Employment and Unemployment Data: Dramatic Changes of Key Indicators

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Beginning with the labor force estimates for January 1994, new initiatives by the federal government will change the way employment and unemployment are measured and estimated. Although the new initiatives are expected to produce more accurate and comprehensive information on the labor force activities of the population, the new data from January 1994 forward will not be fully comparable with prior years.

Labor force data incorporating the new changes can show marked differences when compared to prior years. The differences are particularly pronounced in smaller labor market areas. Much of the variation can be accounted for by the conceptual, geographic, demographic and methodological differences in the new federal survey of the U.S. labor force. This article discusses the four main initiatives that account for many changes in the new labor force data compared to historical data.

Changes in the New Data

Employment and unemployment estimates for states and local areas are key indicators of local economic conditions. Changes in the labor force may indicate important strengths in a local economy or flag potential weaknesses. Historical trends in employment and unemployment are particularly important to credit analysis. Has the labor force been growing or declining? Has unemployment been persistently high or low? How has a local area performed with respect to other areas such as a county, a city, a state or the nation as a whole?

Each month, the federal Bureau of Labor Statistics (BLS), in cooperation with the Census Bureau, administers a survey to 60,000 households to determine the labor force status of the population. This survey, known as the Current Population Survey (CPS), was launched in 1940 as a way to provide timely estimates of the number of employed and unemployed persons in the labor force.

Monthly data for the 11 largest states--California, Texas, New York, Florida, Pennsylvania, Illinois, Ohio, Michigan, New Jersey, North Carolina, Massachusetts--and two sub-state areas--New York City and the Los Angeles-Long Beach, California primary metropolitan statistical area (PMSA)--are produced directly from the CPS. For the remaining 39 states and the District of Columbia, where the CPS sample is not large enough to ensure reliable monthly estimates, statistics are produced using regression techniques developed by BLS.

In 1988, the BLS redesigned the CPS, and in 1993 the Office of Management and Budget and the Census Bureau redefined numerous geographic areas which BLS incorporated into its new labor data beginning in 1994. BLS began to report labor statistics incorporating its new conceptual, geographic, demographic and methodological initiatives in 1994.

Data, beginning 1994, are not directly comparable with those for 1993 and prior years as a result of the redesign of the CPS. …