Dueling Economists

Dueling Economists

Here's a pair of articles. The first extols the virtue of the "Household Survey" method of calculating jobs growth. The second criticizes this method.

Debating job growth

The Establishment Survey takes into account business establishments nationwide by measuring (BEG ITAL) payroll employment. (END ITAL) "But," writes Wesbury in the April issue of The American Spectator, "payrolls are not where the action is today. The real growth is entrepreneurial. Self-employment and Limited Liability Corporations (LLC) are growing like weeds, and these types of employment do not fit into the normal payroll." They do fit into the Household Survey.

Whereas the Establishment Survey tells us that since the end of the recession in November 2001 payroll jobs have declined by 718,000, the Household Survey indicates 1.9 million jobs have been created. Naturally, Kerry, the candidate of confusion, relies on the Establishment Survey. I doubt he has ever paid any attention to the Household Survey.

Wesbury believes that he should. It not only calculates job growth more accurately than the other survey, it also has tracked a trend. For two decades, self-employment has represented an ever-larger percentage of post-recession job growth. In the months following the 1982 recession, self-employment accounted for 5.4 percent of job growth. In the months following the 1991 recession, it accounted for 9.3 percent of job growth. "Since the recession ended in November 2001," Wesbury writes, "total household employment has climbed 2.1 million, and self-employment has grown by 644,000 ... 31.1 percent of all job growth in the Household Survey."

Is it possible to have the healthy growth we now have and a decline in jobs? The understandably confused are confused by this, as well they should be. If Wesbury is right, the confusion is caused by economic statisticians' failure to keep up with our dynamic economy. The economy is growing, and so is the job market.

Here's an article by Daniel Gross over at Slate.com.

He disagrees with this analysis and give's several reasons why.

But here's his final paragraph with added emphasis. He apparently thinks that we should approach things pessimistically - always bet on the worst numbers available; especially if it would hurt their guy and help yours.

[He's also very proud of his vocabulary.]

It's the Data, Stupid

The divergence between the payroll and household figures does raise some interesting questions over which economists will surely puzzle. Has the slack corporate job market turned millions of Americans into self-employed entrepreneurs who don't get counted in the payroll survey? Have American companies simply become so ingenious at wringing productivity out of existing workers and technology that they don't need to hire? It's a debate that won't be settled for at least a year, when this year's figures get revised. It's possible the antidisestablishmentarians may indeed be right. But at this point, the official disdain for the payroll survey and the embrace of the Household Survey is more about belief than data.