Summary:
Our analysis reveals a significant and persistent divergence between employment measures from the Current Employment Statistics (CES) and Current Population Survey (CPS). Adjusting for the net birth-death contribution of businesses only partially explains this gap. The remaining large discrepancy is likely due to an underestimation of population growth in the CPS, potentially linked to recent immigration fluctuations. This finding has substantial implications for understanding the current labor market: adjusted CPS data reveals a more robust labor market with healthy demand and rapid supply growth from the beginning of 2023 to June 2024, contrasting with the unadjusted CPS data, which suggests only tepid demand growth. Our study underscores the importance of accurate estimates and continuing data revisions for informed policy decisions.
Key findings:
- The Current Employment Statistics (CES) measure of employment is likely overstating the level of employment in 2024. Our analysis suggests that the CES forecast for the net birth-death contribution to employment overstates the cumulative contribution to employment by 440,000.
- This downward adjustment to CES employment only explains a small share of the current gap of 3.9 million between the CES and Current Population Survey (CPS) measures of employment (after adjusting the CPS to be consistent with the CES measure).
- The remaining discrepancy is like due to an underestimation of population growth in the CPS, likely to the result of an unexpected increase in net immigration.
Center Affiliation: Center for Quantitative Economic Research
JEL classification: E24
Key words: Employment
https://doi.org/10.29338/ph2024-06
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