Do Jobs Numbers Matter?

by francine Hardaway on February 6, 2010

I'm not an economist, and I'm not an expert. But even I can guess that the jobs numbers we see every month and bet our investment programs and 401ks on are bunk, or maybe junk.

Why? Because yesterday I heard how the government counts them. The numbers never match, because two different methods are used that can be out of sync. Non-farm payrolls, the first method, surveys businesses on whether they hired or laid off. The Bureau of Labor statistics counts them, excluding government employees, employees of non-profits, employees of private households, and farmworkers. Supposedly, that's 80% of all workers.  The other 20%, apparently, are the government and non-profit workers, and your nanny.  Those numbers showed more layoffs.

But then, for the second method, they call 60,000 households and survey individuals. Apparently, that gave us some better news.

But where do they get the rest? The ones who don't work for large companies that submit payroll numbers? The ones who only have cell phones and can't be surveyed? 

How do they accurately count the large and growing number of independent contractors who don't get a payroll, don't work for the government, and hope they aren't working for a non-profit.  Indeed, they hope they are working for themselves.

And what about all the home-based businesses, the startup entrepreneurs with no employees outside themselves, and the laid off workers contracting back to their former employers. Who asks THEM how they are doing?

Take these numbers with a large grain of salt.

Posted via email from Not Really Stealthmode

{ 3 comments… read them below or add one }

mikeoneil February 8, 2010 at 2:43 pm

Francine, I love you.

But you are simply WRONG here.

At the simplest level, they DO sample cell phones. And do so using methods employed after studying trends in cell phone-only individuals for years. And some of the best statistical survey samplers (a distinct subdiscipline of survey research, itself a highly specialized field) have spend years studying this, researching it, holding conferences devoted exclusively to this topic, and writing peer-reviewed articles on the subject.

But you raised objections other than cell phone usage (though that is the most easy to comprehend). Small armies of PhDs with highly specialized training have spent years one each of these issues. I know many of these people and have spend time engaged in and publishing articles in these and other even more arcane and specialized topics which 99.99999% of the population would find to be utterly mind-numbing.

Is the result of their efforts perfect? No, and none of the specialists involved would ever claim it to be. (Journalists contribute to this belief by treating poll results as if they were “facts”, setting up an inevitable letdown when they prove not to be. But every one seriously engaged in this venture knows better and learns to tolerate it when ALL of their caveats are omitted from almost every journalistic treatment). But the figures they derive are sufficiently accurate to be highly useful for a wide variety of purposes.

The survey enterprise has many limitations. And those who do the work know better than most what they are. But I continue to be amazed at the extent to which even some really smart people (like you) think they have thought of something that has not occurred to many of the hundreds of people who have spent decades pondering all of these questions.

hardaway February 8, 2010 at 2:56 pm


jameschris February 15, 2010 at 3:01 am

Its all about chasing shadows.

By that I mean latching on to this or that latest, most innovative idea that some self styled money making guru has put out in the hope it’ll go viral and make them a lot of money off the backs of all the headless chickens who will follow them blindly down a blind alley. It’s a shame but a truism nonetheless that people will follow where someone they see as an expert leads. Even if they lead them to certain disaster, which is what most of the gurus tend to do to their flocks.
The trick is to recognize a shadow when you see it!

Leave a Comment

Previous post:

Next post: