The unemployment rate — a deeply imperfect indicator with which everyone is familiar — is assembled from the Current Population Survey, also known as the “household survey.” The Bureau of Labor Statistics calls a representative selection of households and asks them about their employment status. It is rarely subject to drastic revisions, and the survey can provide a reasonable, real-time guide to the health of the labor market.
However, this is not the data-gathering process for the closely watched monthly payroll estimates, often called jobs reports, that April’s headline-grabbing big miss is based on. For these estimates, the Bureau of Labor Statistics calls business establishments, rather than households, to collect information about their number of workers, the total hours employees worked in a week and how much money employers spent on payroll. Data derived from this survey often experiences significant revisions month-to-month as a result of improved sampling receipts and better data for extrapolating from the sample to population-level estimates.
While this survey, known as “the establishment survey,” is important, it does a terrible job at establishing consistent stories about the labor market. This is clearly visible in April’s jobs report, which dramatically revised the headline numbers for February and March. According to the initial, unrevised, headline-grabbing reports, the economy gained about 379,000 jobs in February and about 916,000 jobs in March. However, if we look at the most recent revisions, we’ll see that the economy roughly gained a whopping 568,000 jobs in February and only about 770,000 jobs in March. Instead of a slow February and incredible March, we see more uniform monthly growth. Different story, right?
Building a master narrative based on a single jobs report may be appealing and politically convenient. But if you’re intent on building a labor-market narrative on the basis of a single payroll release, it should at least match the headline data and the industry-level dynamics.
Though the news has been flush with business interests complaining that they can’t find workers, the numbers, if you look closely, tell a different story. Policy should be made using the data we have, and so lawmakers should note that the data, for now, doesn’t show that the relief they’ve dispersed has caused a clear disincentive that’s hurting the economy.
If we had good evidence that the temporary supplement to unemployment benefits was making it harder to fill certain jobs, that fact should motivate a deeper inquiry: Do those jobs adequately compensate prospective employees for the effort they would exert and the risks they would have to bear? As President Biden said in a recent speech, “People will come back to work if they’re paid a decent wage.”