Feb. 3, 2006 – The Labor Department may be regularly understating the number of unemployed people due to the way it collects data, according to a new study. The progressive Center for Economic Policy Research said yesterday that because growing numbers of people decline to participate in surveys each year, the Departmentâ€™s statistics bureauâ€™s data-gathering techniques are outdated.
CEPR said this leads the Department to miss 3 million or more people when compiling information for a key employment and income indicator.
Pointing to evidence in government and other reports that poor people, blacks, Hispanics, women and younger adults are less likely to respond to self-report surveys, CEPR counseled the Bureau of Labor Statistics (BLS) to change the way it collects information for the Current Population Survey (CPS).
The CPS is used by the Labor Department and other federal agencies to assess income and employment conditions and steer agencies that deal with workforce and income issues. Additionally, many think tanks use the information as ammunition in battles to shape public policy.
Participation in the monthly CPS has dropped in recent years, from around 96 percent in the 1970s to 90 percent in recent years, CEPR noted. The non-response rate is much greater than that of the Census, which saw 98 percent of people contacted respond in 2000, according to government information presented in the report.
According to CEPR, the 8 percent gap leads the CPS to report higher employment levels across demographic groups than Census data indicates, with the differences increased for poor and ethnic minorities. Taken together and adjusted for self-reporting errors, CEPR found that the Labor Department underreports unemployment rates by about 1.4 percent, or 3 million people.
The groupâ€™s report did not take into account estimates of the number of homeless people or those no longer looking for work. The Labor Department reported a 4.9 percent unemployment rate in December 2005. But many progressive economic groups have long maintained that, even before adjusting for the discrepancies noted by CEPR, the unemployment rate is actually much higher.
For instance, the Bureau of Labor Statistics reports that the percentage of people "who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past" was 1 percent for December 2005. The Bureau also counts people "who want and are available for full-time work but have had to settle for a part-time schedule" at 2.7 percent that month. If these two classes were counted in the unemployment rate â€“ as progressive groups have advocated â€“ the rate would rise to 8.6 percent for December.
Employment is not the only area where low CPS participation rates may mislead policy makers. In a report last summer, the Kaiser Family Foundationâ€™s Commission on Medicaid and the Uninsured raised concerns that healthcare resources are inadequately allocated due, in part, to CPS reports. That report found that CPS data was inferior to information collected by the Department of Health and Human Services.