Academic Literature

The New Labor Market in US – Do the widely used measures undercount ?

The CPS and ATUS questions used to classify labor force status are similar, and both rely on the words “work” and “job.” Some researchers feel that these questions fail to resonate with gig workers and those in informal employment arrangements. They argue that, as a result, two widely used measures could be considerably undercounted—the total number of employed and the number of multiple jobholders. If it is true that these questions do not capture large numbers of gig or informal workers, then we would expect ATUS estimates for income-generating activities—such as babysitting or mowing lawns—to be relatively large. However, ATUS estimates indicate that few people engage in income-generating activities on a given day. In the combined years 2012–16, just 1 percent of the population engaged in income-generating activities on a given day. People who engaged in income-generating activities also spent little time doing these activities compared with the amount of time spent working by those who worked—2.6 hours versus 7.6 hours. These statistics suggest that the effect on employment of misclassifying gig and informal workers’ labor force status is small.

Despite anecdotal evidence of a large increase in the number of gig workers in recent years, ATUS estimates do not show a marked increase since 2003–07 in either the percentage of people who did income-generating activities or in the amount of time spent by those who did these activities. The fact that the estimates are relatively stable suggests that the ATUS labor force questions—which are similar to those of the CPS—continue to perform as they have in the past.

However, data from the ATUS do support the idea that some gig and informal work might not be reported as work. Ideally, the ATUS labor force questions would identify people as employed if they had done income-generating hobbies, crafts, food, performances, or services in the prior 7 days. In some cases, however, these activities are reported by people who are classified as unemployed or not in the labor force through the CPS-style labor force questions. Using the assumptions described here, we estimate that if workers who may have been incorrectly classified were reclassified, the 2012–16 employment estimate would increase by between 0.4 percent and 3.0 percent.

We also investigated the possibility that employed people who do gig or informal work outside of their main job may not be correctly classified as multiple jobholders. Our analysis shows that misclassification may be more pronounced for the multiple-jobholding estimate than for the overall employment estimate. Our results indicate that, if workers misclassified as single jobholders were classified correctly, the estimate of multiple jobholders would be between 3.0 percent and 20.7 percent higher in 2012–16 than the current figure.

Although some workers may be misclassified in surveys that use CPS-style questions, we conclude that, on the basis of our analysis of ATUS data, the effect on the total employment estimate is likely to be small. The effect on the estimate of the number of multiple jobholders may be somewhat greater, however.

Chosen excerpts by Job Market Monitor. Read the whole story at Measuring labor market activity today: are the words work and job too limiting for surveys? : Monthly Labor Review: U.S. Bureau of Labor Statistics

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