LARRY KUDLOW: 'Look under the hood' of Biden's May jobs report and you'll see the problem

The payroll establishment survey and the household survey are two different methods used by the Bureau of Labor Statistics (BLS) to gather employment data3.

The payroll establishment survey, also known as the Current Employment Statistics (CES) survey, primarily focuses on larger, established companies. The BLS contacts the human resources department of these businesses to obtain a headcount of the number of jobs. This survey covers about 119,000 businesses and government agencies, representing approximately 629,000 worksites throughout the United States2. The main statistics derived from this survey are monthly estimates of employment, hours, and earnings for the nation, states, and major industries2.

On the other hand, the household survey is primarily focused on individuals and families. The BLS calls households to ask if the residents are employed or not. This survey traditionally has a heavier weighting toward small businesses. Over the past year, the household survey has produced only a small increase in jobs, indicating potential weaknesses in the labor market.

In terms of the differences in the employment data gathered, the payroll establishment survey provides a count of jobs, whereas the household survey provides an estimate of the number of employed people1. If a person changes jobs and is on the payrolls of two employers during the same reference period, both jobs would be counted in the payroll survey estimates1.

It is important to note that both surveys have their strengths and limitations, and they may not always align perfectly due to their different methodologies and focus. However, they both serve as crucial sources of information on the labor force characteristics of the U.S. population and are used by policymakers and analysts to formulate and evaluate economic policy4.

The 408,000 job loss reported in the household survey is significant because it presents a contrasting picture to the 272,000 increase in jobs reported in the establishment survey. The household survey is considered to be more heavily weighted toward small businesses and has produced only a tiny 31,000 increase in jobs over the past year. This discrepancy between the two surveys highlights the complexities of the job market and raises concerns about the actual state of the labor market. Additionally, the civilian labor force shrinking by 250,000 and the employment-to-population ratio falling slightly in May further indicate potential weaknesses in the labor market.