Saturday, February 4, 2012

Did 1.2 Million People "Drop Out of the Labor Force"?




Did 1.2 Million People "Drop Out of the Labor Force"?


Summary

It is being said that 1.2 million people "dropped out of the labor force" between December 2011 and January 2012.  

Each year, the Census Bureau updates their population estimates. For January 2012, the Bureau of Labor Statistics used these adjusted population estimates instead of the estimates they used December 2011.  If these adjustments were applied to December, they would have caused the estimated size of the "persons not in the labor force" to increase by 1.252 million. 

In other words, 1.2 million people (1.177 million) did not "drop out of the labor force" between December and January.  The changes to the population estimates increased the numbers by 1.252 million, so actually about 75,000 people entered the labor force (1.177 million - 1.252 million = 75,000.)


Updated Population Estimates Cause Higher Numbers

According to the Bureau of Labor Statistics:

Effective with data for January 2012, updated population estimates which reflect the results of Census 2010 have been used in the household survey. Population estimates for the household survey are developed by the U.S. Census Bureau. Each year, the Census Bureau updates the estimates to reflect new information and assumptions about the growth of the population during the decade.

...
In accordance with usual practice, BLS will not revise the official household survey estimates for December 2011 and earlier months.


The Bureau of Labor Statistics (BLS) uses population estimates from the U.S. Census Bureau to calculate their data.  If the population estimates increase, then so will the estimates of data, such as the number of unemployed or the "persons not in the labor force."  Since the BLS data for January 2012 uses the updated population estimates, it will naturally be higher than the December 2011 data, which uses previous population estimates.

According to the BLS, that is what happened:

The adjustment increased the estimated size of the civilian noninstitutional population in December by 1,510,000, the civilian labor force by 258,000, employment by 216,000, unemployment by 42,000, and persons not in the labor force by 1,252,000.


If the December 2011 BLS data had used the updated population estimates that were used for the January 2012 data, the number of "persons not in the labor force" would have been 1.252 million higher than previously reported.

The Numbers When Population Increases Are Ignored

Since the published BLS data for January 2012 and December 2011 use different population estimates, they cannot be accurately compared directly to each other.  They should be adjusted for the different population estimates.

According to the Bureau of Labor Statistics:

(Numbers in thousands) 

Category

December to January change as published
2012 population control effect
December to January changes after removing population control effect
Civilian noninstitutional population
1,685
1,510
 175
Civilian labor force
508
258
250
Not in labor force
1,177
1,252
-75


The amount of people who "dropped out of the labor force" between December and January was published to be 1.177 million, (or 1.2 million rounded.)  However, the number of persons "not in labor force" for December would have been 1.252 million higher if December used the same population estimate as January.

When this is taken into effect, the number of persons "not in the labor force" actually decreased by about 75,000 people.  In other words, people did not "drop out of the labor force."  About 75,000 entered the labor force between December and January.

Also, it should be noted the population estimates increased all numbers for January relative to December:

(Numbers in thousands) 

Category

December to January change as published
2012 population control effect
December to January changes after removing population control effect
Employed
847
216
 631
Unemployed
-339
42
-381
Unemployment rate
-.2
.0
-.2

http://www.bls.gov/news.release/empsit.nr0.htm

The number of unemployed actually decreased by more than published, but the number of employed actually increased by less than published.  Thus, the actual unemployment rate is roughly the same as published.





Link to this article:

http://articlesonpolitics.blogspot.com/2012/02/why-12-million-people-dropped-out-of.html

No comments:

Post a Comment

Post a Comment