Exploring Differences in Employment between Household and Establishment Data Katharine G. Abraham, University of Maryland and NBER John Haltiwanger, University of Maryland and NBER Kristin Sandusky, U.S. Census Bureau James Spletzer, U.S. Bureau of Labor Statistics

Overview  Employer survey (CES) employment grew faster than household survey (CPS) employment from 1997 through 2001, but CPS employment outpaced CES employment from 2001 to 2003 Similar cyclical pattern observed in other periods  Discrepancies have provoked much discussion but remain a puzzle  We use CPS records matched to UI wage records for the same individuals to explore sources of discrepancy between employer-reported and household-reported employment

CPS versus CES employment CPS employment  Number of people  Includes wage and salary, self-employed, unpaid family workers  Worked 1 hour, or with a job but not at work  Week of 12 th  Person totals controlled to Census population estimates CES employment  Number of jobs  Includes only non- farm wage and salary workers  On payroll  Payroll period including the 12 th  Employment counts benchmarked to administrative data

Adjusted CPS employment, 2004 (in thousands) Payroll jobs (CES)131,480 Household employment (CPS)139,252 Less: Agriculture2,232 Nonagricultural self-employed 9,467 Nonag. unpaid family workers 90 Private household workers779 Unpaid absences1,926 Total14,493 Plus: Multiple jobholders7,067 Adjusted household employment131,825

Chart 2. Ratio of establishment survey employment to household survey nonagricultural wage and salary employment,

What explains recent discrepancies in CPS and CES employment trends?  Sampling error in the two surveys  Persons under age 16 and members of the institutionalized population excluded from the CPS employment counts  Possible issues with the treatment of government-subsidized jobs  Incomplete accounting for multiple jobs in the adjusted CPS employment series Adjusted series ignores jobs beyond 2 nd job Adjusted series ignores secondary civilian jobs held by those in the Armed Forces

What explains recent discrepancies in CPS and CES employment trends? (cont’d)  Benchmarking of the CES estimates  Population controls used for CPS estimates  Classification of CPS jobs as wage-and- salary employment versus self-employment  Missing marginal jobs in CPS  Missing “off-the-books” or non-standard employment in CES  Pro-cyclical turnover that affects number of jobs during longer CES payroll periods relative to single CPS reference week

Measurement framework Linked CPS-UI wage records microdata Individual holds job in UI NoYes Individual holds job in CPS NoX1X1 X2X2 YesX3X3 X4X4

Measurement framework Number of persons employed in UI X 2 + X 4 Number of persons employed in CPS X 3 + X 4 Difference in number of persons employed (UI - CPS) X 2 – X 3

Measurement framework Linked CPS-UI wage records microdata, X 4 sample People holding stated number of jobs in UI OneTwo plus People holding stated number of jobs in CPS OneY1Y1 Y2Y2 Two plus Y3Y3 Y4Y4

Measurement framework Number of multiple job holders in UI Y 2 + Y 4 (+ part X 2 ) Number of multiple job holders in CPS Y 3 + Y 4 (+ part X 3 ) Difference in number of multiple job holders (UI – CPS) Y 2 – Y 3 (+ part X 2 – part X 3 )

Marginal (short duration or low earnings) jobs that are not reported by household survey respondents grow in number during business cycle expansions X 2 procyclical Y 2 procyclical ”Off-the-books” or non-standard jobs that are not reported by employers shrink in number during business cycle expansions X 3 countercyclical Y 3 countercyclical Increases in the job-changing rate during business cycle expansions lead to relative increases in employment counts Y 2 procyclical Measurement framework

Research strategy  Use UI and CPS data to study levels and changes over time in number of people by employment status (X 2, X 3 ) and job count classification (Y 2, Y 3 ) Are aggregate movements consistent with our hypotheses?  Examine characteristics of people and jobs in different cells Are personal and job characteristics of people in different cells consistent with our hypotheses?  Use information on changes in person and job characteristics over time to simulate movements in X 2, X 3, Y 2, Y 3 series Do simulated series reproduce the discrepancy that motivated our study?

Linking CPS and UI records  Census Longitudinal Employer-Household Dynamics (LEHD) program has UI wage record data for 17 states from 1996 to present  CPS data monthly and UI data quarterly Need to construct quarterly CPS records for comparison with quarterly UI records for same individuals  Protected Identity Key (PIK) based on SSN available for percent of March CPS supplement responses and all UI wage records

Analysis sample  Analysis sample consists of March CPS respondents age 16 and older who live in 16 states covered by LEHD data (17 states minus Maryland) Maryland dropped because more than 15 percent of residents work in another state or DC  Because quarterly information required for comparisons with UI data, sample limited to those with CPS responses for January, February and March  Because CPS records must be matched to the UI wage records, sample limited to CPS records with a PIK  Propensity score methods used to adjust CPS weights to account for sample restrictions

Constructing quarterly employment records  In both data sets, in-scope employment includes individuals with a non-agricultural private sector, state government or local government wage-and-salary job  Information on job changes and multiple jobs held simultaneously used to categorize people as holding one in-scope job or two plus in- scope jobs in CPS Most certain a job change has occurred if question asked and answered directly, but not always asked Multiple job question asked every month, but class of second job asked only in outgoing rotation group Will discuss results for more restrictive of two criteria  Number of jobs in UI data based on number of wage records

Trends in national CES versus CPS, linked sample UI versus CPS

Discrepancies in employment status, Not in-scope worker in UI In-scope worker in UI Not in-scope worker in CPS Overall share37.1%3.4% Row share91.7%8.3% Column share77.9%6.4% In-scope worker in CPS Overall share10.5%49.1% Row share17.6%82.4% Column share22.1%93.6%

Discrepancies in job count status, restrictive CPS classification, Single wage and salary job in UI Two plus wage and salary jobs in UI Single wage and salary job in CPS Overall share81.3%10.4% Row share88.7%11.3% Column share95.6%69.2% Two plus wage and salary jobs in CPS Overall share3.7%4.6% Row share44.6%55.4% Column share4.4%30.8%

Trend in X 2 and X 3

Trend in Y 2 and Y 3, more restrictive CPS multiple job definition

Which people would we expect to find in X 2 and X 3 ?  Expect people in X 2 to hold jobs they consider marginal Personal characteristics: young (students), older (retired) Job characteristics: short duration, low hours, low earnings  Expect people in X 3 to hold “off-the-books” or non- standard jobs Personal characteristics: older, less than high school education, college or higher education Job characteristics: short duration, low hours, low earnings; types of work (industries and occupations) in which there are many non-wage-and-salary workers (self-employed, contractors, consultants)

Factors affecting probability in-scope UI worker not an in-scope CPS worker (X 2 ) Age ** Age Age ** Age 65 plus 0.088** Less than high school 0.007* Some college College graduate More than college 0.010* Black 0.022** Other nonwhite 0.009* Male 0.006** Married ** Foreign-born 0.026** Non-proxy interview 0.006** Any long UI jobs? ** Two or more UI jobs? ** UI earnings under $1K 0.280** UI earnings $1K-$2.5K 0.057** UI earnings $12.5K-$25K ** UI earnings over $25K-0.000

Factors affecting probability in-scope CPS worker not an in-scope UI worker (X 3 ) Age ** Age ** Age ** Age 65 plus 0.105** Less than high school 0.018* Some college College graduate 0.017** More than college 0.055* Black ** Other nonwhite Male 0.025** Married * Foreign-born 0.040** Non-proxy interview Work discontinuity? 0.152** Probability a contractor 0.091** Any full-time jobs **

Which people would we expect to find in Y 2 and Y 3 ?  Expect people in Y 2 to hold marginal second jobs and/or have two jobs counted when they change employer Personal characteristics: young (high turnover) Job characteristics: short duration, low hours, low earnings  Expect people in Y 3 to hold “off-the-books” or non- standard jobs Personal characteristics: older, less than high school education, college or higher education Job characteristics: short duration, low hours, low earnings; types of work (industries and occupations) in which there are many non-wage-and-salary workers (self-employed, contractors, consultants)

Factors affecting probability UI multiple job holder has only a single CPS job (Y 2, restrictive) Age Age * Age Age 65 plus Less than high school Some college * College graduate ** More than college ** Black 0.097** Other nonwhite Male Married * Foreign-born 0.057** Non-proxy interview * Any long 2 nd UI jobs? ** Three or more UI jobs? UI 2 nd job under $1K UI 2 nd job $1K-$2.5K ** UI 2 nd job $12.5K-$25K 0.210** UI 2 nd job over $25K 0.250**

Factors affecting probability CPS multiple job holder has only a single UI job (Y 3, restrictive) Age ** Age Age ** Age 65 plus Less than high school Some college College graduate 0.045* More than college 0.117** Black Other nonwhite Male 0.047** Married Foreign-born Non-proxy interview * Simultaneous mult. jobs ** Multiple jobs all 3 months ** 16+ hrs/wk on 2 nd job(s) **

Actual and predicted X 2 and X 3

Predicted shares of UI workers not found in CPS (X 2 )

Predicted shares of CPS workers not found in UI (X 3 )

Actual and predicted Y 2 and Y 3, more restrictive CPS definition

Predicted shares of UI multiple job holders with a single CPS job (Y 2 )

Predicted shares of CPS multiple job holders with a single UI job (Y 3 )

Summary  Large discrepancies at the micro level between employment and job count status for same individuals in UI and CPS data  Characteristics of those in off-diagonal cells generally consistent with expectations  No single story about recent divergence between UI (employer reported) and CPS (household reported) employment Growth in number of multiple job holders in UI not measured by CPS important (marginal 2 nd jobs, employee turnover) Growth in number of workers measured in CPS but not UI important (off-the-books or non-standard jobs)

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