William WascherDeputy Director of the Division of Research and Statistics - Federal Reserve Board of Governors
2005, No. 2
THE BUREAU OF Labor Statistics’ (BLS) monthly report on labor market
developments is the government’s most widely anticipated statistical release
and the one that most influences markets, forecasters, and policymakers.
The report provides detailed information on employment from two sources:
the Current Population Survey of households, which also provides data on
unemployment, and the Current Employment Statistics survey of payrolls
from nonfarm business establishments and government. These two sources
often produce very different estimates of the monthly change in aggregate
employment, and the payroll data are widely accepted as the more reliable.
They are featured on the first page of the monthly release and are
the employment data most frequently discussed in the business press and
other media. The annual Economic Report of the President has recently
reaffirmed their reliability relative to the household data, as has Federal
Reserve Board Chairman Alan Greenspan. Simply put, to judge by what the
experts say and what the media report, most people interested in what is
happening to aggregate employment rely on the payroll numbers. They use
the household survey for the unemployment rate, demographic breakdowns,
and various more arcane measures of labor market developments that only
it provides. This paper questions whether the overwhelming preference for
the payroll data as the measure of aggregate employment is justified, and
concludes it is not.
