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Will the Real Employment Number Please Stand Up?

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By William Sargent and Mark Mansius

The Post Newspaper Contributing Columnists

Editor’s Note: The Post Newspaper welcomes the opportunity to hear from our readers and invite the public to consider writing a guest column. However, please keep in mind The Post Newspaper neither supports nor condones the opinions of our guest columnists.

On February 2, the Labor Department’s Bureau of Labor Statistics (BLS), reported unexpected employment creation numbers. According to BLS’s “Establishment [Payroll] Number,” an estimated 353,000 (seasonally adjusted*) new jobs were created, compared to the experts’ estimates of 185,000. Annually, between December and January there is drop in employment after the Christmas season to the tune of between 2.5 and 3 million jobs. So, either BLS’s figures are really good news or somebody is blowing smoke! Unfortunately, it appears the BLS numbers don’t hold up under closer scrutiny.

The long-established ADP Survey, conducted by the private ADP Research Group, measures private employment by contacting private employers directly. They found that in January there were 107,000 new private sector jobs created. This differs from the BLS “Establishment Number” by 246,000 jobs – the ADP Survey shows the BLS’s “Establishment Number” is 3.29 times higher than their findings!

Additionally, BLS conducts a “Household Survey” by contacting private homes. One of the principal purposes is to determine the number of persons employed as opposed to the number of jobs. Conversely, in the “Establishment Survey” a person working two jobs is counted twice trying to determine the number of jobs, not the number of people actually working. Normally both BLS surveys and the ADP survey complement each other. But as a wise man once said, “figures don’t lie but liars can figure!”

The “Establishment Survey,” which the news media latches onto and reports the job numbers from, is created using a baseline. If the number of jobs created is above that baseline, then there is a positive report, the higher above the baseline, the higher number of jobs reported as being created. If the number of jobs created is below the baseline, then the result is a loss of jobs. The critical issue is where the baseline is drawn. If it were to remain static (absolute) then the job numbers reported in the “Establishment Survey” would be reliable. If, however, the baseline is moved either up or down arbitrarily the “Establishment Survey” numbers become highly unreliable; “A joke,” as one observer called it.

For whatever reason BLS has moved the baseline arbitrarily, creating a situation where the “Establishment Survey” differs from both the ADP and BLS Household surveys. In the case of the January numbers the baseline was moved downward by 233,000 jobs. If this had not been done the BLS “Establishment Survey” number of jobs created would be approximately 120,000 new jobs created, close to the ADP Survey’s finding of 107,000. Factor in further that the “Establishment Survey” includes government as well as private sector jobs while the ADP Survey only counts jobs in the private sector and the difference between the two would be even closer. So, it’s highly probable that the BLS “Establishment Survey” has overstated the number of job actually created.

The point is your government may not be being honest with you. The reasons are for you to decide, but as a wise man once said, “Don’t take everything on face value.” Check other available sources and see whether they confirm what you are being told is the truth.

* “Seasonally adjusted” employment varies month-to-month based upon the seasons (i.e., we often see higher employment while companies are gearing up for the holiday season followed by lower employment numbers afterwards).

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