Yale Labor Survey - Report of February 23, 2021 for the week ending February 13, 2021
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.
Current YLS results cover labor market activities through the week of February 7-13, which is the reference week for this month’s Current Population Survey (CPS). YLS data are not seasonally adjusted and refer to the population aged 20 and older. This week’s key findings are as follows:
- YLS employment measures improved in the most recent survey. The YLS employment-to-population ratio rose by 0.6 percentage point relative to the previous week, while the work-for-pay ratio, which does not include persons on paid absences, rose by 1.0 percentage point. Relative to their values during the CPS reference week for January, the employment-to-population ratio is higher by 0.6 percentage point and the work-for-pay ratio is up 0.8 percentage point.
- Over a longer horizon, YLS data indicate that employment has plateaued since mid-October, after rising quickly following the initial pandemic shutdowns this spring. Relative to the CPS reference week for October, the YLS employment-to-population ratio is up only 0.1 percentage point while the work-for-pay ratio is down 0.2 percentage point.
- The YLS unemployment rate fell by 1.7 percentage points in the week ending February 13, while the YLS participation rate fell by 0.6 percentage point. Since mid-October, the YLS unemployment rate has been significantly higher than the CPS unemployment rate. The proximate cause of this discrepancy is a higher share of YLS respondents who are looking for work, as non-employed persons who are conducting active job searches are counted as unemployed in labor market surveys.
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. During the week ending February 13, the WFPR rose by 1.0 percentage point, to 56.8%.
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). The EPR rose by 0.6 percentage point during the week of February 13, to 58.4%.
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). The most recent CPS estimate for EPR-alt corresponds to the week ending January 16, when this statistic was 58.2%, down slightly from its 58.6% reading in mid-December.
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.
As noted above, the unemployment-rate discrepancy has been high in recent weeks. The YLS unemployment rate stood at 10.6% during the January CPS reference week, compared to a published CPS 20+ rate of 6.5%. In the most recent report, the YLS unemployment fell by 1.7 percentage points, to 9.4%.
Labor Force Participation Rate
As of the week of February 13, the YLS labor force participation rate (LFPR) stood at 66.0%, down 0.6 percentage point from the previous week. During the last several weeks, the YLS participation rate has been much higher than the corresponding participation rate in the CPS. This difference between YLS and CPS participation rates explains most of the gap between the unemployment rates in the two surveys over the last several months. The source of these differences is an active area of research for the YLS team.