Job Stats for Dummies
A guide for the mainstream media.
By Jerry Bowyer
National Review Online
See chart at link (below).
It’s understandable if you’re a member of the general public and you’re perplexed about the dozen or so stats that appear in the monthly employment statements. But it’s not if you write business headlines for the New York Times.
Today the Times’s web edition ran a headline that said, “U.S. Economy Added Only 78,000 Jobs in May.” Of course, this statement is false. Total nonfarm employment, which is part of the Labor Department’s payroll survey, is what increased by only 78,000. This is not a measure of what the “U.S. Economy” is doing, nor does it purport to be. It is one survey’s attempt to measure payroll jobs and nothing else. It does not count self-employment, nor does it even attempt to do so. In addition, over the past several years, the payroll survey has habitually undercounted even the limited universe of payroll jobs. This is because the survey has trouble counting the payroll jobs of companies in the start-up phase.
The statistic that actually does attempt to measure the overall economy’s job-creation rate is found in the chart above. The statistic is called household employment. It went up by 376,000 for May, has increased by 2.6 million over the past year, and currently stands at slightly more than 141 million jobs. It is also the reason why the unemployment rate currently stands at its post-recession low.
Some people, including a notoriously inaccurate columnist for the same New York Times (perhaps he’s picking up some overtime writing headlines), have claimed that the reason unemployment is low is that people are leaving the labor force — meaning not only are they not employed, they aren’t even looking. This is also wrong: 360,000 people entered the labor force last month and 605,000 people entered the month before.
The chart above shows this. The upper line is the number of people who are in the labor force, which means they are either working now or are actively looking (within the past four weeks). The line beneath it represents those who are working. The gap between them therefore represents the number of people who are unemployed.
The conclusions are inescapable: The number of people entering the labor force has grown rapidly since the supply-side tax cuts of 2003. Meanwhile, the number of people who have found jobs during this period has grown even more quickly, so the percentage of unemployed people has been shrinking. The fact that most of this has been happening in the self-employed sector is a cause for celebration, not hand-wringing. After all, it’s a New Ownership Society that most Americans are shooting for in the first place.
— Jerry Bowyer is the author of The Bush Boom and an economic advisor to Blue Vase Capital Management. He can be reached through www.BowyerMedia.com.
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