No, a million more men than women didn’t enter the labor force: Explaining the January 2022 jobs report

What a viral chart about women in the labor force teaches us about economic statistics.

“Pay strict attention to what I say because I choose my words carefully,” the Manhattan bank thief Dalton Russell says at the beginning of Spike Lee’s “Inside Man.” For everyone’s sake, you should treat the Bureau of Labor Statistics the same way.

Within this January’s jobs report, there was something strange. It seemed like more than 1 million men joined the labor force, meaning they were working or looking for work, compared with women.

Hear more from Matthew Zeitlin about this story:

But it wasn’t the case. Or, if gender-based domestic burdens from omicron were affecting the entry of men and women into the labor force, it wasn’t going to show up in those figures.

What really happened is that the Census Bureau, which helps conduct the household survey used by the BLS for its labor force estimates, developed what are known as new “population controls” based on updated population data.

These two sets of revisions, along with the “seasonal adjustments” they use to iron out predictable variations in employment (like retailers taking on new employees in November and December and letting them go in January), can produce large disjunctions, especially in the January report, where the data is updated through the annual adjustment process and there’s one of the more sizable seasonal adjustments, as well as the typical revisions.

While many economists and perhaps even the White House expected meager or even negative jobs gains because of omicron peaking across the country, the headline number was far stronger than expected.

What this means is that the household survey responses are re-weighted according to new estimates of how large the “civilian noninstitutional population age 16 and older” is.

“The only thing that a survey can ever measure is a proportion … a public opinion survey can tell you the proportion of the population that plans to vote for Biden, just as it can tell you the proportion of the population that’s in the labor force. To turn this into an aggregate number — the total number of votes for Biden or the total number of people in the labor force — you have to multiply by a population estimate,” Justin Wolfers, a University of Michigan economist, told Grid.

The explanation for this disjunction is that the survey found more men. Since the male labor force participation rate is higher than the female labor force participation rate, this mechanically made the male labor force larger.

“The BLS uses a population estimate that comes from the Census Bureau. Through 2021, it was using one set of population estimates. In January 2022, it switched to a new set of population estimates. That new set of estimates has a lot more men, so a (roughly) unchanged male labor force participation rate multiplied by a larger number of men yields a larger estimate of the male labor force,” Wolfers explained in an email to Grid.

“Virtually all (or possibly even more than all) of the rise in male labor force participation in January was due to changing population controls,” he said.

Another annual revision process caught the attention of economic observers: the so-called benchmark revisions to the establishment survey, which, combined with updating seasonal adjustments, can lead to big swings in reported data that aren’t necessarily month-over-month changes.

For example, the new data shows that employment in the retail sector had suffered more than previously thought and employment in warehousing and storage has been hotter than we knew before.

In “Inside Man,” Russell delivers his monologue at the beginning of the movie, from what he describes as what “could most readily be described as a prison cell,” but, spoiler alert, he is really in the bank itself, waiting to walk right out, unnoticed by the police. Sometimes all you need to know is right in front of you, but only if you know where to look.

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