Opinion pieces and speeches by EPI staff and associates.
[ THIS ARTICLE ORIGINALLY APPEARED IN THE DETROIT NEWS ON MARCH 21, 2004 ]
Bush officials try to cherry-pick statistics;
it’s still worst job creation record in 60 years
Employment numbers create a fight about ‘jobless recovery’
By Elise Gould
Politicians like to cherry-pick statistics that best fit their political agenda. When it comes to the current jobs situation, however, the Bush administration is out of luck.
Two government surveys measure employment. The payroll survey collects data from 400,000 employers and is the source of the official employment figures that are reported at the beginning of each month. The household survey, as its name suggests, collects its data from about 60,000 households. Both paint the picture of a recovery with the worst job creation record since the end of World War II.
The administration wants the public to believe the economy is strong and jobs are being created. So it has tried to muddy the issue by highlighting the slightly better trends in the household survey since the beginning of the recovery in November 2001.
Its argument is simply bad economics. Nonpartisan experts including the Bureau of Labor Statistics (the people who compile both sets of numbers), the Congressional Budget Office and the President’s Council of Economic Advisers are unanimous that the payroll survey provides the better measure of employment trends. Federal Reserve Chairman Alan Greenspan concurs. He testified before the Senate Banking Committee on Feb. 12 that “the payroll series is the more accurate number.”
The payroll survey is better because it is much larger, it is checked annually against unemployment insurance tax records (in contrast to every 10 years for the household survey) and it is less likely to be subject to large revisions or misreporting. The payroll survey shows that employment has fallen by 718,000 since the recovery began. Michigan alone lost 2.7 percent of its jobs in this “recovery.”
The administration’s supporters counter that the payroll survey doesn’t include growth in entrepreneurship and doesn’t fully capture employment in new firms. Even so, the household survey, including the self-employed, shows record low average yearly employment growth — only 0.6 percent since the beginning of the recovery.
The claim that employment is at a record high is cherry-picking at its most blatant, an attempt to find improvements that are simply not there. Yes, the number of working people has grown, but population has grown faster. In fact, employment has grown only half as fast as what’s needed just to keep even with population growth.
Failing to find solace in the employment numbers, the administration points instead to the 5.6 percent unemployment rate. Although the unemployment rate has fallen, it has happened because record numbers of people have abandoned the search for jobs that don’t exist. Long-term unemployment is at a peak compared to the same point in the previous four recessions. In February, nearly one-fourth of unemployed people had been out of work at least six months. The average unemployment spell is 20.3 weeks, the longest average unemployment duration in more than 20 years.
Even Wall Street economists at J.P Morgan agree that the unemployment rate “misrepresents the underlying state of the job market.” The percentage of working-age people in the labor market — that is, those who are working or looking for work — has dropped to its lowest rate in over 15 years. Contrary to conventional wisdom, J.P. Morgan economists claim that “the latest data indicate that more men than women have been pulling out of the labor force.” Goldman Sachs paints an even bleaker picture of today’s slack labor market, noting that if the same proportion of people were in the labor market today as there were seeking work in March 2001, the unemployment rate would be 7.4 percent.
A close look at the payroll and household surveys shows very few cherries to pick. Since both tell political bad news, we should get back to good economics. Instead of trying to convince the public that bad news is really good news, the administration should be focusing on the problem at hand: an economy that isn’t generating enough jobs.
Elise Gould is an economist at the Economic Policy Institute in Washington, D.C.
[ POSTED TO VIEWPOINTS ON MARCH 23, 2004 ]