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Economy & Business Environment Blog

Mar
30
2017

3 Things the Jobs Report Doesn’t Tell Us About the US Economy

This blog is authored by Gad Levanon and Diane Lim.

Like every U.S. jobs report, this morning’s report gave an incomplete snapshot of the labor market’s current condition and trajectory.

Make no mistake-the Bureau of Labor Statistics (BLS) report remains the gold standard in terms of being the highest quality, most reliable labor market data out there.

But here are three reasons why this monthly report fails to provide a high-resolution view of the labor market-a view that we economists need to better understand what’s going on.

It doesn’t fully capture unconventional jobs like Uber.

The survey questions fail to fully capture the rising trend of non-standard job arrangements. For example, jobs associated with mobile platforms, like Uber, along with the broader population of the self-employed, including temps and contractors.

These types of work arrangements are not always viewed or counted as employment by either the “worker” or “business” surveys that feed into the BLS report. From the worker’s perspective, a part-time (and often sporadic) activity, even if paid, can be considered more of a hobby or side gig than a “job.”

From the business’s perspective, hiring a “consultant” for specific services is not the same as bringing more employees onto the company payroll. So when the surveys ask workers about their employment situation and ask businesses to “count jobs,” these non-standard work arrangements typically fall under the survey’s radar, and thus don’t get captured in the employment report.

It describes the employment conditions of groups, not individuals.

The report aggregates businesses into industry categories and workers into large demographic categories. Any particular group might show close to zero change in the number of jobs or employment status. For example, in today’s jobs report the manufacturing industry shows a gain of only around 5,000 jobs out of 12.3 million, and the demographic categories of adult men, whites, and those with college degrees each show no change in unemployment rates.

Yet if we could look more closely across different parts of the country, different companies within an industry, and even different occupations within a company, we would likely see plenty of job churning. (In the manufacturing industry, for example, around 275,000 jobs are gained or lost in any month.) And we would likely see changes in the composition of jobs across the narrower categories within the broader ones. Those more micro-level movements would give us much better clues about where the overall labor market and economy as a whole is headed.

It says “a job is a job” rather than identifying “whose” job it is.

Finally, the two separate surveys that feed into the employment report make it difficult to figure out how employment arrangements are distributed across real people. The establishment survey counts jobs as reported by businesses, while the household survey measures employment and unemployment as reported by individuals.

One person can hold multiple jobs, but a job is a job in the establishment survey. Each job in the establishment job count cannot be linked to specific people in the employment status household survey. A person employed in three part-time jobs can be counted as one “full-time” employed person in the household survey (holding multiple jobs), and three jobs in the establishment survey. So more jobs counted from the business side does not always mean “more employment” from the household (real people) perspective.

The monthly employment report falls short in providing the microscopic, high-resolution view of the labor market that economists yearn for. That’s why BLS does so much more, and collects so much more data, than what goes into the monthly employment report-a prime example being their survey of contingent and alternative employment arrangements. They last fielded this survey a dozen years ago in 2005, but have scheduled the next one to be fielded this spring, with the results set to come out in late 2017 or early 2018.

These kinds of supplemental surveys that collect more granular, micro-level information on employment status are essential for economists to have a better understanding of today’s uncertain and ever-changing economic conditions.

This piece originally appeared in “The Hill.”



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