Dept. of Labor Using New Darts for 2011 Employment Reporting

Nice job by Sara Murray with her recap

of upcoming changes with the

Department of Laughter's Labor's

Employment Reports.

(thanks Sara!)

By Sara Murray
Wall Street Journal
12/28/10

The Labor Department is ringing in the New Year with an assortment of changes to the employment report. The adjustments, both to improve accuracy and to better gauge the effects of the recession, will be rolled out over the next couple months. Here’s a guide to the changes coming up:

Unemployment Duration: Jobless Americans will be able to report unemployment durations of up to five years; until now, the government has recorded only whether a person has been out of work for two years or more. The switch will show up in January’s employment data, released in February. It won’t change the total number of unemployed people.

The decision to change the maximum was the result of a downturn that’s created the largest pool of unemployed workers on record. Some 1.5 million were out of work for two years or more as of November.

“There has been an unprecedented rise in the number of persons with very long durations of unemployment during the recent labor market downturn,” the Labor Department states. “This upper bound was selected to allow reporting of considerably longer durations while limiting the effect of erroneous extreme values (outliers).”

Because the new five-year maximum will affect average unemployment duration measures, the numbers released in February won’t be comparable to prior months. The Labor Department doesn’t predict whether the duration measures will increase or decrease.

The full effect of this change won’t be evident until April’s data is released in May because the survey doesn’t ask each respondent for unemployment duration every month.

Birth/Death Model: Business births and deaths will be estimated on a quarterly basis instead of annually with the aim that it will lead to smaller revisions in employment data. The adjustment will begin with the January jobs report released in February.

Applying the quarterly adjustment to data from 2003 to 2009 showed that the change had the biggest impact in 2009 when the job market was suffering from the recession.

The annual model estimated that business birth and deaths contributed 990,000 jobs in 2009, not seasonally adjusted. The estimate was too high: The number was later revised to 585,000 jobs. If the quarterly analysis had been applied, the estimated contribution from business birth and deaths would have been 730,000 jobs, closer to the actual contribution.

“This suggests that the quarterly methodology should help CES [Current Employment Statistics] estimates better reflect turning points,” according ot the Labor Department.

Self-Employed Workers: People who work for themselves will be classified more specifically according to whether they operate incorporated or unincorporated businesses.

Separate measures for unincorporated self-employed workers and incorporated self-employed workers will be added to Table A-9, which currently looks like this.

The tables that currently identify self-employed workers, Table A-8 for example, will now list them as self-employed workers, unincorporated. That changes their title but still measures the same set of people.

Occupations: Definitions of occupations were updated for 2010 and the jobs report will begin classifying workers according to these new definitions, starting with the February release. Those occupations appear in Table-13. The last time the definitions were updated was in 2000.

The Labor Department’s updated list includes 840 detailed occupations, 359 of which are unchanged from 2000. Others experienced changes in definition, title, etc. For more on how occupations are classified, read this.

The Department of Laughter's Labor's Birth/Death Model

has been a great data manipulating tool for the government

given the fact it is based on throwing darts.