Is The Jobs Report Almost Always Wrong?May 18, 2011 4:15 am
We have written about how the government measures unemployment before – but the jobs report, the one that quotes the number of jobs gained or lost in a particular month, gets revised so many times later, that a lot of people are questioning if the report can ever be close to accurate. A Time article on this more or less summarizes the issue:
“Revisions are of course the norm with government reports, but most of those reports don’t get the attention that the jobs report gets. Worse, the size of the revision seem to matter more at times when the economy is weak. A difference of 50,000 jobs, which is well within what the government deems as an acceptable error, can really change the employment picture at a time when the economy is producing less than 100,000 jobs a month.”
Read more: http://curiouscapitalist.blogs.time.com/2011/05/17/jobs-miscount-how-flawed-is-the-nations-most-watched-economic-indicator/#ixzz1Mfqf5bkl
Here is the real reason why these numbers are not dependable:
“Making matters worse, the monthly numbers we get on the jobs market come from not one, but two surveys. The number of jobs comes from something called the establishment survey, which is done by asking 140,000 businesses and 440,000 workplaces to fill out a form in the middle of the month detailing how their payrolls have changed. The government takes that data and makes an estimate of how many people are employed in the entire country. The unemployment number, which is also released on the first Friday of the month, comes from a survey of 60,000 households. Despite the smaller sample, the unemployment rate often gets more attention than the jobs tally. Worse, at times the two surveys can say opposite things, which is exactly what happened last month when the unemployment rate rose, but so did the number of people with a job. The differing data can leave economists scratching their heads.”
Read more: http://curiouscapitalist.blogs.time.com/2011/05/17/jobs-miscount-how-flawed-is-the-nations-most-watched-economic-indicator/#ixzz1Mfr4G8Oq
Measurement is key. But wrong measurements, and misinterpretations on top of that can have dire consequences.