Article 43
Tuesday, September 13, 2022
Unemployment Survey Issues
The adjustment factors are estimated using a main effects linear model and generalized least squares. These adjustment factors indicate that the redesign had no statistically significant effect on the total unemployment rate, but it did affect statistics related to unemployment such as the reasons for unemployment, the duration of unemployment and the industry and occupation distribution of the unemployed with previous work experience. The adjustment factors also indicate that the redesign significantly increased the EMPLOYMENT-TO-POPULATION RATIO and LABOR FORCE PARTICIPATION RATE for women, but significantly decreased the employment-to-population ratio for MEN. At the same time the redesign significantly influenced the measurement of characteristics related to employment such as the proportion of employed working part time, the proportion working part time for economic reasons, the number of individuals classified as self-employed and the industry and occupation distributions of the employed.
Women’s labor force activity has increased dramatically. Service sector employment has grown. The proportion of the employed working in factory jobs has declined. Two-income households have become the norm in husband-wife households. Single-parent households have become more prevalent. The population has grown older, and minorities constitute a larger proportion of the labor force than previously. Given these societal changes, some of the wording of the CPS questions were dated and new situations had arisen that were not adequately covered by the survey
[I]n the unrevised CPS, interviewers were instructed to tailor the wording of the first labor force question based on the gender and age of the respondent. Specifically, if the respondent “appears to be a homemaker,” the manual instructed interviewers to ask, “What were you doing most of last week—keeping house or something else?” If the respondent appeared to be relatively young, interviewers were supposed to ask, “What were you doing most of last week—going to school or something else?” For all other respondents, interviewers were instructed to ask, “What were you doing most of last week—working or something else?” The next question about work activities in the unrevised questionnaire included the phrase “not counting work around the house.” Given the increased labor market activity of women and the rising prevalence of home offices or other work arrangements that involve individuals working from their homes, the wording of these questions could be both offensive and confusing
Investigation also revealed that the meaning of several phrases and words in the CPS have changed over time. An important example of shifting meanings involves the measurement of individuals “on layoff.” In the past, most people defined a layoff as a temporary spell of unemployment from which an individual expected to be recalled as soon as business conditions improved or retooling was completed. Research showed, however, that in the late 1980’s and early 1990’s, the majority of individuals used the word layoff to refer to permanent separations from which they did not expect to be recalled
- The CPS After the [1994] Redesign [Abstract] - [.pdf]
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Changes in Unemployment Duration and Labor Force Attachment
THIS PAPER accounts for the observed INCREASE in unemployment duration relative to the unemployment rate in the U.S. over the past thirty years, typified by the record low level of short-term unemployment. We show that part of the increase is due to changes in how duration is measured, a consequence of the 1994 Current Population Survey redesign. Another part is due to the passage of the baby boomers into their prime working years. After accounting for these shifts, most of the remaining increase in unemployment duration relative to the unemployment rate is concentrated among women, whose unemployment rate has fallen sharply in the last two decades while their unemployment duration has increased. Using labor market transition data, we show that this is a consequence of the increase in women’s labor force attachment.
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The Evolution of Rotation Group Bias: Will the Real Unemployment Rate Please Stand Up?
We document that rotation group bias - the tendency for the unemployment rate to vary systematically by month in sample - in the CURRENT POPULATION SURVEY (CPS) has worsened over time. Estimated unemployment rates for earlier rotation groups have grown sharply relative to later rotation groups; both should be nationally representative samples. This bias increased discretely AFTER the 1994 CPS redesign, and rising nonresponse rates are likely a significant contributor. Survey nonresponse increased after the redesign, mirroring the evolution of rotation group bias. Consistent with this explanation, rotation group bias for households that responded in all eight interviews remained stable over time.
In this paper we have documented that rotation group bias in the CPS has substantially worsened, with a marked increase in bias since the 1994 CPS redesign. We find suggestive evidence that the increase in rotation group bias is related to nonresponse, which follows a similar time-pattern as rotation group bias, as well as possible effects from the 1994 redesign of the CPS. The results suggest several important avenues for future research. While it does not appear that rotation group bias is severely confounding estimates of macroeconomic relationships, it remains an open question as to which rotation group provides the most accurate measure of the unemployment rate, and whether the increase in rotation group bias has affected the trend in the official unemployment rate. To assess these issues one would need an independent, unbiased unemployment measure, free of rotation effects, that when regressed on the MIS rates one would expect a coefficient of 1, or a macroeconomic relationship between the unemployment rate and some other measure with a known coefficient. We leave this question to future work.
The results also suggest that there is not a HEISENBERG PRINCIPLE of rotation group bias, whereby rotation group bias is an inherent feature of any labor force survey with multiple interviews. This can be seen most clearly from the Canadian labor force survey that does not exhibit rotation group bias. This conclusion is also reinforced by the high degree of rotation group bias for those on new spells of unemployment, who have not previously been asked job search questions. These observations lead to the question of which aspects of survey design and implementation can be improved to mitigate rotation group bias.
The evidence presented here suggests that we require a better understanding of survey nonresponse, particularly finding ways of reducing nonresponse and better imputation methods to adjust for nonrandom nonresponse, to help mitigate rotation group bias.
Lastly, we note that the potential for rotation group bias complicates the design and interpretation of overlap samples. For example, possible rotation group bias in the parallel sample that was surveyed to assess the effects of the 1994 redesign and rotation group bias in the CPS itself could confound the interpretation of differences between the two surveys as measuring the effect of the redesigned survey.
Section Dealing with Layoff •
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