American Voice 2004:  Who’s right and who’s wrong in the job growth debate?

American Voice 2004: Who’s right and who’s wrong in the job growth debate?

Date: 1 Jun 2004 | posted in: From the Desk of David Morris, The Public Good | 0 Facebooktwitterredditmail

Q.   Republicans insist that during George W. Bush’s first three years in office several hundred thousand jobs have been created. Democrats maintain that during this same time period several million jobs have been lost! Both are relying on government data. How can that be? Who is right?

Answer:

They’re both right, although one may be righter than the other. The Department of Labor’s Bureau of Labor Statistics, the primary source for employment information, uses two very different methods to calculate job growth.

The payroll survey relies on monthly unemployment insurance records kept by 400,000 companies. The household survey relies on information from monthly interviews of 60,000 households.

The two methods can produce very different results. The February payroll survey, for example, estimates that 2 million jobs have been lost since 2001. The household survey, conducted the same month, concludes that the economy has gained more than 500,000 jobs.

Which is more right? According to recent Congressional testimony by Alan Greenspan, whose reappointment as Chairman of the Federal Reserve President Bush supports, “We have concluded that the data on the so-called payrolls survey is surely the more accurate of the two…” The payroll survey samples 600 times as many workers as the household survey.

The household survey is useful because it counts self-employed individuals, an important and growing part of the labor force that is not counted in the payroll survey. Greenspan offers this bit of sound advice, “So if you add both of them together you’ve probably got the best estimate of what true employment is, which”, he points out, “still shows something far more closely related to the payroll rather than the household survey.”

 

 

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David Morris
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David Morris is co-founder of the Institute for Local Self-Reliance and currently ILSR's distinguished fellow. His five non-fiction books range from an analysis of Chilean development to the future of electric power to the transformation of cities and neighborhoods.  For 14 years he was a regular columnist for the Saint Paul Pioneer Press. His essays on public policy have appeared in the New York TimesWall Street Journal, Washington PostSalonAlternetCommon Dreams, and the Huffington Post.