How Reliable Are Administrative Reports of Paid Work Hours?

This paper examines the quality of quarterly records on work hours collected from employers in the State of Washington to administer the unemployment insurance (UI) system. We subject the administrative records to four “trials,” all of which suggest the records reliably measure paid hours of work. First, the distribution of hours in the administrative records exhibits far less “heaping” than does the distribution in the Current Population Survey (CPS). Second, quarter-to-quarter changes in the log of earnings are highly correlated with quarter-to-quarter changes in the log of paid hours. Third, annual changes in Washington’s minimum wage rate (which is indexed) are clearly reflected in year-to-year changes in the distribution of work hours in the administrative data. Fourth, Mincer-style earnings and wage rate regressions using the administrative data produce estimates similar to those found elsewhere in the literature. We speculate that the administrative hours records in Washington are of high quality because they are collected for the purpose of administering unemployment insurance (UI), particularly to determine UI eligibility.