What to read about jobs in the U.S. economy

The February employment data could have been better:

U.S. employers added 21,000 workers in February, less than the lowest forecast, further evidence of a “jobless” economic recovery that may affect President George W. Bush’s reelection prospects. The results follow a January gain of 97,000 that was less than previously estimated, the Labor Department said in Washington, and trailed the median forecast of 130,000 in a Bloomberg News survey of economists. The unemployment rate held at 5.6 percent as more Americans gave up their search for a job.

The Chicago Tribune also has economic gloom on today’s front page:

As the nation’s 8 million jobless wait for evidence that a growing economy will finally lead to robust hiring, one thing is already clear: Long-term joblessness is the worst it’s been in this country for more than 20 years. According to a new study by the Economic Policy Institute, a Washington, D.C., think tank, 22.1 percent of all unemployed workers were out of work for six months or more in 2003–the worst annual rate since 1983. And a growing number of those long-term job seekers were people with lots of experience and plenty of education, raising more questions about the loss of highly paid work during the nation’s persistent “jobless recovery.”

Here’s a link to the EPI report upon which the Trib story is based. This is not going to look great for President Bush. However, Noam Scheiber — hardly a Bush fan — points out that it would be unfair to blame Bush for the current sluggishness in job growth:

Listening to Kerry, you almost get the impression that George W. Bush spends his waking hours personally scrolling through corporate payrolls looking for vulnerable people to throw out of work. By this logic, all you’d need was a president more sympathetic to the plight of the common man and you could instantly reverse the American economy’s recent hemorrhaging of jobs. Alas, it’s not so simple. As incompetent as Bush may be at managing the economy, he deserves little if any responsibility for the millions of jobs lost during his term. Nor is there much Kerry or any other Democrat could have done to reverse the trend had they been in office instead. Call it cosmic justice for the Florida recount, or a genetic predisposition toward economic bad luck. But, whatever you call it, you have to acknowledge that the deck was pretty much stacked against Bush on the jobs issue from the day he entered office. Just like American businesses over-invested in computers and sophisticated factory machines during the bubble years of the late 1990s, they also over-invested in labor. There is some debate among mainstream economists over the lowest sustainable unemployment rate (known as the NAIRU, or non-accelerating inflation rate of unemployment, for sticklers). But even if you’re optimistic and put it slightly below 5 percent, then the economy would have needed to shed between a million and a million-and-a-half jobs from its 2000 unemployment rate of 3.9 percent.

Finally, the continuing battle over the validity of the household survey for measuring jobs versus the payroll suvery for measuring jobs continues. According to the payroll survey, 716,000 jobs have been lost since the recession ended in November 2001; according to the household survey, 2.2 million jobs have been created. The conventional wisdom among economists is that the payroll survey is the more reliable of the two in terms of measuring jobs. EPI’s Elise Gould does a fine job of summarizing the arguments in favor of relying on the payroll survey. The Heritage Foundation’s Tim Kane argues that the conventional wisdom is wrong (link via Bruce Bartlett). A summary of his arguments:

The payroll survey double-counts many workers who change jobs and is now artificially deflated because job turnover is down. Decelerating turnover in 2002-2003 explains up to 1 million jobs artificially “lost” in the payroll survey since 2001. The BLS household survey indicates record high employment. The disparity of 3 million jobs (in employment growth) between the household and payroll surveys since the recovery began is unprecedented. The disparity between the two BLS surveys of total employment is cyclical. The disparity widens during recessions and narrows during periods of rapid growth in gross domestic product (GDP). Such variation strongly suggests a statistical bias in one of the surveys. Payroll survey data are always preliminary. Past revisions have regularly shown the initial estimates to be off by millions of jobs. For example, initial estimates of job losses in 1992 were revised in 1993, 1994, and 1995 and now show net job creation. The payroll survey does not count the surge in self-employment. The household survey has recorded a surge of 650,000 self-employed workers. This number may be even higher if modern workers in limited liability companies and in consulting positions with traditional firms are not identifying themselves as self-employed.

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