Friday’s jobs report brought welcome news that the unemployment rate had fallen to 7.8 percent in September, a surprisingly large decline given the mediocre 114,000 nonfarm jobs that were added. The report showed that about twice as many people got hired as entered the labor force, causing the September unemployment rate to fall.
Economists recognize the inherent volatility of monthly statistics and are particularly unmoved by the unemployment rate in any particular release, given the degree of variability in the data. They tend to focus more on the trend in job creation over several months.
However, some particularly uninformed and addled comments surfaced after the latest report. In particular, former GE chairman Jack Welch leveled accusations of data manipulation against the Obama administration. Given the surprising lack of ridicule with which Welch’s comments were greeted, a primer in how the data are reported seems in order.
On the first Friday of each month, the Bureau of Labor Statistics releases results of two separate surveys. The Current Employer Survey (CES) polls 141,000 businesses and government agencies to collect information on jobs created or eliminated. This so-called “establishment survey” is the source of the nonfarm payroll statistics to which economists tend to pay the most attention.
The unemployment rate is a product of the Current Population Survey (CPS), also known as the “household survey.” Each month, 2,200 professional Census Bureau data collectors contact 60,000 separate households with a series of questions aimed at capturing the employment status of residents aged 16 and over. The monthly household survey has been conducted continuously since 1940 by experienced career civil servants who are not political appointees. In fact, to paraphrase one knowledgeable economist, these are quintessential “nerds with pocket protectors” who bristle at any suggestion of manipulation.