The mystery of the Virginia-sized gap in US job numbers
The two major employment surveys tell very different stories about jobs in America. There's a reason for that.
The two main employment indicators for the US economy are at odds with one another because of how they account for the surge in immigration surge or fail to do so.
Between November 2021 and June 2024, employment increased by 9.4 million, according to the non-farm payroll survey (CES). But the household survey (CPS) shows the gain was only 5.3 million for the same period – even after attempts to harmonize the two figures for differences in how they’re measured, the Federal Reserve Bank of Atlanta said in a report.
The difference between the two estimates is nearly equal to all the jobs in the state of Virginia.
Economists Jonathan Willis and Tao Zha conclude that the most likely reason for the gap is that the CPS understates population growth, which has been buoyed by a surge in immigration.
Data discrepancies always exists when comparing the payroll and the household surveys. This is because the payroll survey collects the data from businesses, while the household survey asks individual Americans their employment status. The Bureau of Labor Statistics, which conducts the household survey, usually has a predetermined population size based on Census data.
But in recent years, the difference in employed population between these two surveys reached an unusual level that’s too big to ignore.
Since 2022, population growth is stronger than previous Census estimates, due to an unanticipated surge in immigration. Using the Congressional Budget Office’s figure of 5.4 million in net immigration between 2022 and 2024, the Atlanta Fed report found that the level of immigration would translate to 2.6 million employed workers, or 75% of the gap between CES and CPS.
The labor market is stronger than the household survey data would suggest. And this isn’t just a good-news story for people coming to the US, but also reflects better labor market outcomes for those already here.
After accounting for this revised population growth, both US-born and foreign-born employment increases, according to a separate analysis published by The Hamilton Project. While CPS numbers suggest that US-born employment declined over the course of 2023, the authors estimated that employment for this group actually increased by 740,000.
