Video 1: CPS

Introduction to Economic Indicators

  • Economists, journalists, and government officials use various indicators to assess the economy's health and performance.
  • Key indicators of economic performance focus on production, traditionally measured using Gross Domestic Product (GDP).

Transition to Labor Market Indicators

  • In future discussions, the focus will shift to labor market indicators, which provide insights into employment dynamics.
  • Understanding how the government collects labor market data is crucial for interpreting these indicators.

Current Population Survey (CPS)

  • The U.S. Census Bureau conducts the Current Population Survey (CPS) to gather labor market data.
  • The survey involves calling 60,000 American households each month to collect employment status information.
  • The sample size of 60,000 is considered sufficiently representative of the overall economy in the United States.

Methodology of the Current Population Survey

  1. Data Collection
    • The Census Bureau randomly selects 60,000 households for participation.
    • Households are asked a series of questions regarding the employment status of individuals living there.
  2. Questions Asked
    • The survey aims to determine:
      • The number of individuals within each household.
      • Age of each individual.
      • Employment status (employed, unemployed, etc.).
      • Job application status for those who are unemployed.

Population Categories in Labor Data

  • The population can be broken down into several categories to simplify analysis.

General Population

  • Comprises all individuals residing in the surveyed 60,000 households.

Working Age Population

  • Defined as individuals who are considered capable of working.

  • Exclusions: An individual is not classified as part of the working age population if:

    1. Age Restrictions:
    • Age younger than 16 years.
    • Example: A 15-year-old is not in the working age population.
    1. Incarceration Status:
    • Individuals currently incarcerated in jail or prison are excluded.
    • Even if in prison but performing a job, they are still not included because such work is not considered traditional wage-earning work.
    1. Long-term Health Care:
    • People residing in long-term health care facilities are also not included.

  • All others not meeting these criteria fall within the working age population.

Labor Force Categories

  • The working age population can be further divided into:

Labor Force

  • Comprises individuals who are either:
    • Employed:
      • Defined simply as having paid work, irrespective of job satisfaction or full-time/part-time status.
    • Unemployed:
      • To be considered unemployed, an individual must meet specific criteria defined below.

Not in Labor Force

  • Refers to those within the working age population who are not actively seeking employment.

Definition of Unemployment

An individual is classified as unemployed if:

  1. They do not have paid work (i.e., they are not employed).
  2. At least one of the following is true:
    • They have applied for a job in the last four weeks.
    • They are waiting to start a new job within the next thirty days.
    • They are waiting to hear back from an employer after recently being laid off.

Summary of Labor Market Classification

  • The CPS aims to categorize individuals into groups based on their employment status:
  1. Potential Workers: Defined by the working age population.
  2. Labor Force Participants: Individuals willing to work, either employed or actively seeking employment.
  3. Not in Labor Force: Individuals who are capable of work but not seeking employment.

Future Discussions

  • Subsequent videos will delve into specific labor market indicators, examining how to calculate these measures using the data obtained from the Current Population Survey.