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>On Fri, 5 Dec 2003, Shane Taylor wrote:
>
>> Doug Henwood fwd'd:
>> > Companies created 57,000 new jobs in November. Although
>> > that was the fourth straight monthly gain in employment, it fell
>> > far short of 150,000 private economists had expected.
>> >
>> > However, in a positive sign, the jobless rate dropped to an
>> > eight-month low of 5.9 percent.
>>
>> Why is that? Are a chunk of people dropping out of the labor market?
>> Aren't the recent employment gains alone too paltry to account for the
>> drop?
>>
>> -- Shane
>
>Yes, I keep reading Max and other econ-wonks claim we need about
>150,000 jobs a month just to keep up with new entrants to the
>labor market. Shouldn't the unemployment rate be increasing?
It's the two surveys problem. The unemployment rate comes from the household survey, which has been showing strong growth in employment. The survey of employers has been showing much slower growth in employment. The difference is partly explained by self-employment - the self-employed are counted in the household but not the establishment survey. But that doesn't explain all of it - the remaining difference is a mystery. Bulls are arguing that the household survey is telling the real story - that the establishment survey is missing a bunch of newborn businesses which were spawned by optimistic entrepreneurs who've rediscovered their animal spirits. Maybe. The BLS says that the establishment survey is more reliable - it's based on a sample of 300,000 employers, which cover about a third of all employment. The household survey is based on a sample of 60,000 households. Every year, the BLS revises the establishment count with its so-called benchmark revisions, which are based on unemployment insurance records, which cover nearly 100% of the workforce. Going into the last benchmark revision in June, the bulls were expecting a large upward revision to the establishment employment count, but that didn't happen, and they were quiet about the discrepancy for a while. Now that it's been five or six months since the benchmark revision, the bulls are touting the HH survey again as telling the real story. Maybe they're right this time.
Floyd Norris has a column about this in today's NYT <http://www.nytimes.com/2003/12/06/business/06impact.html>. He quotes an analyst who argues that the HH survey is capturing a new generation of internet entrpreneurs including - for real - spammers.
Doug