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Are Jobs Numbers Skewed Towards Larger Employers?

Writer's picture: Nick AndriacchiNick Andriacchi

Well, all right. Here is the basis for my theory on how data collected from the BLS represent larger companies rather than smaller ones.





The establishment survey, also known as the Current Employment Statistics (CES) survey, is conducted by the Bureau of Labor Statistics (BLS) in the United States. It collects data from a sample of nonfarm businesses and government agencies.


Self-Reporting


Businesses selected for the survey self-report their payroll data to the Bureau of Labor Statistics (BLS). They provide information on the number of employees, hours worked, and earnings for the pay period that includes the 12th day of the month.


Sample Representation


The BLS aims to have a representative sample of establishments from different industries and sizes. However, there are some considerations regarding the representation of smaller versus larger employers:


  • Sampling Frame: The sampling frame for the establishment survey is derived from the Quarterly Census of Employment and Wages (QCEW), which covers more than 95% of U.S. jobs and is based on unemployment insurance tax records. Smaller employers may not have filed this tax return yet.


  • Methods of Reporting: Establishments can report their data via various methods, including electronic data interchange, web-based reporting, telephone, or by mail.


  • Sampling Probability: Larger establishments have a higher probability of being included in the sample because they employ more people and thus have a greater impact on the overall employment statistics. This is known as probability-proportional-to-size sampling.


  • Verification and Validation: The BLS employs several methods to verify and validate the data received to ensure accuracy. This includes follow-ups with respondents and statistical techniques to adjust for any nonresponse or reporting errors. Smaller firms are less likely to answer.


  • Actual Sample: I worked for a funding company during the Great Recession of 2008 – 2010 and we noticed a recovery 6 - 8 months before jobs gains showed up in the BLS reportWe primarily worked with small to mid-sized staffing companies.


While the BLS takes measures to ensure that both large and small employers are adequately represented, the nature of the survey design means that larger employers might be more prominently featured in the sample. This is partly because they account for a larger share of total employment and are therefore more likely to be included in a probability-proportional-to-size sampling framework. Plus, they have the resources to answer the survey. Never forget – smaller employers tend to generate more new jobs than larger ones.

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