LOOKING TO GOVERNMENT FOR ACCURACY?:

The jobs numbers that you're not hearing about (Timothy Kane and Andrew Grossman, 8/26/04, USA Today)

The U.S. Bureau of Labor Statistics (BLS) recently snuck out a telling confession beneath everyone's radar: Its flagship payroll survey is likely undercounting hundreds of thousands of jobs.

Most economic observers were too busy fretting over the lackluster gain of 32,000 payroll jobs in July to take notice of the other positive indicators, let alone the quiet little study that acknowledges payrolls have a problem.

The study describes how job-changing can inflate the payroll survey's numbers artificially. When worker turnover is brisk, as in the late 1990s, millions of workers are counted twice when they switch jobs. About 3.9 million people changed employers during a typical month during the 1990s, but only 3.1 million do so now.

Why is job-changing dropping? Maybe stability is preferred since 9/11. Perhaps lower turnover is a reflection of the aging workforce and low participation rate of current teens. Or maybe more workers are becoming self-employed. The reason doesn't matter, but the effect on payrolls does.

For months, the debate has been raging over how to measure jobs. Being that we're in a presidential election year, the issue has been magnified. But why should the average person care? Because only an accurate reading can gauge the country's true economic health and affect everything from interest rates to consumer confidence.

Ironic that businessmen, who generally disdain the government, follow the economic numbers it generates like lemmings off a cliff.

Posted by Orrin Judd at August 26, 2004 12:44 PM