Tale of Two Jobs Surveys.

By Justin Lahart

By one measure the labor market is much stronger than the gain of 192,000 nonfarm jobs in February suggests.

To gauge employment, the Labor Department uses two separate surveys. The jobs figures come from establishment payrolls, while the unemployment rate comes from a survey of U.S. households.

But the Labor Department also releases jobs figures from the household survey that it has adjusted (by subtracting farm workers and so on) to reflect the same sort of jobs the establishment survey covers. By this count, the economy added 342,000 jobs last month, after adding 153,000 in January and 498,000 in December.

In fact, the household gauge shows that the economy didn’t erase quite as many jobs in the recession as the establishment survey did, and that there’s been a significantly stronger rebound in employment. But why?

Both of the Labor Department surveys have downsides. The sample size for the household data is much smaller than the establishment figures, for example. 

But the establishment figures can’t always keep up with shifts in the makeup of U.S. businesses. So economists generally think the establishment figures are better, but sometimes argue that the household ones are better at picking up turning points in the labor market.

There could be other reasons for the mismatch, a 2009 paper by economists Katharine Abraham and John Haltiwanger at the University of Maryland, Kristin Sandusky at the Census Bureau and James Spletzer at the Labor Department suggests.

Analyzing a data set that allowed them to match people in the household survey with people on employee payrolls from 1996 to 2003, the economists found “substantial discrepancies” between the two.

Some 6.4% of people who showed up as holding jobs on employee records were recorded as unemployed in the household survey. Many of them were 65 and older — which suggests they were people who considered themselves retirees even as they continued to draw some sort of paycheck. An even larger 17.6% of people who counted as employed in the household survey didn’t show up on employee records. Many of them had demographic characteristics, such as low education levels, that suggested they were working off the books.

The economists also found that from 2001 to 2003 — the period that covers the brief recession and the jobless recovery that followed it — the number of people on employer records who counted in the household survey as unemployed declined. But the number of people who didn’t show up on employer rolls but who were counted in the household survey as employed rose. That’s a pattern that might be repeating itself, with fewer senior citizens taking jobs here and there to round out their retirement income, and more people getting paid under the table.

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