Lawler: Revisions Almost Eliminate Household/Establishment Survey Employment Growth Gap

This is a little off topic, but demographics are key for housing!

In December, housing economist Tom Lawler wrote Lawler: New Census Population Estimates Show Massively Higher Population Growth and outlined the implications of the new population estimates. Lawler had been noting for some time that estimate were too low!

From housing economist Tom Lawler: Revisions Almost Eliminate Household/Establishment Survey Employment Growth Gap

Over the last few years there has been a sizable gap between trend growth in the Household Survey estimate of employment and the Establishment Survey estimate of employment, with the Household Survey showing significantly slower growth than the Establishment Survey. I and others noted that much of this “gap” reflected the fact that previous estimates from the Household Survey were “benchmarked” to population estimates that for the last few years were way to low because of an underestimate of net international migration, and that updated population estimates (Vintage 2024) that massively revised up NIM over the last few years would result in a huge upward revision in the household estimate of employment in the January Employment Report.

In today’s employment report the BLS said updated population controls resulted in an huge increase in the Household Survey estimate of employment for December 2024 of 2 million (1.2%).

At the same time, the BLS reported that its annual benchmarking of the Establishment Survey resulted in a decline in the seasonally-adjusted estimate of nonfarm payroll employment for March 2024 of 598,000 (-0.4%).

As a result of these two revisions, the “gap” between the Household Survey of employment and the Establishment Survey estimate of employment – after adjusting for definitional differences – has narrowed substantially.

Below are tables showing the Establishment Survey estimate of nonfarm payroll employment compared to the BLS’ “adjusted” Household Survey estimate, with the adjustment designed to be more similar in concept and definition to the Establishment Survey measure.

As these tables show, the “gap” between the Establishment Survey measure of nonfarm payroll employment and the adjusted Household Survey estimate of nonfarm payroll employment fell from 4.301 million in December to 1.461 million in January.

While it would be nice to compare the growth in these two measures by year, sadly the BLS does not go back and revise historical measures of the Household Survey to reflect updated historical population estimates.

However, since 2020 and 2021 population estimates were not revised by much in the Vintage 2024 population estimates, the “old” Household Survey estimate for the end of 2020 probably would not be that different from a revised one if BLS did in fact revise the historical Household Survey. As such, here is a table showing growth in the two measures from December 2020.

As this table shows, while prior to this month’s revisions the Establishment Survey showed substantially faster employment growth than the Household Survey over the last four years, the two measures now show similar growth over that period.

Economist Emily Litella had been arguing that the subpar growth in the Household Survey relative to the Establishment Survey suggested that the economy and the labor market were weaker than many suggested, but after seeing today’s revisions she sent out a post saying…….. “Never mind.”

This was from housing economist Tom Lawler.