An improved estimate of self-employment hours for quarterly labor productivity

In 2024, the U.S. Bureau of Labor Statistics will implement two adjustments to the self-employment hours series used for constructing productivity measures: (1) directly compositing the self-employment hours estimates as is done for national employment and unemployment statistics and (2) removing part of the estimates’ irregular component, calculated during the seasonal adjustment process, from the series. These adjustments will result in a substantially smoother self-employment hours series without losing important information about changes in self-employment. In turn, this improvement will remove distortions in measured productivity. Labor productivity is a Principal Federal Economic Indicator published by the U.S. Bureau of Labor Statistics (BLS), and its correct measurement is crucial for tracking the sources of U.S. economic growth. Sometimes, however, quarterly labor productivity is unduly volatile because of large changes in measured self-employment hours.