Thursday, August 26, 2004

Jobs numbers and uncounted employment

Much was made in the media last month when the Bureau of Labor Statistics claimed that only 32,000 new jobs had been added to the nation's payrolls. That was supposedly awful news for the Bush Administration.

But there's one problem with the BLS's stats: it does not count people who HAVE JOBS but are not on a business payroll. In other words, self-employed consultants, real estate agents, internet entrepreneurs, freelance journalists, and any other person who has a paying job that does not show up on a traditional company's payroll (or government agency payroll) is not counted in the BLS survey.

But another survey shows that there are MORE WORKING AMERICANS UNDER PRES. BUSH THAN AT ANY POINT IN U.S. HISTORY. Indeed, that survey is supported by the rest of the economic facts that indicate an improving economy and strong job market. What's the trick? The Labor Dept. survey is not subject to the false "additions" caused by people changing jobs, like the BLS survey and DOES count household-based jobs. As the authors of the USA Today Op-ed linked above show:

The U.S. Labor Department's household survey . . . It surveys 60,000 households and counts self-employed consultants, real estate agents, farmers and other non-traditional workers who aren't on old-style payrolls.

Yet because the household survey shows 2 million more working Americans under President Bush than ever before, it has been attacked for partisan reasons. Those who favoring the payroll survey are quick to quote Federal Reserve Chairman Alan Greenspan's congressional testimony in February favoring conventional numbers.

Here's the political sea-change: In March, the Heritage Foundation released a critique of the payroll survey and showed statistically that it doesn't accurately reflect today's economy. Then Greenspan endorsed that logic:

In his July 20 testimony to Congress, Greenspan cited measures from the payroll and household surveys. Then the Federal Reserve, led by Greenspan, voted unanimously to raise interest rates. It said the economy is "poised to resume a stronger pace of expansion" and noted that labor-market conditions continue to improve. It's no secret which survey would lead to that conclusion.

The Fed's actions helped everyone, including Wall Street, remember the good news. Claims for unemployment benefits, for example, are 10% below their 30-year average, while the unemployment rate has fallen to its lowest level since 2001. Best of all, the household survey showed a gain of more than half a million jobs in July alone.

Everything adds up — except the payroll survey.

So when you hear how Bush is the first president since Hoover to have net job loss, remember that claim is based on flawed information. The reality is that the new economy is growing rapidly and more Americans are working than ever before. That's not a net job loss, that's a success.

Hat-tip QandO.

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