monthly establishment survey estimates include an adjustment to account for the net employment change generated by business births and deaths. The adjustment comes from an econometric model that forecasts the monthly net jobs impact of business births and deaths based on the actual past values of the net impact that can be observed with a lag from the Quarterly Census of Employment and Wages. The establishment survey uses modeling rather than sampling for this purpose because the survey is not immediately able to bring new businesses into the sample. There is an unavoidable lag between the birth of a new firm and its appearance on the sampling frame and availability for selection. BLS adds new businesses to the survey twice a year. Is the count of unemployed persons limited to just those people receiving unemployment insurance benefits? No; the estimate of unemployment is based on a monthly sample survey of households. All persons who are without jobs and are actively seeking and available to work are included among the unemployed. (People on temporary layoff are included even if they do not actively seek work.) There is no requirement or question relating to unemployment insurance benefits in the monthly survey. Does the official unemployment rate exclude people who have stopped looking for work? Yes; however, there are separate estimates of persons outside the labor force who want a job, including those who have stopped looking because they believe no jobs are available (discouraged workers). In addition, alternative measures of labor underutilization (discouraged workers and other groups not officially counted as unemployed) are published each month in the Employment Situation news release.