U.S. Labor Force Statistics:

Illustrative Simulations of the Likely Effects of Underrepresenting Unauthorized Residents

GAO-10-99: Published: Nov 30, 2009. Publicly Released: Dec 7, 2009.

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Cornelia M. Ashby
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In times of economic uncertainty as well as in times of stability, policymakers and the public rely on labor force statistics, such as the unemployment rate, to provide important information on the current state of the economy. These statistics, published by the Department of Labor's Bureau of Labor Statistics (BLS), include key figures that are based on data obtained from the Current Population Survey (CPS). The CPS, a household interview survey administered by the Department of Commerce's U.S. Census Bureau, is designed to represent the entire United States civilian noninstitutional population. However, certain U.S. residents--specifically, foreign-born persons who are not authorized to live here, to whom the Government Accountability Office (GAO) refers as unauthorized residents in this report--may not be represented in CPS data to the same extent as the general population. Little research has been done on whether potential underrepresentation of the unauthorized population might noticeably affect labor statistics, but policy efforts that depend on valid and reliable labor force statistics would benefit from such information. GAO agreed with the Bureau of Labor Statistics to examine issues concerning unauthorized residents' impact on labor force statistics. GAO addressed the following key questions: (1) Extent of underrepresentation: What is known about the extent of any underrepresentation of unauthorized residents in CPS data used to compile labor force statistics?; (2) Labor force status: What is known about the likely labor force status of unauthorized residents?; (3) Possible effects: How might CPS underrepresentation of unauthorized residents affect key labor force statistics?

GAO found the following: (1) The extent of CPS underrepresentation of unauthorized residents is unknown, but experts GAO consulted told us that the CPS data might not represent approximately 10 to 15 percent of unauthorized residents; (2) Little information is available about the labor force status of unauthorized residents, but experts GAO consulted suggested that their approximate unemployment rate in March 2008 may have been 6.5 to 8.5 percent, compared with 5.2 percent nationally; (3) Little is known about the effect of underrepresentation of unauthorized residents on labor force statistics. However, using the above information provided by experts, GAO simulated the likely effects of adding unauthorized residents assumed not represented in March 2008 labor force statistics. Because the expert assumptions were uncertain, GAO tested its results using a broader range of assumptions. GAO's simulations showed that adding unauthorized residents not represented in CPS data would likely have a minimal effect on the overall U.S. unemployment rate. The simulations did not, however, rule out the possibility that adding such residents would increase the estimated size of the national labor force and the estimated number of persons employed nationally. Updating these simulations using national labor force statistics for June 2009 revealed similar effects.

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