Three myths about the September jobs report

Politics,Beltway Confidential,Conn Carroll

Ever since the economy became the focus of the 2012 presidential election, interest in the Labor Department’s monthly jobs report has never been higher. This election season, on the first Friday of every moth, political observers across the country are frantically hitting the refresh button on their browsers to get the latest jobs numbers. And the last report, released on October the 5th, was a doozy.

It reported that while U.S. employers said they created just 114,000 jobs in September, 873,000 Americans claimed to have gotten new jobs in that same month. Only 3 other jobs reports in the history of the Labor Department had a larger gap between the employer and household survey. Here are some other facts about last Friday’s historic jobs report.

1. The economy is not getting stronger
“The right message is that on Friday, we saw great economic news,” Brian Moran, the chairman of the Virginia Democratic Party, told The New York Times. “Things are moving in the right direction.”
Only if you think declining job growth is “the right direction” can you interpret the recent job report as “great economic news.” The reality is that according to employer survey, the economy has been creating just 106k jobs a month over the last six months. That’s compared to the 194k job a month clip from the six months before and it is just barely above the 100k jobs a month the Atlanta Federal Reserve says we need to keep up with population growth.

But what about the 873,000 Americans who said they got new jobs last month? Doesn’t that prove the economy is getting better? No. No it doesn’t. That 873,000 number comes from the Current Population Survey which is conducted by the Census Bureau for the Labor Department’s Bureau of Labor and Statistics. The CPS is famously volatile and far less reliable an indicator of economic conditions than the employer survey (called the Current Employment Statistics survey).

But even considering the usually unstable nature of the CPS, this September’s CPS report is particularly unreflective of reality. Wells Fargo called the September household survey “a black swan outlier” and noted that the 873,000 job gain “was more than four times the size of the average change over the past 12 months.” Gallup‘s Chief Economist Dennis Jacobe said the CPS 873,000 job gain “seems to lack face-validity.”

2. There was no surge in part time jobs
Hours after the September jobs report was released, Washington Post blogger Ezra Klein said the household survey’s 873,000 job growth was backed up by the “internals” since 582,000 Americans said they got part time jobs.

And it is true: the number of Americans telling the BLS that they worked “part time for economic reasons” (eg inability to find full time work) did grow by 582,000. But while “part time for non economic reasons” (eg illness, family obligations) did fall 260k, Table A9 of the household survey showed that the total number of part time workers actually fell 26k. But 582,000 – 260,000 does not equal -26,000. So what gives? Turns out the household survey derives the two numbers from two entirely separate questions.

When deriving the “part time for economic reasons” number, BLS asks respondents how many hours they worked in a specific week. If they worked anywhere in between 1 and 35 hours in that week, then they are deemed “part time.” This question produced the 582,000 spike in September. In a separate question, BLS asks respondents if they usually work full or part time. This is where the -26,000 total decline in part time work came from.

So if a respondent normally works full time as a contractor, but for the specific week BLS is studying, that person worked less than 35 hours because he couldn’t find enough work, that person would be counted as both full time for one part of the survey and “part time for economic reasons” for another part of the survey.

3. Government employment is growing
You won’t hear President Obama tout this fact on the campaign trail, but one of the strongest sectors of job growth in the September household survey was from government jobs. Of the 838,000 full time jobs the household survey claims were added in September, almost one-quarter, 187,000, came from the government. Even the employer survey showed some government job growth, all be it a twentieth the size (just 10,000).

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