Income Data for Policy Analysis: A Comparative Assessment of Eight Surveys. Work Activity and Earnings

12/23/2008

In some of the surveys, data on work activity and the income from that activity are collected together. Questions ask respondents about their work activity, and those who report such activity are asked how much income they received from it.40 With this approach, respondents cannot report earnings without first reporting employment. If they do report employment, then there is an income amount associated with it—or a missing data item to be imputed. In the other surveys, questions on work activity and earnings occur in separate parts of the instrument, which does not preclude respondents from reporting one without the other. If the skip logic in the instrument does not enforce consistency, then edits may be required to ensure that respondents do not end up with earned income without work activity or vice versa.

In our review of survey procedures, we found that among the five major surveys the CPS and ACS include consistency checks in their data processing procedures to ensure that there is income associated with all work activity, and work activity associated with all earned income reported in the final data file. NHIS collects work activity and annual earnings together, and the latter is always positive when employment in the prior year is indicated. However, respondents are asked elsewhere in the questionnaire whether each adult family member received income from wages and salaries or self-employment in the prior year, and the responses to these questions are not edited for consistency with reported employment or earnings. MEPS collects annual earnings separately from work activity and does not include consistency checks in the editing. SIPP collects work activity and earnings in the same part of the instrument, but because this information is captured monthly, and employment may start or end in the month before the income from that activity, consistency is not forced at that level, either in the skip patterns or subsequent editing. We examine the incidence of inconsistency between the presence of earnings and reported receipt (NHIS) or work activity (MEPS and SIPP).

In the NHIS, of those who were reported as having received income from wages and salaries or self-employment during the year, an estimated 4.3 million persons had no reported earnings (Table IV.47). Similarly, an estimated 4.0 million persons with reported annual earnings totaling $105.3 billion had no reported receipt of income from wages and salaries or self-employment during the same period.

For MEPS the JOBS file contains detailed employment data covering the same period of time as the annual income data collected elsewhere in the instrument.41 Using these data we find that an estimated 2.6 million persons had one or more jobs working for others or in their own businesses during the year but reported no wage and salary or self-employment income for the same time period (Table IV.48). Another 6.6 million persons reported wage and salary or self-employment income totaling $99.7 billion for the year but gave no indication of work activity over that same period.

TABLE IV.47

ESTIMATES OF CONSISTENCY BETWEEN REPORTED RECEIPT OF INCOME FROM WAGES AND SALARIES OR SELF-EMPLOYMENT AND REPORTED WORK ACTIVITY WITH EARNINGS: NHIS
Estimate With Reported Receipt But No Reported Earnings With Reported Earnings But No Reported Receipt With Both Reported Receipt and Reported Earnings
Millions of Persons 4.35 3.98 143.37
$Billions of Earnings 0.0 105.3 5,156.2

Source: Mathematica Policy Research, from tabulations of work activity and earnings in calendar year 2002 from the 2003 NHIS.

TABLE IV.48

ESTIMATES OF CONSISTENCY BETWEEN REPORTED WORK ACTIVITY AND REPORTED EARNINGS: MEPS AND SIPP
Survey With Reported Work activity But No Reported Earnings With Reported Earnings But No Reported Work Activity With Both Reported Work Activity And Reported Earnings
Millions of Persons MEPS 2.60 6.61 153.81
SIPP 0.081 0.38 153.68
$Billions of Earnings MEPS 0.0 99.7 5,164.1
SIPP 0.0 1.1 4,759.0

Source:   Mathematica Policy Research, from tabulations of work activity and earnings in calendar year 2002 from the 2001 SIPP panel and the 2002 Full-year Consolidated MEPS-HC.

1.Initially, we identified 2.06 million SIPP respondents with reported work activity but no reported earnings.  Census Bureau staff determined that an error in the questionnaire skip logic accounted for 1.97 million of this number.

With SIPP we initially identified an estimated 2.1 million persons with work activity but no reported earnings, but on pursuing this matter with the Census Bureau we learned that nearly all of this entire number—all but 0.08 million—was due to an error in the skip logic that was corrected in the 2004 panel. Because of the error, questions on the income from a business (which could include net profit or loss) were skipped for self-employed persons in sole-proprietorships and some partnerships when no monthly draw (salary paid to oneself) was reported. We found an additional 0.4 million persons who reported earnings but no work activity. Thus, while SIPP does not edit or impute monthly work activity against monthly earnings or monthly earnings against monthly work activity, we identified fewer than 0.5 million persons with either work activity but no earnings or earnings but no work activity on an annual basis. This contrasts with an estimated 9.2 million in MEPS.

If those reporting the receipt of earned income but no dollars in NHIS, or work activity but no dollars in MEPS, and those skipped around the self-employment income questions in SIPP are included in the population of earners, the number of earners would be increased to 151.7 million in NHIS, 163.0 million in MEPS, and 156.0 million in SIPP (Table IV.49). In contrast, the estimated 150.4 million earners in the CPS, which is edited and thus unchanged, would become the smallest estimate while the ACS would remain in the middle with 151.9 million.  If, at the same time, the 6.6 million with reported earnings but no reported work activity were removed from the MEPS estimate of earners (on the grounds that they may have misreported the source of their income), the MEPS estimate of total earners would drop to 156.4 or narrowly more than the SIPP estimate.

TABLE IV.49

IMPACT ON ESTIMATES OF PERSONS WITH EARNINGS IF PERSONS REPORTING WORK ACTIVITY OR RECEIPT OF EARNINGS BUT NO EARNED INCOME ARE INCLUDED
  Millions of Persons
Employment CPS ACS SIPP MEPS NHIS
Persons with Earned Income Reported 150.44 151.93 154.06 160.42 147.35
Additional Persons with Evidence of Earnings 0.00 0.00 1.97 2.60 4.35
Total Persons with Evidence of Earnings 150.44 151.93 156.03 163.02 151.70

Source:  Mathematica Policy Research, from tabulations of calendar year 2002 income from the 2003 CPS ASEC supplement, the 2001 SIPP panel, the 2002 Full-year Consolidated MEPS-HC, and the 2003 NHIS, and prior 12 months income, inflation-adjusted to calendar year 2002, from the 2002 ACS.

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