2 surveys, 2 divergent views on U.S. jobs

Posted in United States | 07-Aug-04 | Author: Floyd Norris| Source: International Herald Tribune

July was a poor month for job creation in the United States.

July was an excellent month for job creation in the United States.

That tale of two employment reports is true, and it continues a trend that has persisted for two and a half years. The discrepancies have made it possible for Republicans to herald a job recovery and for Democrats to deny one exists.

Both sets of numbers come from the U.S. government's Bureau of Labor Statistics, but they come from very different surveys. The establishment survey questions 160,000 employers about how many people are working. That survey concluded July was a poor month, with seasonally adjusted growth of just 32,000 jobs, far below what economists were projecting.

On a nonseasonally adjusted basis, the performance was even worse. It showed that there were 1.2 million fewer people working in the United States in July than in June. The difference between those two figures reflects expectations that many seasonal jobs, notably those of teachers, vanish during the summer months.

The other survey is the household survey. It is compiled by telephoning a sample of 60,000 households. That survey, on a seasonally adjusted basis, showed a gain of 629,000 jobs in July. Before seasonal adjustment, the gain was an even larger 839,000 jobs. It is not clear why the seasonal adjustments went in different directions.

The household survey is used to calculate the unemployment rate, which fell to 5.5 percent in July, the lowest level since October 2001, from 5.6 percent.

The two surveys are not supposed to produce the same results. The household survey includes the self-employed, who would not be counted in the establishment survey, and the establishment survey counts each job, so that a worker with two jobs could be counted twice.

But over time the two surveys have been roughly similar, although with an interesting political difference. Republican administrations tend to produce better household numbers than establishment ones - perhaps reflecting a better environment for the self-employed. Democratic administrations tend to show better establishment figures.

In the early part of the Bush administration, which began just as the economy was sliding into a recession after a period of prolonged growth in which unemployment sank to historically low levels, both surveys showed a shrinking work force.

But they began to diverge in early 2002, with the household survey finding steady job gains while the establishment survey continued to show losses.

By the time the establishment survey hit bottom, in August 2003, it indicated that 705,000 jobs had vanished since January 2002, bringing the total job loss in the Bush administration to 2.6 million.

But the household survey found that nearly 2 million jobs had been added since January 2002, almost reversing the job losses earlier in the Bush administration.

Since then, the two surveys have fluctuated but the household survey has continued to paint a brighter picture than the establishment one.

Which is right?

Because of its smaller sample size, the household survey is always more volatile and month-to-month changes can be deceptive for that reason. So economists normally pay more attention to the establishment survey. But the fact they differ so drastically may mean that reality lies somewhere in between.

Over all, the household survey now shows that employment has risen by 1.9 million jobs, or 1.4 percent, since President George W. Bush took office, while the establishment survey shows employment is down by 1.1 million jobs, or 0.8 percent.

Going back to Harry Truman, that is the poorest job creation record of any president to this point in a presidential term, by either measure. The second worst was turned in by Bush's father, who did not win a second term in 1992.

But good job records also do not guarantee electoral success. The two best terms by that measure were the terms ending in 1968, when Lyndon Johnson was president, and in 1980, when Jimmy Carter was in the White House. In each year the Democrats were thrown out of the White House by dissatisfied voters.

A Democratic partisan would note that six of the seven best presidential terms, as measured by the establishment survey through the first three and a half years, have been under Democratic presidents. The only Republican to make that list was Ronald Reagan in his second term, when jobs grew by 9.5 percent. The seven worst by that measure were all Republican administrations.

On average, the establishment survey has shown a 10.1 percent rise under Democrats and a 4 percent rise under Republicans. The household survey has shown a less marked preference for Democrats, whose edge is 6.7 percent to 4.8 percent.

International Herald