On December 15, 2022, the US Census Bureau released its final plan for improving disclosure avoidance procedures for the Current Population Survey Public Use Files (CPS PUF), and that plan is available here
. As you may recall, we here at the Atlanta Fed have been keenly interested in the proposed changes because we actively use the public use files to produce statistics such as the Wage Growth Tracker.
Part of the plan to avoid disclosure of individuals in the CPS-PUF is to round the CPS PUF earnings data. Previously, I have written about how the initial proposed rounding rules for hourly and weekly wages would have harmed the reliability of the Wage Growth Tracker (see here and here). In this Policy Hub: Macroblog post, I take a look at how the final plan for rounding wages would affect the Wage Growth Tracker.
The following table summarizes the Census Bureau's final rounding rules for hourly and weekly wages in the CPS PUF, with the prior proposed values shown in parentheses if they differ from the final values:
As you can see in the table, the final rounding rules are less restrictive than the prior proposal released in July 2022. In particular, the Census Bureau modified its proposal by raising the upper boundaries of the rounding for hourly wages. It also updated the weekly rounding to better align with the hourly wage rounding rules, assuming a traditional 40-hour work week, along the lines I had suggested here.
The following chart shows the published Wage Growth Tracker based on unrounded data (orange line), and what it would have been if the final rounding plan had been in place (blue line).
If you have difficulty seeing any difference between the two lines, it's because they differ very little. The rounded wage data would have had very little impact on the Wage Growth Tracker statistic. I believe this outcome is a win for the collaborative process that the Census Bureau employed when developing this final plan, which included sharing information about the proposals and gathering suggestions for revision from the user community.
The Census Bureau plan includes one other change that will also directly affect the Wage Growth Tracker data. The Wage Growth Tracker excludes wage observations that have been topcoded. (Topcoding helps preserve the anonymity of the highest wage earners in the sample under study by replacing their actual wage with a topcode value.) The Census Bureau is introducing a dynamic topcode that will apply to the top 3 percent of earnings reported each month. This method will replace the current one, which applies fixed-dollar topcode thresholds to the wage data. For weekly earnings, the static threshold is currently $2,884.61 ($150,000 a year) and results in the potential exclusion of about 5.5 percent of the wage data that could have gone into the Wage Growth Tracker statistics. The new dynamic topcode will result in fewer cases being topcoded and thereby modestly expand the sample size used to compute the Wage Growth Tracker. However, if the highest wages are mostly people with relatively low wage growth (because, for example, they are late in their careers), then the calculated median wage growth could be a bit lower than it would have been. For that reason, at least initially, we plan to maintain a parallel set of Wage Growth Tracker data that continue to implement the static topcoding to see if we note any systematic differences arising from the dynamic topcode.
The changes to the CPS PUF will be implemented with the release of the January 2023 data in early February. I will report here on what we learn about the impact of the switch to dynamic topcoding, but users of the Wage Growth Tracker data can be confident that the switch to the rounding of the underlying wage data will have minimal impact.
By John Robertson, a senior policy adviser in the Atlanta Fed's Research Department