The Labor Department’s latest monthly report on hiring and unemployment will include revisions for previous months that should give a more accurate picture of the U.S. job market — but that could also sow confusion.
When the data is released on Friday, one major measure of employment will be revised up. Another will be revised down. Some historical numbers will be revised, but others won’t. And the updates, though part of a routine process, will be taking place in a political environment where both sides have at times expressed skepticism of government economic statistics.
“There is going to be a massive amount of confusion,” said Wendy Edelberg, director of the Hamilton Project, an economic policy arm of the Brookings Institution.
Here is what economists say you will need to know about the revisions to make sense of the numbers.
The revisions are part of a longstanding annual process.
The monthly job figures are based on two surveys, one of employers and one of households. Those surveys are generally reliable — they involve a number of interviews far larger than a presidential election poll, for example — but they aren’t perfect. And so, once a year, the government reconciles the numbers with less timely but more reliable data from other sources. Similar processes are in place for revising other government statistics, like gross domestic product and personal income.
“Revisions are how statistical agencies achieve both timeliness and accuracy,” said Jed Kolko, who oversaw economic statistics at the Commerce Department during the Biden administration. “Near-real-time data like the jobs report later get revised to match other data sources that are more accurate but take longer to collect and publish.”
The revisions being released on Friday were scheduled far in advance and will use methodologies that were announced ahead of time, allowing economists, including Mr. Kolko and Ms. Edelberg, to publish detailed forecasts of what the new figures will show.
That transparency should give people confidence in the revision process, Mr. Kolko said. If statistical agencies begin making unexplained or unannounced updates, he added, that “could undermine faith in government statistics.”
Recent job growth will be revised down.
In August, the Labor Department released preliminary data, based on records from state unemployment insurance offices, showing that employers added roughly 818,000 fewer jobs in 2023 and early 2024 than initially reported. On Friday, the department will release an updated version of those figures and incorporate them into the official jobs data.
The final revision, which will affect job totals for every month since March 2023, could be larger or smaller than the preliminary estimate. But it will almost certainly be the largest in recent years, possibly the biggest downward adjustment since 2009. That will make job growth during the Biden administration look weaker than previously reported.
Still, the updated numbers aren’t likely to change the basic narrative of a solid labor market. They could even make the recent slowdown in hiring appear more muted, because they will make the large job gains in 2023 look smaller.
Labor force estimates will be misleading.
The other set of revisions is, if anything, even more complicated.
Data on the labor force — including estimates of employment and unemployment — comes from a monthly survey of households, known formally as the Current Population Survey. The responses in that survey are weighted to match population estimates produced annually by the Census Bureau.
But for a variety of reasons, the Census Bureau has struggled to fully account for the surge in immigration in recent years, leading it to underestimate the rate of population growth. In December, the bureau released new figures using an updated methodology that its experts believe better captures recent immigration — and that showed much faster population growth in 2023 and 2024.
The jobs report on Friday will be the first to use those new estimates. But, consistent with its past practice, the government won’t revise any of the historical household-survey data. Instead, the new population numbers will show up as a huge, one-month increase in virtually every measure that is based on them: Mr. Kolko estimates that the labor force will appear to add about two million people, and that employment and unemployment totals will also jump.
Of course, the labor force didn’t really grow by two million people in January. That growth occurred over the past several years. As a result, the January figures won’t be directly comparable with previous estimates — it won’t be possible, for example, to say how many people have joined the labor force since the pandemic. (At least not based on official Labor Department data — Mr. Kolko and others plan to produce their own unofficial revisions of historical numbers.)
Fortunately, measures that are based on ratios — like the unemployment rate and the labor force participation rate — should be mostly unaffected by the population updates. Those are the measures that most economists focus on anyway.
The revisions will help resolve a mystery.
At first glance, it may seem strange that one measure of employment will be revised up and another down. But the new data should actually help resolve a disagreement between the two sources, which have been sending conflicting signals for years.
According to the survey of employers, the U.S. economy in December had 7.2 million more jobs than it did on the eve of the pandemic, in February 2020. The survey of households, however, shows a gain of just 3.1 million jobs over the same period. The two sources often move in different directions over short periods, but it is rare for a gap to be this large or to last for this long.
The revisions on Friday should go a long way toward closing that gap. Ms. Edelberg estimated that after the updates, the discrepancy between the two surveys should shrink from more than four million to less than half a million, well within normal levels.
They will also dispel a myth.
Recent jobs reports have shown that employment has been growing among immigrants but falling among native-born Americans. But that data is misleading.
The household survey correctly identified that immigrants were making up a larger share of the work force in recent years. But the size of that work force was based on the Census Bureau’s estimates, which understated recent population growth. So the data released by the Labor Department last year underestimated employment among immigrant and native-born workers alike.
Because the Labor Department won’t revise the historical household survey data, it won’t be possible to see exactly how employment has changed among native or foreign-born workers in recent years. But the new figures should make it clear that employment has been growing among native-born workers too, not just immigrants.
