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Is the Labor Department Understating Job Loss?
The Labor Department's establishment survey includes an imputation for jobs created in new firms that are not included in its sampling universe. This imputation tends to miss turning points, understating job growth when the economy picks up speed and overstating job growth when the economy sinks into a recession.
Last year it overstated job growth by 284,000 for the year from March 2006 to March 2007, an average of 24,000 a month. It is likely that this imputation is still overstating job growth. The imputation for April, May, and June was 80,000 more in 2008 than in 2007. Since the economy is almost certainly creating jobs at a slower rate this year than last, it is likely that these numbers will be revised downward in the benchmark revisions. The preliminary data for the benchmark revision will be released with the September unemployment report.
Of course, you can always get the real scoop on the jobs numbers with the CEPR Jobs Byte.
--Dean Baker
COMMENTS (6)
Spam filtering would be a great idea.
Please remove the above post.
[done- db]
Posted by: Francois | July 4, 2008 5:41 AM
Mark Thoma has a nice post that picks up on something you wrote and a bit I added (Angrybear) as to how the Household Survey's employment to population ratio is signaling a recession.
Posted by: pgl | July 4, 2008 6:22 AM
Are the Labor Department's historical numbers for unemployment based on the present methodology, or are they just the numbers given at the time? That is, does the Labor Department or anyone else (CEPR?) continually recompute the numbers for the past based on present criteria?
Posted by: skeptonomist | July 4, 2008 10:33 AM
«Are the Labor Department's historical numbers for unemployment based on the present methodology, or are they just the numbers given at the time?»
The statistics methodology used for the Carter years was right for Carter, but the very different statistics methodology used for the Bush years is right for Bush.
Or are you a communist fellow traveler thinking that unamerican Democrats deserve the same statistical breaks as trueamerican Republicans?
:-)
Posted by: Blissex | July 5, 2008 6:42 AM
Is the BLS understating unemployment?
Yes.
And thanks for telling us by how much.
Posted by: Jim D | July 5, 2008 10:54 AM
One area of the cooked employment statistics is the birth/death model that gets arbitrarily added to the jobs statistics. It is supposed to represent jobs added by new companies. In reality, the birth/death model is just another 'cooking the books' fraud to make things look better than they really are.
Since February it says we've added 153,000 new jobs at new companies in construction and 325,000 in new leisure & hospitality companies. I find it difficult to believe that the real numbers are anywhere near this.
Posted by: FoonTheElder | July 7, 2008 10:38 PM