‘s the Deal with the Job Numbers? // (John Hinderaker)

Here I wrote about the fact the federal government seems to be producing absurdly optimistic job numbers just in-time to give Democrats a boost during the midterms. However, this is not the only mystery in the current job data. The current employment situation in America is somewhat elusive. I asked John Phelan my colleague to explain. Here is his reply.

The United States’ economy shrank in the first quarter of 2022. In the past, a recession would have been declared immediately. But not this time. Some argued that there could be a recession when employment was high.

These estimates of the US number of jobs are based on the Bureau of Labor Statistics’ Establishment survey. As Business insider explained in 2014.

…data about the Establishment are collected by the U.S. Bureau of Labor Statistics in its Current Employment Statistics survey (CES). This survey includes payroll records of approximately 144,000 non-farm institutions and government agencies. It covers workers at around 554,000 individual work sites. The BLS also collects data about hours worked, earnings, and industries within which employees are employed at the surveyed places.

These data show that there have been steady increases in the number and types of jobs in the economy. There have been increases in every month since December 2020, 263,000 in Nov 2022, or 3.8 Million new jobs since January.

The Employment Situation Report is released by the BLS each month. It provides another estimate from the Household Survey of the actual number of people employed. Business Insider explained this:

…is conducted annually by the U.S. Census Bureau. It surveys approximately 60,000 American households each week during its Current Population Survey (CPS). The Census also determines the employment status of each household surveyed, which it classifies in terms of whether they are employed, unemployed, or not in the civilian labor market. It also collects data about their demographic profiles, such as race, Hispanic origin and age, sex, etc.

The BLS explains it all:

There are many conceptual and methodological differences in household and establishment surveys, which result in important distinctions in employment estimates derived using the surveys. These are:

– The household survey includes agricultural workers and self-employed workers whose business is not incorporated, as well as unpaid family workers and private household workers. These groups are not included in the establishment survey.

– The household survey includes those on unpaid leave from the employed. The establishment survey does.

– The household survey is only available to workers aged 16 and over. The age limit for the establishment survey is not applicable.

– The household survey does not count duplicates of individuals because each individual is counted once even though they have more than one job. Employees who work at more than one job and appear on more than one payroll in the establishment survey are counted separately.

Which is “better”? The Household survey seems to be the better measure for points 1 through 4. The Establishment survey seems to have the advantage on points 2 and 3. To put it another way, the Establishment survey measures number of jobs, while the Household survey measures number of people employed.

The Household survey data shows a completely different picture when we look at the data about people employed. In fact, the number of Americans employed has fallen over the last ten month (and both the previous two). There were 1.3 million more Americans working in November than in January (you can also see the same pattern in state-level data, such as in my state, Minnesota).

Both surveys use different methods to measure different things, so it shouldn’t surprise that they don’t match. We must ask ourselves why they diverge so much.

What if there is no discrepancy or it is at most much smaller? John reported yesterday on a report by the Philadelphia Federal Reserve that found:

…the employment trends from March to June 2022 were significantly different between 33 states and the District of Columbia compared to current state estimates from Bureau of Labor Statistics (BLS). Current Employment Statistics (CES)

…

The total number of net new jobs added over the period was 10,500, rather than the 1,121,000.500 jobs estimated by the sums of the states. The U.S. CES estimated that there was net growth of 1,047,000 for the period.

The Establishment survey – the job figures – is just wrong.

It is worth noting that while the CES (jobs), reported a gain in 1.0 million jobs, the CPS (people employed), reported a decrease of 347,000 in Americans employed over the same period. If the Philadelphia Fed is correct there is still a discrepancy . This could be explained by more people having multiple jobs to make ends met. It is not an economic endorsement.

So why are the jobs numbers so off? It is impossible to rule out incompetence when government agencies are involved. Zerohedge, who deserves a hat-tip for his work on the subject, suggests something darker.

It is interesting to note that this is not the first instance of the “apolitical Bureau of Labor Statistics” pulling off such a bizarre divergence. It happened right before Obama was reelected.

Then again, right before Hillary’s “100% Guaranteed Election” (because one wouldn’t want a weak economy to negatively impact her re-election chances).

I don’t like to question people’s motives. It suffices to say that blockbuster job numbers can make you wonder how many people actually work.