A commenter recently posted this observation:
Is there something wrong with the BLS methodology?Let me make two observations.
I wouldnd't say this except for the fact that its data now seems to be providing what are outliers to other data, even other data related to employment.
The other thing to consider is that the BLS really didn't pick up the move into recession jobs wise in 2008. Years later, those numbers have in some cases been massively revised downward.
1.) The recession of 2008 was incredibly severe. According to the latest data, the economy lost over 8 million jobs. There was a period when the economy was shedding over 600,000 jobs/month. This could throw off any statistical gathering service.
2.) Starting sometime over the last 12 months, we have the great wave of baby boom retirements beginning. This will greatly alter the employment data in God knows how many ways, along with the underlying assumptions of employment data collection.
I bring this up because of an email conversation I had today where all the participants explored the idea the BLS is simply trying to figure out what is going on right now and not having any answers regarding the employment situation. In addition, there is the question of whether or not the standard BLS methodology is out of sync with the current economic situation.
This does not mean that the employment situation is better than reported. For all we know, if the above situation is accurate, the employment situation could be worse. But the last few employment reports have been downright from a variety of angles.
Ultimately, we don't know if the above statement is accurate or not, so please do not take it as anything but an open question to which we will probably never have an answer. However, given the severe shocks to the economy over the last 2-3 years and the underlying changing dynamic of the labor force, we may also be dealing with a time when the numbers almost seem completely and totally random (i.e. they have no underlying logic/sense to them).
5 comments:
At least for Jan, I wonder if there is a simpler explanation. Initial jobless claims have been all over the place, it seems, for the last 6 weeks or so. I mean, we see these swings each week of 20K-30K or more. Some of that may be because of post holiday layoffs and the weather. While people correctly point out that most economic data has been stronger, initial claims, which probably have a significant impact on the monthly report, have been inconsistent.
My wife runs a small childcare business in our Long Island home. Given her many years of experience and lots of glowing recommendations from past clients, she should be doing a booming business -- and she was, until New Years Day of 2009.
She lost over half her business the next business day entirely due to the completely unrelated layoffs of half of her cliets. Three of them brought their kids to our home that morning as usual, and by 10AM, they were in our home sobbing at having been fired without even the slightest warning.
They each vowed to come back when they found work again, but despite keeping in close touch with all of them, none has been able to find a job.
My wife has diligently advertised, spread the word, lowered her rates to levels that were unthinkable three years ago, but the phone just won't ring with new clients.
My point is this: I'll let you all know when the employment situation is about to pick up, because it will be preceded by my wife's childcare business taking off again as all those about-to-be-employed moms come looking for a place to bring their kids on the first day of their new jobs.
Can one quantify the number of baby boomer retirements, or more precisely the increase in the number of people entering the social security retirement system currently and in the near future, versus in the past few years?
How substantial would the increase in number be, in terms of the employment situation? For example, if the labor force were to decline by 1% in size over the next year due to retirements, this would lead to about a 1% drop in unemployment even if no new jobs were added.
This might have a tremendously positive impact on the economy in the short term. But what are the numbers?
Dumb question from a non-economist:
When there was a disparity in Jan (for Dec. unemployment), people assumed the ADP was inaccurate when the establishment figure was released. Should be reasessing the ADP #s if it is the BLS/establishment #'s methodology is out of synch?
OK, bonddad, enough with my anecdotes. You want data? I got'cher data right here.
It's a compilation I put together of all the Monster Employment Index (MEI) data since January 2004, and I include a chart from 1/2004 to 1/2011 for some long-term perspective and a chart from 1/2009 to 1/2011 for a better perspective on the most recent data. Finally, here is a Google spreadsheet of the data in three formats: one is compact and easy-to-read, and the other two are ready-to-use data for creating the charts.
From Bloomberg:
"The Monster Employment Index is a comprehensive monthly analysis of U.S. online job demand. It is conducted by Monster Worldwide, Inc. and is based on a real-time review of a large, representative selection of career sites and job boards, including Monster according to Monster Worldwide. The Index presents a snapshot of employer online recruitment activity nationwide."
What I see:
The MEI grew quite linearly from 2004 to late 2007 -- probably reflecting more the growing popularity of online job recruiting than significant increases in job growth -- at which point actual job recruiting declined precipitously into early 2009 when it flatlined for a year. Then in early 2010, it picked up again, but by mid-year, it topped out (perhaps because of when the Homebuyers' Tax Credit ended). Then, as of mid-2010, the MEI began declining again -- slowly at first, but increasingly so at the end of 2010 leading to January 2011's very serious decline.
My mathematical eye is especially taken with the shape of 2009 (essentially flat) and of 2010 (essentially parabolic).
If extrapolation (always risky) is appropriate from the last six months, since no letup in the MEI's negative second derivative is evident, and no remarkable external events seem to me to be particularly inspiring to change that (remember Austerity now now now!), I would have to say that the MEI will continue to decline which, of course, would probably lead to the BLS's Establishment Survey of overall job creation declining, perhaps into negative territory from its current paltry +36,000.
I know retail was pretty good this past holiday season, and I know consumer confidence is up, and I know that manufacturing is improving, and I know that it's supposed to be time for Boomers to start retiring, but...
There are so many long-term unemployed out there who have completely given up at this point -- and who employers have decided are unemployable -- that I think the decline in U-3 is more attributable to discouraged workers dropping out than to voluntary retirements. Note that U-6 declined even more than U-3 did (from 16.7% to 16.1%). No-one can realistically believe that enough U-6 people finally found work in this job climate to justify a decline in U-6 of that magnitude.
Furthermore, so many Boomers lost so much retirement savings after both the Tech and Housing Bubbles burst, that even though they are due to retire now, lots of them are holding on longer than they had planned. (I would tell you that I personally know a few of them doing exactly that, but that would be yet another anecdote!)
No, I think the BLS numbers are accurately reflecting that employers are adding few, if any, new jobs now, and that the long-term unemployed are capitulating to their fate.
Post a Comment