Thursday, 21 April 2016

Happy birthday, dear survey...

It's not often a statistical survey has a birthday celebration, but yesterday Statistics NZ had a 30 year anniversary do at AUT to celebrate the Household Labour Force Survey (the HLFS) getting underway in 1986. Stats brought along copies of the very first HLFS data announcement: it had a well-written press statement that has stood the test of time pretty well, though the tables will take you back to the era of dot matrix printers and what looks like Lotus 1-2-3 output (children, ask your parents).

Diane Ramsay from Stats took us through the history of the HLFS. There could have been, should have been, an HLFS in 1979 - the Department of Labour and the then Statistics Department had done a feasibility study and recommended one - but the Muldoon government, with characteristic incompetence and contempt (my comment, not hers), decided it couldn't afford one. The Labour party, on the other hand, recognised that a proper measure of employment, unemployment, underemployment and participation is a fundamental piece of information in an open democracy, and got the HLFS going in 1986.

And so here we are today, with the HLFS pretty much as it was day one. It's one of the biggies for the financial markets, right up there with GDP and the CPI, but as the various presenters showed, the long set of consistent data has also been enormously useful over that time to investigate all sorts of social and economic issues. Dave Paterson from MBIE, for example, explored a number of trends over that time - notably the large rise in the labour market participation rate of women, how the various business cycles had different regional impacts, and what the forecast demographic profile of the workforce looks like and its implications for aggregate economic growth and productivity.

AUT's Gail Pacheco - a fellow Warriors tragic - summarised her research papers (written with various colleagues) on the impact of changes in the minimum wage. This is one of the red-hot economic policy topics in the US (and elsewhere) at the moment, and to be honest I wasn't aware that there was equivalent research in New Zealand. Turns out, Gail said, that by international standards we have a relatively high minimum wage relative to the median income, so our results happen to be especially relevant to people overseas thinking of whacking up their minimum wage (like this month's US$15/hour moves in New York and California). If you're interested in the topic, best read Gail's output properly rather than rely on my takeaway, but in one study where she focussed on employment effects where the minimum wage was a binding constraint, she found negative effects on teenagers and minorities, which is what I would have expected.

Gail and Waikato's Bill Cochrane used the HLFS, and an occasional supplement run alongside it, the Survey of Working Life, to look at the gender pay gap. It has been narrowing, but it's still there, and even after throwing a battery of control variables at it to allow for different occupational distributions and everything else that might be a plausible explanation, there's still a 10% gap left unexplained. Is that big or small? Well, as Bill said (and I'd endorse as the father of a working daughter), why don't you leave 10% of your income at the door when you leave, and see if it feels small to you.  The Herald's social issues editor, Simon Collins, had the gumption to come along to the day, and you can find his coverage here.

The other news was that, after 30 years. the HLFS is getting a bit of a remake and a refresh, though not so as to cause any major inconsistencies and series breaks - there'll be an element of 'backcasting' if needed to put the old data on all fours with the new. Fuller details here. As Sharon Snelgrove of Stats explained, some of the changes reflect different ways of doing things today (looking for jobs over the internet, for example, rather than in the job ads in the newspapers), and some are aiming at new data (such as union membership, or being part of a collective bargaining agreement). When people respond that they'd like more hours of work, they'll now be asked, "how many?", so we can get a volume measure of underemployment.

Three technical details I found interesting.

One, the HLFS rotates out one-eighth of the survey panel every quarter. The same rotation process appears to have caused real issues for the Aussies and the volatility of their monthly employment data, so I asked the Stats folks if ours were likely to go off the rails. The answer was, it's hard to know, as there's quite a lot of volatility in the employment data anyway, and it's not that easy to figure out how much might be due to some non-representative oddity of the new one-eighth intake. But their rough-and-ready feel was, no.

Two, immigrants have recently been one of the big components of growth in the labour force: do we know anything about their employment experience? Short answer, no, not in the short-term anyway: the HLFS is designed to exclude anyone who has been been in New Zealand for less than a year.

And three, I was reminded - well, got into a bit of an argy-bargy about it, really - about the very tight definition of unemployment. To be unemployed in an HLFS sense (which in turn is a definition set by the International Labour Organisation)
A person must be actively seeking work and available to work in the reference week to be classified as unemployed. ’Actively seeking work’ means an individual must use job search methods other than looking at job advertisements – for example, contacting a potential employer or employment agency. Previously, responses that specified using the internet to seek work were captured in an ‘other’ category and consequently classified as ‘active seeking’
My beef is that if I were an unemployed economist, and keen to get a job, I might very well turn to Seek or whatever, enter 'economist' in the keyword box, read the options, and flag them away if there's no fit. That, for me, has all the look and feel of an unemployed person actively looking for work. But not for the HLFS (nor other ILO-compliant surveys). I won't feature in the unemployment stats, though I will be in what is called 'the potential labour force', which makes up one part of the 'underutilised' labour force (the unemployed, the underemployed, and the potential labour force).

So my reaction is that I think I won't be quite so hung up on the headline unemployment rate in the future, and I'll pay a bit more attention to the underutilisation rate, as will Stats itself: "As part of the new outputs released from the June 2016 quarter, Statistics NZ will include the underutilisation rate as a key statistic".

Well done to all involved - Stats really does go the extra mile to connect with its users.

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