The Economy Loses 824,000 Jobs and the Post Doesn't Notice
One of the big pieces of news in the September jobs report released by the Labor Department yesterday was that the Bureau of Labor Statistics' (BLS) preliminary benchmark revisions showed that job loss had been 824,000 greater through March of 2009 than had been previously reported. This is a really big deal. It means that job loss averaged almost 70,000 more than originally reported each month over the year from March 2008 to March 2009.
The monthly jobs numbers are based on a survey of 160,000 businesses and governmental agencies. While this is a large sample, it necessarily excludes newly created firms that cannot be included in the sample. This would lead the sample to have a downward bias in measuring job creation.
On the other side, there are a large number of firms that go out business each month. Many of them may not feel the need to send back their survey to the BLS as they clean out their office. The non-response by firms shutting down could lead to an upward bias in measuring job growth.
To correct for both these problems, the BLS includes an imputation every month for jobs created in new firms and jobs lost in firms that have gone out business. This imputation is based on a "birth/death" model that estimates the number of jobs missed by the survey based on recent economic growth and other variables. While the model produces reasonably reliable estimates in normal times, it has been notoriously bad in missing turning points, underestimating job growth during upturns and overestimating job growth during downturns.
Economists who follow the data closely noted that the monthly imputations from this model had been running at about the same level or even slightly higher during this downturn than in the corresponding months of the prior year. (The imputations are not seasonally adjusted so it is necessary to measure January against January, etc.) Since it was absurd to imagine that new firms were creating as many jobs in the six months when the economy was in a free fall (October, 2008-March, 2009) as in the corresponding months of the prior year, it was virtually certain that the imputation was leading to a substantial overstatement of job growth.
This suspicion has now been confirmed with the BLS benchmark revision. This revision is based on data from state unemployment insurance records. These data are almost a complete census of payroll employment since more than 99 percent of employees are covered by state unemployment insurance. As a result of the release of preliminary data on this benchmark revision, we now know that the job loss in this downturn has been far more severe than initially reported, unless of course we rely on the Washington Post for our news. (The final data, which will be incorporated into the establishment numbers in the January jobs report, always are close to the preliminary data.)
--Dean Baker
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COMMENTS (36)
Every week we read about another corporation moving operations overseas to the cheap labor markets. Isn't it time that we establish a tax structure that makes it unattractive to put Americans out of work. The right constantly harps on "country first" then supports tax cuts, no environmental constraints and de-regulation of businesses. We need tarrifs, re-importation taxes and a campaign to put American jobs first. If we are going to give businesses tax cuts, how about giving them incentives to keep jobs here.
Posted by: xargaw | October 3, 2009 1:03 PM
Well said xargaw.
Posted by: Doug | October 3, 2009 1:13 PM
Agreed xargaw:
Isn't funny how right groups battle immigration into the United States based upon jobs going to foreign skilled labor, when they also ship the jobs to these countries at the same time?
Posted by: tweet congress | October 3, 2009 2:00 PM
Xargaw, Doug,
Don't get giddy about bashing one side only. It is a bipartisan affair. Both the fascist neocon right and the lunatic neoliberal left believe in putting Americans out of work. "Free Trade" and "Open Borders" anyone? With the massive influx of illegal immigration, H-B1 visas for foreign workers, and the WTO, NAFTA, CAFTA, and FTAA, and any other stupid so called free trade agreement you can think of, is there any wonder that the REAL UNEMPLOYMENT RATE IN AMERICA IS 20 PERCENT??
Posted by: Reed Richards | October 3, 2009 2:21 PM
It seems we are down to the choice of either start killing off the population or create new jobs...No matter what else happens if we don't start hiring Americans to work within the American economy, nothing else matters. We are in a hole so deep that this might be the only way out. Free markets, capitalism, lack of regulation has buried us. Not because its such a bad academic idea, but because it provided a platform for the greediest and least ethical among us to prosper.
Posted by: Bikerdude | October 3, 2009 2:23 PM
Welcome to the republican 2ND Great Depression, compliments of greed, two illegal Bush/ Cheney wars for profit and unregulated Capitalism gone wild, and destructive with no ethics. Good for a few, terrible for most of the Planet.
http://www.richmonk31.blogspot.com
Posted by: Rich Monk | October 3, 2009 2:25 PM
Getting out ahead of the BLS's annual benchmark revisions a bit, there have been 815,000 net jobs imputed by the birth/death model so far from April to September of this year. The total number imputed last year (April to March) was 717,000, which was more than wiped out by the 824,000 benchmark revision. I'm guessing those 815,000 phantom jobs have about as much chance of surviving in the March 2011 benchmark as last year's 717,000.
So yesterday's report suggests that we can expect about a million and a half fewer jobs when the final revisions come in, not counting the yet to be imputed jobs from October to March.
Yesterday, Joe Biden credited the Recovery Act with having saved or created, by some estimates, one million jobs so far. Heck, the BLS can create as many just by imputing them!
Posted by: Sandwichman | October 3, 2009 2:36 PM
Dear Rich Monk,
One assumes you are a "liberal". I'm also sure you feel very very safe, being online and at this thoroughly "liberal" magazine. But do you think your pride and security over being liberal should entitle you to scapegoat anyone, even political enemies? That's a dysfunctional thing to do even in good times, in times of quickly developing social stress it could be more than simply rude, it could lead to... let's say overreactions.
Look, let's presume it will be next to impossible to get the conservatives to stop scapegoating others, but the first step is that you liberals should stop doing it yourselves. Try to be teachers rather than demagogues; remember you are Liberals, after all, not "meanies".
Posted by: OrfeoTreshula | October 3, 2009 2:50 PM
Enjoying Capitalism are we? Why is anyone surprised? What we have today is the pay off for 30 yrs. of Rt. wing economic and social policies driven by both parties.
Posted by: Blutodog | October 3, 2009 2:53 PM
Xargaw said: We need tariffs, re-importation taxes and a campaign to put American jobs first.
IMO what most don't take into account is the context in which either 'free trade' or 'protectionism' (two use two perfectly bad descriptives)is a good or a bad idea.
'Free trade' works well only for the team that has competitive advantages over their trading partners, like the post-war U.S. or modern-day China. In those situations (and for those countries in those times), 'free trade' is the most favorable condition, as it allows the dominant manufacturing nation to take full advantage of that dominance and sell their goods in foreign markets.
However, when a nation does not enjoy a competitive advantage (like the U.S. today or Latin America for the past 500 years), a 'free trade' trade policy is disastrous, as it kills domestic manufacturing and the jobs and prosperity that come with it.
Therefore, Xargaw, you are absolutely right: the U.S., through nobody's 'fault', presently has huge competitive disadvantages built into their manufacturing and industrial capacity, among which are high (relatively) wages, pension and health costs, environmental and safety costs, etc. These are the fault of no one, but rather the natural evolutionary state of a mature industrial state.
As there is no such thing as 'post-industrial prosterity', however, the U.S. at this time in it's industrial evolution must act to protect it's disadvantaged industries if it wants to keep them and the jobs they provide.
Again, free trade is a great idea when you have advantages you want to exploit... but that is not the current situation the U.S. is in. If it wants to keep it's industrial sector, it must move to protect them. The idea that this will produce a 'trade war' that will be harmful to everyone is total fantasy. The 'trade war' we're currently in is a war we're losing, and like Afghanistan, a new strategy developed that will lead to victory.
Posted by: Sid | October 3, 2009 3:08 PM
OrfeoTreshula:
Your wrote: Look, let's presume it will be next to impossible to get the conservatives to stop scapegoating others, but the first step is that you liberals should stop doing it yourselves. Try to be teachers rather than demagogues; remember you are Liberals, after all, not "meanies".
With due respect, we progressives tried that for years... tried not being nasty, tried not lowering ourselves to the level of the more ignorant on the right... and all that earned us was a reputation that we were soft, not tough enough, weenies. Furthermore, as you note, it didn't change the behavior of the other side.
So at this point I agree with Rich Monk's tactics, and while I wouldn't start the insults, I also won't tolerate them any longer. Alan Grayson, responding to the outrageous 'death panel' charges is a model of what the progressives need to become.
Posted by: Sid | October 3, 2009 3:20 PM
9 of those months belonged to you, the republicans, if you recall and the rest can be blamed on you all as well.
Posted by: mtrav | October 3, 2009 3:28 PM
Thanks for getting the word out Dean. The mass media has become a careless propaganda machine.
It's no wonder they lose adult audiences when shelve stories like this in to devote news cycles to David Letterman.
Posted by: Bart | October 3, 2009 3:54 PM
Americans are disgusted with themselves after 8 years of Bush. There's no self-respect, no pride, no desire to move forward. And the rest of the world doesn't look up to us any more. Olympics going to Rio, nobody needs us.
Posted by: Annie | October 3, 2009 4:32 PM
Sid, well said.
You certainly have a point that can't be ignored. I guess I'm just thinking ahead to where all this ends up some assuredly and comfortably distant, far off day. You liberals are the party of experts, education, and discourse. The conservatives are the party of Law, Order, and War. Think about that. Who's going to win if things descend to the lower regions of human affairs? Perhaps one could ask Jack Kennedy? Bobby?
In any event, neither party is ever going away. One party does well in a barbaric environment, the other does not, and cannot without become barbarous themselves. (Oh, not to speak poorly of any Noble Barbarians out there!) Perhaps it is inevitable that the discourse, and indeed entire society slide towards the barbarous, but need this party, your party, speed that, and in so doing sow the seeds of its own intellectual and moral decline?
I suggest that by taking the higher ground, you "save what can be saved" of civil society (which if nothing else, is at least yourselves). And if you lose by that path, you were going to lose anyway-- otherwise you merely postponed the inevitable at the cost of your own identity and integrity (plus interest, of course).
Posted by: OrpheoTreshula | October 3, 2009 4:33 PM
How can we expect anything good to come with the "banksters" sucking billions upon billions out of every orifice of our economy, profiting on disasters they create?????
Posted by: All Facts Support My Positions | October 3, 2009 4:38 PM
This is what most people I know have suspected, and remember these numbers do NOT reflect those working way below their pay scale & those who have exhausted their benefits. Things are much worse than the government wants us to know. It's an economic Katrina. See Michael Moore's "Capitalism: A Love Story" and you'll learn even more about how us "Peasants" are screwed.
Posted by: WestCoastLiberal | October 3, 2009 5:07 PM
The reason they haven't noticed is that US jobs are a concern of the ruling elite. The WaPo is their paper, not ours.
The corporate workforce is overseas where workers can more easily be super-exploited.
If US workers take to the streets, the WaPo may not report it, but the ruling will notice.
Posted by: Carol Davidek-Waller | October 3, 2009 5:10 PM
Could it be that the current climate of uncertainty and tax policy create disincentives for businesses to hire? Remember that the majority of jobs in this country are created by small businesses - when are we going to see more small business friendly policies from the current administration. How about a 1 year payroll tax holiday for businesses with less than 25 employees?
Posted by: Ed | October 3, 2009 5:16 PM
I believe this falls under the heading of 'Out of sight, out of mind". Since the DC area is the one hot spot for job creation in the US, I believe we grow accustomed to feeling sorry for others who are bleeding jobs. Since the Washington area is growing leaps and bounds in most respects, we take a thankful posture and hope it doesn't hit us too.
It is like those areas that are hard hit by crime, as long as it is not in our backyard we can feel gratified. However you want to impute your data, human emotions are based on logic and not always reasoning and vice versa.
The Post is grateful probably because their readership and their sales are not being impacted as great as other areas. However I might be wrong because I am not privy to your revenues and unit sales. Thanks Dean for a good article.
Posted by: The JR Jake | October 3, 2009 5:30 PM
Yep xargaw - and repubs love overseas tax havens and outright tax evasion. They all want to live in this country and enjoy the perks - they just don't want to pay for any of them.
You know the old saying - "Fat man does the dancin' and poor man pays the band."
Posted by: Bob | October 3, 2009 6:08 PM
Rich Monk IS correct. Sure do wish WE had impeached.
Posted by: Mike Meyer | October 3, 2009 7:20 PM
OrpheoTreshula: I can SEE the war part, I'll damn sure grant YOU that. Too bad they haven't figured out how to WIN one yet, maybe in a few years. ITS THE LAW AND ORDER part that throws me. Do YOU mean fake law and "i was just following orders"?
Posted by: Mike Meyer | October 3, 2009 7:32 PM
OrpheoTreshula:
You said: "You liberals are the party of experts, education, and discourse. The conservatives are the party of Law, Order, and War. ... and again I'd beg to differ.
This duality is a completely modern construct, created out of whole cloth at the Carter (appearing weak before Iran) Reagan (kicked the hell out of Grenada!) juncture. The fact is that the two world wars of the 20th century were both waged and won by Democrats. After that, Truman fought China to a standstill in Korea, and Johnson led the U.S. into Vietnam. In light of that history, I'd be loath to make your argument that democrats are by definition effete over-educated wusses.
The real liberal conservative/construct is more properly about economic class than relative macho swagger, station in life than obedience to law or defense of country. The division you refer to is fallacious, along with so many other bills of goods created and sold during the Reagan presidency (like free trade, trickle down economics, low taxes creates prosperity, less regulation is better regulation, the government is the problem, etc). These all represent the interests of an economic class, and have absolutely nothing to to with to 'law and order' or war.
On the other hand, there are plenty of erudite conservatives, and I hardly think Bill Buckley was some kind of sh*t-kicking war-monger. I would humbly suggest you take another look at who's interests are being promoted and defended (motive, in a word), and pay less attention to the braggadocio with which they are presented (confusing the same with virtue).
s
Posted by: Sid | October 3, 2009 8:18 PM
First we haven't gone to war since 1945. Every other involvement has been a political demonstration of one party or the other. War is declared. The nation/s that we are to go to war with are named. The pres takes his aurguments to congress and congress declares war. Anything else is unconstitutional. Both parties like to use our military to poke fingers in eyes at a high cost to our military personnel. Both Parties!
What is a corporation? How many employees does it take? How many businesses have been bankrupt due to the worlds highest tax rate on business? How many business would still be here in the US, happy to pay good wages if they were not taxed out of business. It is not the salary that drives business overseas, it is the tax. Go elsewhere and pay low taxes. There is not a few big companies that would love to have their homes and their workers here but the 35% tax is forcing them out of business or out of the country. I would rather have a good high paying job and not have high business tax.
Posted by: Gazinya | October 3, 2009 9:00 PM
Gazinya,
That tax line is nonsense. 30% of US corporations actually pay taxes, the rest skate through tax loop holes as big as conservative logic.
Posted by: James | October 3, 2009 9:12 PM
There is something that the media never discusses. The 2001 recession ended in November 2001 but the unemployment continued to rise and peaked at 6.4% in June of 2003. That's 19 months after the end of the recession. And that was a much milder recession and Bush and the GOP Congress enacted massive tax cuts, mostly for the very wealthy. So if the recession ended this summer, we can expect unemployment to keep rising until December of 2010.
Posted by: therecession | October 3, 2009 9:51 PM
Well, there it is. Ideology over critical thinking. I had no idea that Barney and Dodd,Pelosi,Kerry,Waxman,Reid et.al.,were conservatives. We all know that they don't pay taxes,ala Rangels, Jefferson,Lewis but they also are the people who write the huge tax loopholes for the very,very rich. Even with them they still don't pay. Wouldn't it be swell if they outsourced themselves overseas. I would still rather have a good paying job and take care of myself than sit on a street corner bitching about what crap other people are not suffering.
Posted by: Gazinya | October 3, 2009 10:33 PM
Okay first of all, WW2 and WW1 are not the same as the war in Iraq and the middle east.
WW1, WW2, and even the Korean War, were actually important wars they were wars because of a threat not to use it for war profiteering.
If you look at any Almanac or history book, the War of Vietnam is listed to of start in 1959 and end in 1975. A republican was in power, Eisenhower, Eisenhower also had the Prime Minister assassinated and then inserted the dictator the Shah of Iran, Nixon attacked more then Vietnam during his presidency. Bush senior started the Desert Storm, The New war and the War in Iraq was republicans and Reagan killing around 400,000 people in Lebanon, then leaving the day after not to mention the Iran Contra. These are all republicans, at least WW1 and WW2 were used because of a threat and not because of war profiteering.
Posted by: Julian Cicone | October 4, 2009 12:07 AM
A Chinese autoworker earns $2.40 an hour. Think about it. That is where we are going.
Posted by: Jim | October 4, 2009 4:03 PM
For the first time, cable is admitting that real unemployment is around 17 percent.
The stimulus is not working because it was never intended to create long-term jobs. It was meant to shore up social programs within each state and to get a bit of infrastructure work done during the downturn. The truth is this administration coupled with the brain dead congress had no idea how severe the crisis was. All that mattered is providing plenty of rhetoric for the masses to believe.
If you ever listen to Dave Ramsey his callers that are sick of their debt ridden lives, cut spending cold turkey. They make their mission to pay off their debt and then to live a different life based on a new moral behavior. It is immoral to spend like drunken sailors because in doing so it hurts your family, friends and now we can see OUR NATION.
Posted by: Susan | October 4, 2009 4:21 PM
Ed, you are exactly right on the money. When the president and congress is all about redistribution of wealth and anti-business policies, the small business owners start to protect what they have and cut as much as possible to survive this era of uncertanty. It is only a natural reaction and expansion is not even on the agenda list. Kinda like the policies that brought about the housing bubble and collapse. They just weren't thinking about unintended consequences, only re-election and staying in power. That's the truth!!
Posted by: Ted | October 4, 2009 5:52 PM
Ted:
Please state exactly what are the "anti-business polices" that you refer to that you seem to think that the current administration is "all about".
And while you're at it in your catch-phrase regurgitating, please recall that at the present time the top tax rate is 35%, while from the 1940's through the 1970's, when American small businesses and big businesses did very well, the top tax rates were over 90%, over two and one half times what they are under this, as you appear to believe, 'redistributive' administration.
While I don't want to actually make you think or let the facts get in the way of your talking points, I can state as a fact that neither your taxes nor the taxes of anyone you know have gone up under Obama. But don't let that stop you from ranting your foolishness.
I'd ask again for you to point out the specific 'anti small business' and 'redistributive policies' that this administration has enacted. Take your time.
Posted by: sid | October 4, 2009 11:37 PM
Here are a couple of thoughts all of you to rip apart. How about a tariff on products that come into the US, that is equal to the wage difference of what is a living wage in the US. So if a living wage is $15 an hour and it cost $3 an hour to make one chair, it has a $12 tariff. This would create a level playing field for American goods as well as keep us from buying things that aren't worth having.
Posted by: randon100 | October 5, 2009 3:05 AM
Specifically on drug companies: If we give our money to charities who finance research, and we fund research through government programs to find cures, then the PRODUCTION of the cure should be HERE in America. Profit should go back to our coffers. We should not pay a premium while the rest of the world gets our discoveries at pennies on the dollar. Any company shipping it overseas should be considered hostile, and the should lose their corporate domicile status as a US company and should forfeit all patents. There. That's revolution!
Posted by: JT Mann | October 6, 2009 12:34 AM
We are seeing the effects of NAFTA, started a dozen years ago.
Posted by: Gordon | February 3, 2010 9:39 PM