Office-Using Employment: Ready to Rebound?

Economic Pulse
November 8, 2013
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In line with October’s significantly stronger-than-expected growth in total payrolls (+204,000) and private payrolls (+212,000), office-using employment grew by a robust 56,000 jobs on the month (Table 1), led by the Information (+5,000), Financial Activities (+7,000) and Professional/Business Services sectors (+44,000). On a combined basis, the figures for August and September were revised slightly higher (+11,000); nonetheless, even with these upward revisions, the three-month moving average in monthly changes in office employment (+37,000) is still at a 13-month low, and is well off the 89,000 average monthly change observed over the February 2013 through April 2013 three-month period observed earlier this year.

One anomaly in October was the fact that even with a pick-up in Professional/Business Services employment, the hiring of temporary help workers slowed markedly, with the category adding only 3,300 jobs—the smallest addition in more than a year. It’s difficult to gauge whether this slowdown was a result of a reduction in government work contracted to the private sector, although the aggregate payroll figure suggests this was not the case. Detail on October private-sector employment in management consulting, technical consulting and aerospace and arms manufacturing—categories that include firms that typically perform government contract work—will be released in next month’s report.

Could the government shutdown potentially have raised the payroll figure? The Bureau of Labor Statistics noted that due to the government shutdown, data collection for the Establishment (payroll) survey began later in the month than is typical. The response rate for the survey, at 83.5%, was much higher than usual (Chart 2), possibly boosting the initially reported figure by incorporating more responses from firms that are typically not captured until subsequent months.

The Unemployment Rate Should Have been Higher, says BLS

Unlike the Establishment survey, some of the estimates from the Household Survey (the survey that reports the unemployment rate) clearly reflected the impact of the partial government shutdown. In the Household Survey, workers who indicate that they were not working during the entire reference week due to a shutdown-related furlough and expect to be recalled to their jobs should be classified as unemployed on temporary layoff, whether or not they are paid for the time they were off work. In October, many furloughed federal employees were classified as such, contributing to a rise in the overall number of persons unemployed on temporary layoff.

However, some federal workers who were not at work during the entire reference week in October were not classified as unemployed on temporary layoff. Instead, they were classified as employed but absent from work. The BLS notes that such a misclassification is an example of nonsampling error, and one that is not “corrected.” Specifically, even though respondents may have misunderstood the question(s) being asked, responses are accepted “as is”; to maintain data integrity, no ad hoc measures are undertaken to reassign survey responses.

If the federal workers who were recorded as employed but absent from work had been classified as unemployed on temporary layoff, the overall unemployment rate would have been slightly, but not substantively, higher than reported. On a non-seasonally adjusted basis, the unemployment rate would have risen by 7.0% in September to 7.1% in October. Because of the misclassification, the non-seasonally adjusted unemployment rate remained at 7.0%.