Household survey employment

What Is Household Survey Employment?

Household survey employment refers to the estimate of the number of employed individuals derived from a direct survey of households within a given population, rather than a count of jobs from employer payrolls. This key economic indicator falls under the broader category of Labor economics and is crucial for understanding the overall health and dynamics of the labor force. Unlike some other employment measures, the household survey aims to capture a comprehensive picture of individuals' employment status, including those who may not be on a formal payroll, such as the self-employed or agricultural workers.³⁹ The data collected provides insights into various aspects of the economy, including the unemployment rate and labor force participation. The Bureau of Labor Statistics (BLS), in conjunction with the U.S. Census Bureau, is the primary agency responsible for collecting and disseminating household survey employment data in the United States.³⁸

History and Origin

Before the 1930s, comprehensive monthly statistics on unemployment were largely unavailable. The widespread joblessness during the Great Depression highlighted an urgent need for more accurate and consistent measures of the labor market. Various research groups and government entities began experimenting with direct surveys of the population to classify individuals as employed, unemployed, or outside the labor force.³⁶, ³⁷

This experimentation led to the development of precise labor force concepts in the late 1930s. These concepts were subsequently adopted for a national household sample survey initiated in 1940 by the Work Projects Administration, then known as the Monthly Report of Unemployment. In 1942, the survey was transferred to the Census Bureau and later renamed the Current Population Survey (CPS) in 1948, reflecting its expanded scope to include a wide range of demographic, social, and economic characteristics.³⁴, ³⁵ The responsibility for analyzing and publishing the labor force data from the CPS was transferred to the BLS in 1959, with the Census Bureau continuing its role in data collection.³³

Key Takeaways

• Household survey employment estimates the number of employed people, not jobs, and includes a broader scope of workers compared to other surveys.³²
• It is a critical component of monthly economic reports, providing data on the unemployment rate and various demographic characteristics of the workforce.³¹
• The Current Population Survey (CPS) is the primary source for household survey employment data in the U.S., conducted jointly by the U.S. Census Bureau and the Bureau of Labor Statistics.³⁰
• The data is vital for policymakers, analysts, and researchers in formulating and evaluating economic policy and understanding labor market trends.²⁹
• Differences exist between household survey employment and payroll survey employment due to variations in methodology and definitions, which can lead to divergences in reported figures.²⁷, ²⁸

Interpreting the Household Survey Employment

Interpreting household survey employment involves understanding what the figures represent and the context in which they are presented. As a measure of employed people, it provides a unique perspective on the number of individuals contributing to the economy. For instance, a person holding two jobs would be counted only once in the household survey, whereas they would be counted twice in a payroll-based survey.²⁵, ²⁶ This distinction is crucial for assessing underemployment or multiple jobholding trends within the workforce.

The household survey is also the source of the official national unemployment rate, which is calculated as the percentage of the civilian labor force that is unemployed but actively seeking work. Analysts closely watch month-over-month changes in household survey employment to gauge the pace of job creation from the perspective of individuals. Significant shifts can indicate broader trends in economic expansion or contraction. Additionally, the detailed demographic data available from the household survey allows for analysis of employment trends across different age groups, genders, races, and educational attainments, offering a granular view of labor market dynamics.²⁴

Hypothetical Example

Consider a hypothetical country, "Diversifia," which conducts a household survey similar to the U.S. model. In January, Diversifia's household survey determines that 150 million people are employed. This includes:

• 140 million wage and salary workers.
• 5 million self-employed individuals.
• 3 million agricultural workers.
• 2 million unpaid family workers (e.g., helping a family business).

The survey also identified that 5 million people were actively looking for work, and 45 million were not in the labor force (e.g., retired, students, stay-at-home parents).

In February, the survey finds that employed individuals increased to 150.5 million. This 500,000 increase in household survey employment suggests a net gain of half a million employed people in Diversifia's economy. This figure would reflect individuals who found jobs, started their own businesses, or became unpaid family workers, contributing to the overall strength of the labor market. This rise indicates positive momentum, even if some of these gains come from less traditional forms of employment like self-employment.

Practical Applications

Household survey employment data has numerous practical applications for various stakeholders in the financial world and beyond:

• Economic Analysis: Economists and policymakers utilize household survey employment figures as a primary economic indicators to assess the health of the job market and the overall economy. This data helps in forecasting future Gross Domestic Product (GDP) growth and identifying potential shifts in consumer spending.
• Monetary Policy Decisions: Central banks, such as the Federal Reserve, closely monitor household survey employment data, particularly the unemployment rate, when making decisions about monetary policy. Strong employment figures might signal a need to consider interest rate adjustments to manage inflation, while weak figures could suggest easing policies to stimulate growth.
• Investment Strategy: Investors and financial analysts use household survey employment data to inform their investment strategies. A robust increase in employed persons can indicate a strong economy, potentially leading to higher corporate earnings and supporting equity markets. Conversely, a decline might suggest an impending recession. The Federal Reserve Bank of St. Louis's Federal Reserve Economic Data (FRED) system provides extensive access to historical household survey employment data, allowing analysts to track long-term trends and short-term fluctuations.²³
• Social Policy and Research: Beyond financial markets, the detailed demographic breakdown provided by the household survey is invaluable for social researchers and government agencies to understand workforce participation across different population groups and to develop targeted social programs.

Limitations and Criticisms

Despite its utility, household survey employment data has certain limitations and faces criticisms. One significant point of discussion is its occasional divergence from the employment figures reported by the payroll (or establishment) survey.²² While both surveys aim to measure employment, they do so with distinct methodologies and scopes, leading to differences. For instance, the household survey counts individuals, meaning a person with multiple jobs is counted only once, whereas the payroll survey counts each job.²⁰, ²¹ Additionally, the household survey includes categories of workers excluded from the payroll survey, such as agricultural workers, the self-employed, unpaid family workers, and private household employees.¹⁸, ¹⁹

Another criticism pertains to the sample size and response rates. Although the Current Population Survey (CPS) interviews approximately 60,000 households monthly, its sample size is smaller than the payroll survey's, which covers a much larger number of business establishments.¹⁷ This smaller sample can sometimes lead to greater month-to-month volatility in the household survey figures, making it less precise for capturing very short-term changes compared to the payroll survey. Furthermore, the household survey relies on self-reported data, often from a single household member providing information for all residents, which can introduce response bias or incomplete information.¹⁶ Adjustments to population controls, which are introduced annually based on updated demographic information, can also cause level shifts in historical household survey data, impacting comparability over long periods.¹⁵

Household Survey Employment vs. Payroll Survey Employment

Household survey employment and payroll survey employment are two distinct, yet complementary, measures of the labor market in the United States, both published monthly by the Bureau of Labor Statistics (BLS). The key differences stem from their methodologies, scope, and what they fundamentally measure.

Confusion often arises because both figures are used to describe the state of employment, and they can sometimes show different trends in the short term. The household survey captures changes in the number of individuals working, including those who may start their own businesses or take on informal work not reported by employers. In contrast, the payroll survey offers a precise count of jobs in the formal nonfarm sector.⁶ While discrepancies can occur due to these conceptual differences and variations in survey methods, historical trends suggest that the two measures tend to align over longer periods.⁵

FAQs

What is the Current Population Survey (CPS)?

The Current Population Survey (CPS) is the household survey conducted jointly by the U.S. Census Bureau and the Bureau of Labor Statistics (BLS) each month. It gathers data from a sample of U.S. households to provide comprehensive information on the employment, unemployment, and other labor force characteristics of the civilian noninstitutional population.⁴

How does household survey employment differ from unemployment?

Household survey employment measures the total number of people who are employed, while unemployment measures the number of people who are not employed but are actively looking for work. Both figures are derived from the same household survey data and are used to calculate the official unemployment rate.³

Why are there two main employment surveys (household and payroll)?

The U.S. government uses two main employment surveys—the household survey and the payroll (or establishment) survey—because they provide different, complementary views of the labor market. The household survey focuses on the number of employed people and demographic characteristics, while the payroll survey focuses on the number of jobs in nonfarm establishments and industry details. Both are crucial for a complete understanding of labor market conditions.

##²# Does household survey employment include self-employed individuals?

Yes, household survey employment includes self-employed individuals, agricultural workers, unpaid workers in family businesses, and workers in private households, in addition to wage and salary workers. This broader scope is one of the key distinctions between the household survey and the payroll survey, which typically excludes these categories.¹