Yale Labor Survey - Report of September 22, 2020 for the week ending September 12, 2020 Yale Labor Survey - Report of September 22, 2020 for the week ending September 12, 2020

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September 22, 2020

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The Yale Labor Survey, a research project from Yale University’s Tobin Center for Economic Policy, is designed to provide policy makers and the public with real-time information about the US labor market. Its questions are modelled on those of the monthly BLS-Census Current Population Survey. The project has been designed and developed by researchers at Yale University, Stanford University, and the Boston Fed’s research department. Data are made available weekly at the websites of the Boston Fed and the Yale Labor Survey website at the Tobin Center. Background documentation for the Yale Labor Survey is available in Cowles Foundation Discussion Paper No. 2243. The Yale Labor Survey is not an official forecast of the Federal Reserve Bank of Boston or its president, the Federal Reserve System, or the Federal Open Market Committee.

Results Summary Results Summary

Current YLS results cover labor market activities through the week of September 6-12, which is also the reference week for the September 2020 Current Population Survey. (September CPS results will be published on Friday, October 2.) YLS data are not seasonally adjusted and refer to the population aged 20 and older. This week’s key findings are as follows:

  • The YLS unemployment rate drifted higher in week ending September 12, rising to 12.1% from 11.7% the previous week. During the past three weeks, the YLS unemployment rate has increased by 1.5 percentage points. However, the most-recent YLS UR is about 1 percentage point below its value during the August CPS reference week.
  • In official government data, “employment” includes (i) persons who “work for pay” during the reference week plus (ii) persons who are absent from work due to vacation, illness, or similar reasons. The YLS measures the ratio of work-for-pay to population (WFPR) and the employment-to-population ratio (EPR). Both series were little changed in the most recent report. The WFPR was 54.7% for the week ending September 12, down 0.3 percentage point from the previous week. The EPR was 56.5%, unchanged in the last week.
  • The labor force participation rate (LFPR) is estimated at 65.8% for the week ending September 12, up 0.2 percentage point from the previous week.
  • The YLS agrees more closely with CPS estimates of employment than it does with CPS estimates of unemployment and labor force participation. Although YLS estimates of unemployment and participation are higher than the corresponding rates in the CPS, movements over time in unemployment and participation have been similar across the two surveys.

Work-for-Pay Ratio Work-for-Pay Ratio

The work-for-pay ratio (WFPR) measures the fraction of survey respondents who report that they worked for pay or profit during the reference week. After falling sharply when the pandemic hit, the WFPR rose quickly from late April through mid-June. Since the August CPS reference week, the YLS estimate of the 20+ WFPR has risen by 1.8 percentage points, to 54.7% for the week ending September 12. Over the past three weeks, however, the WFPR is little changed (down by 0.4 percentage point).

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Employment-to-Population Ratio Employment-to-Population Ratio

The employment-to-population ratio (EPR) is the standard measure of labor market activity reported by the Bureau of Labor Statistics (BLS). In addition to persons working for pay, the EPR also includes workers who are absent from their regular jobs (for example, workers on vacation). For the week ending September 12, the YLS EPR was 56.5%, unchanged from the previous week. In September CPS data, the not-seasonally-adjusted EPR typically rises by less than the work-for-pay ratio does, as employed persons return to work from their summer vacations. This pattern is consistent with recent YLS data. Since the August CPS reference week, the YLS EPR has risen by 1.1 percentage points, less than the increase of nearly 2 percentage points in the YLS WFPR over the same period.

During the pandemic, the BLS has stated that the CPS has had difficulty distinguishing between workers who were absent from their jobs for the usual reasons (such as vacation or illness) and workers who were displaced by the pandemic. An alternative measure of the government’s EPR calculated by YLS researchers with CPS microdata, “EPR-alt,” is designed to remove pandemic-displaced workers from CPS employment. The EPR-alt measure is close to the YLS definition of employment, which includes only paid absences and is therefore less susceptible to classification error (see the background documentation for details). During the week of July 12-18, both the calculated CPS EPR-alt estimate and the YLS EPR estimate stood at about 56%. The YLS measure has risen by about ½ percentage point since then.

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Unemployment Rate Unemployment Rate

The YLS has consistently overestimated the unemployment rate, although the divergence depends upon whether corrections for recent CPS classification errors discussed above are made. To be classified as unemployed, a non-employed person must either (i) have actively searched for a job in the last four weeks, or (ii) be laid off from a job with an expectation of return. The questions that gather information about job-search activities and layoff conditions differ slightly between the CPS and YLS.

Despite the differences, the basic trends in unemployment-rate estimates are similar in the CPS and YLS. Unemployment fell significantly from April through June, consistent with the significant increase in employment that both surveys measure. During the July CPS reference week, the YLS unemployment rate was 13.4%, compared to 11.7% for an adjusted CPS unemployment rate (“U3-alt”). During the CPS reference week for August, the YLS unemployment rate stood at 13.2%. As of the most recent report, the YLS UR is 1.1 percentage points below its mid-August value.

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Labor Force Participation Rate Labor Force Participation Rate

As of the week ending September 12, the YLS labor force participation rate (LFPR) stood at 65.8 percent, up 0.2 percent from the previous week. Over the entire sample period, the YLS participation rate has been higher than the corresponding CPS rate. This discrepancy is due almost entirely to the overestimate of the unemployment rate, which in turn is due largely to the YLS’s overestimate of the number of persons searching for jobs. (An increase in the number of job searchers raises both the unemployment rate and the participation rate.)

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