Current Population Survey (CPS)

Under the estimating methods used in the CPS, all of the results for a given month become available simultaneously and are based on returns from the entire panel of respondents. The estimation procedure involves weighting the data from each sample person by the inverse of the probability of the person being in the sample. This gives a rough measure of the number of actual persons that the sample person repre sents. Since 1985, most sample persons within the same State have had the same probability of selection. Some selection probabilities may differ within a State due to the sample design or for operational reasons. Field subsampling, for example, which is carried out when areas selected for the sample are found to contain many more households than expected, may cause probabilities of selection to differ for some sample areas within a State. Through a series of estimation steps (outlined below), the selection probabilities are adjusted for noninterviews and survey undercoverage; data from previous months are incorporated into the estimates through the composite estimation procedure.

Noninterview adjustment

The weights for all interviewed households are adjusted to account for occupied sample households for which no information was obtained because of absence, impassable roads, refusals, or unavailability of the respondents for other reasons. This noninterview adjustment is made separately for clusters of similar sample areas that are usually, but not necessarily, contained within a State. Similarity of sample areas is based on Metropolitan Statistical Area (MSA) status and size. Within each cluster, there is a further breakdown by residence. Each MSA cluster is split by “central city” and “balance of the MSA.” Each non-MSA cluster is split by “urban” and “rural” residence categories. The proportion of sample households not interviewed varies from 7 to 8 percent, depending on weather, vacation, etc.

Earnings Data

Beginning in January, 1992 usual hourly and weekly earnings data began appearing on the monthly CPS File for that portion of the population roughly corresponding to wage and salary workers (self-employed persons in incorporated businesses are excluded, although they are normally included with the wage and salary population). These data are collected on a monthly basis in the two outgoing rotation groups as part of the basic CPS labor force interview.

Ratio estimates

The distribution of the population selected for the sample may differ somewhat, by chance, from that of the population as a whole in such characteristics as age, race, sex, and State of residence. Because these characteristics are closely correlated with labor force participation and other principal measurements made from the sample, the survey estimates can be substantially improved when weighted appropriately by the known distribution of these population characteristics. This is accomplished through two stages of ratio adjustment, as follows:

1. 
   First-stage ratio estimation.
   The purpose of the first-stage ratio adjustment is to reduce the contribution to variance that results from selecting a sample of PSUs rather than drawing sample households from every PSU in the Nation. This adjustment is made to the CPS weights in two race cells: Black and nonblack; it is applied only to PSUs that are not self-representing and for those States that have a substantial number of black households. The procedure corrects for differences that existed in each State cell at the time of Census 2000 between 1) the race distribution of the population in sample PSUs and 2) the race distribution of all PSUs. (Both 1 and 2 exclude self-representing PSUs.)
2. 
   National coverage adjustment.
   The purpose of this step is to improve the adjustment for subpopulations most prone to undercoverage. It adjusts CPS sample weights to independent population estimates for 34 white non-Hispanic, 26 black non-Hispanic, 18 Asian non-Hispanic, 18 residual race non-Hispanic, 26 white Hispanic, and 4 non-white Hispanic age-sex cells.
3. 
   State coverage adjustment.
   This step adjusts CPS sample weights to independent state population estimates. The number of age-sex cells for each state varies, depending on the black and nonblack population.
4. 
   Second-stage ratio estimation.
   This procedure substantially reduces the variability of estimates and corrects, to some extent, for CPS undercoverage. A national-coverage step and a State-coverage step make preliminary corrections for undercoverage. The CPS sample weights are then adjusted to ensure that sample-based estimates of population match independent population controls. Three sets of controls are used in different steps of the procedure:
   1. 
      State step:
      Civilian noninstitutional population controls for 6 age-sex cells in the Los Angeles-Long Beach metropolitan area, the balance of California, New York City, the balance of New York State, each of the other 48 States, and the District of Columbia.
   2. 
      Ethnicity step:
      National civilian noninstitutional population controls for 26 Hispanic and 26 non-Hispanic age-sex cells.
   3. 
      Race step:
      National civilian noninstitutional population controls for 34 white, 26 black, and 26 Asian-plus-residual-race age-sex cells.

The independent population controls are prepared by projecting forward the resident population as enumerated on April 1, 2000. The projections are derived by updating demographic census data with information from a variety of other data sources that account for births, deaths, and net migration. Estimated numbers of resident Armed Forces personnel and institutionalized persons reduce the resident population to the civilian noninstitutional population. Prior to January 2003, the projections were based on earlier censuses. See “Revisions to the Current Population Survey Effective in January 2003,” in the February 2003 issue of this publication for a detailed discussion of changes to the second-stage weighting and composite estimating procedures that were introduced in January 2003.

Composite estimation procedure

The last step in the preparation of most CPS estimates makes use of a composite estimation procedure. The composite estimate consists of a weighted average of two factors: The two-stage ratio estimate based on the entire sample from the current month and the composite estimate for the previous month, plus an estimate of the month-to-month change based on the six rotation groups common to both months. In addition, a bias adjustment term is added to the weighted average to account for relative bias associated with month-in-sample estimates. This month-in-sample bias is exhibited by unemployment estimates for persons in their first and fifth months in the CPS being generally higher than estimates obtained for the other months.

The composite estimate results in a reduction in the sampling error beyond that which is achieved after the two stages of ratio adjustment. For some items, the reduction is substantial. The resultant gains in reliability are greatest in estimates of month-to-month change, although gains usually are also obtained for estimates of level in a given month, change from year to year, and change over other intervals of time.