|A NEW STUDY BY Center for Economic and Policy Research economists John
Schmitt and Dean Baker found that the Current Population Survey, the
source of the government's most important statistics on the labor
market, may be overstating the share of working Americans by 1.4
percentage points (roughly 3 million people).
The study found that the CPS overstates employment rates for blacks by
about 2 percentage points, with the gap for younger black men as high
as 8 percentage points. The CPS also appears to be overstating
employment rates of younger Hispanic women by about the same margin,
and younger Hispanic men by 3 to 6 percentage points.
In the coming weeks CEPR will be holding discussions on the
implications of this overstatement in terms of measuring health
coverage, unemployment and poverty rates. Please contact Liz Chimienti
at (202) 293-5380 x110 or firstname.lastname@example.org if you would like more
STUDY FINDS CPS OVERSTATES SHARE OF WORKING AMERICANS BY 1.4 PERCENTAGE POINTS
Washington, DC - The most important source of data on the U.S. labor
market may be systematically overstating employment, according to a
new report by the Center for Economic and Policy Research. The report,
"Missing Inaction: Evidence of Undercounting of Non-Workers in the
Current Population Survey (CPS)," found that the CPS appears to be
overstating the share of American adults who are working by about 1.4
The report by economists John Schmitt and Dean Baker noted that a
large and growing portion of the population does not respond to the
CPS, and that the non-responders appear less likely to be employed
than people who take the survey. This overstatement is significant
because the CPS is the source for the government's most important
statistics on the labor market, including the unemployment rate,
poverty rate and health-insurance coverage.
"Current labor market estimates appear to be overstating the share of
working Americans by 1.4 percentage points. This corresponds to
roughly 3 million fewer people working - almost as big a drop in
employment as in a typical recession," said John Schmitt, CEPR
economist and lead author of the report.
The study assessed employment rates among non-responders by comparing
employment rates in the CPS with employment rates in the 2000 Census.
In 2000, 8 percent of the population did not respond to the CPS. In
contrast, only 2 percent did not respond to the 2000 Census. After
adjusting for the errors in reported employment in the Census data
(and excluding the prison population), the study found that employment
rates were 1.4 percent lower overall in the Census than in the CPS.
The study also found that the CPS overstates employment rates for
blacks by about 2 percentage points, with the gap for younger black
men as high as 8 percentage points. The CPS also appears to be
overstating employment rates of younger Hispanic women by about the
same margin, and younger Hispanic men by 3 to 6 percentage points.
Since the CPS is also the source of official statistics on poverty
rates and health-insurance coverage, the report warns that these
widely reported numbers could also be overly optimistic. Non-working
adults are more likely to be in poverty and less likely to be covered
by health insurance. Therefore, if non-working adults are
disproportionately excluded from the CPS, then the survey is
understating the true poverty rate and overstating the share of the
population covered by health insurance.
The Current Population Survey is a monthly survey of households
conducted by the Bureau of Census for the U.S. Bureau of Labor
To read the report, see: