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« 'Mainstream Journalism's Pre-Eminent Blogger' | Main | Get a Real Job » January 20, 2004The 'Jobless Recovery' Isn't JoblessA few posts below this one I wrote about an economic indicator - increased hiring of temps - that portends a pick-up in hiring and an end to the so-called 'jobless recovery.' Regular readers know I've written a few times about the discrepancy between two different government jobs data - the employer (establishment) survey and the household survey. Well, thanks to the Econopundit, I bring you what may be the definitive look at the data. Warning: if you're a Democrat banking on the 'jobless recovery' boosting your party's chances at having its nominee living in government-subsidized housing at 1600 Pennsylvania Avenue next year, you won't like a new analysis from three economists at Bear Stearns, who find evidence of a growing economic recovery in the household employment survey.
"Fair use" doctrine under federal copyright law allows me to quote from the Bear Stearns report as part of journalism or commentary, which this blog post clearly is. In fact, were I to republish the entire text of the Bear Stearns document for the purpose of responding to it and analyzing it line by line, fair-use doctrine would protect me. I chose not to do that.] Here are some excerpts from the report from economists David Malpass, Tim Kearney and Sandy Batten at Bear Stearns, which was forwarded to me from someone at Bear Stearns.... - In both nominal and real terms, U.S. GDP has hit a new record in each quarter of 2002 and 2003, reaching over $11 trillion in current dollars. In the fourth quarter of 2003, the economy grew fast, probably well over 5%, defying the bearish expectations about the temporary nature of the U.S. expansion.The third page of the Bear Stearns memo has a more detailed look at the growth of establishment employment at the expense of self-employment in the 1990s. Also, don't miss a related relevant must-read commentary here. Also, Daniel Weintraub, who blogs about California politics for the Sacramento Bee, notes a similar discrepancy in the employer and household data in the Golden State. California's latest employment figures illustrate the widening gap between the two survey methods, one of employer payrolls and the other of households. The payroll survey shows employment dropped in December as companies shed 8,400 jobs during the month. The household survey, on the other hand, shows an increase in the number of people reporting they hold jobs, up 39,000 over November's figure.If you see similar data from your state's labor department, please send it to me at bill-at-billhobbs.com. UPDATE: Thanks to Glenn Reynolds for pointing out today's latest report on the economy from Congress' Joint Economic Committee, which also discusses the discrepancy between the employer and household employment data. Thanks, also, to Glenn for the link. Here's a chart from the Joint Economic Committee that illustrates the data gap between the household employment survey and the employer survey.
The chart is also here in a PDF file. UPDATE: University of Texas economist James Kenneth Galbraith charges the president Bush doesn't even want more people to find work, in this screed in Salon. Instead, charges Galbraith, Bush's policies are intended as a payoff to "the military contractors, oil companies, pharmaceutical firms and big media that control this government." Tinfoil hat firmly on his head, Galbraith boldy asserts Bush doesn't even want to make real progress on national security and the War on Terror and his policies in that arena are "all about the contracts" for defense contractors. Galbraith's Salon article isn't the first to claim Bush doesn't want the unemployment rate to come down. He made that deranged and unsupportable charge back in October 2003 in this piece in The Progressive, titled "Why Bush Likes a Bad Economy. Tellingly, although he discussed employment data in that piece, Galbraith didn't mention the household survey. But now, with the household survey data increasingly showing a vibrant and growing entrepreneurial sector and more and more economists, such as those at Bear Stearns, noting that the household survey date is a harbinger of better overall employment, Galbraith feels it necessary to diss the household survey in his Salon article. He does so by dismissing the data as meaningless because self-employed people do not have "real jobs." To Galbraith - whose resume boasts a series of jobs paid for by tax dollars - if you don't work for a boss, you aren't really working. You might operate a one-person business, successfully, putting food on your family's table and a roof over their heads, but that doesn't count to Galbraith. You don't have a "real job." And of course once Galbraith dismisses the self-employed as not having "real" jobs, he can focus only on the employer survey data. Which, as the Bear Stearns economists note, will likely eventually be revised upward to validate the housing survey data. But that's of no concern to Galbraith right now. Right now, he just wants you to believe President George W. Bush is happy when folks can't find a job or make a living, and he's willing to dismiss data and tell lies to make you believe it. Incidentally, Galbraith served as Chief Technical Adviser to the State Planning Commission of the People's Republic of China - communist China - from 1994-97. He's currently the Lloyd M. Bentsen Jr. Chair in Government/Business Relations and Professor of Government at the LBJ School of Public Affairs at the University of Texas in Austin. Are you a self-employed person? Feel free to email Galbraith and tell him just how real your job is. Comments
As someone who lost and and regain a job in this recession, this is definately not a jobless recession to me. Posted by: BigFire at January 20, 2004 12:50 PMDid you mean to say it is not a jobless recovery? Posted by: Bill at January 20, 2004 12:55 PManyone who associates their personal employment situation with the national business cycle is either a megalomaniac or an idiot. I'm putting BigFire in the latter category. Posted by: Jon Brennan at January 20, 2004 01:56 PMEh, a lot of former employees are being converted to "contractors." I think this trend has been noted before, and this is why health insurance again is such a big issue--usually contractors have to pay for it themselves, and these people are finally noticing that, gee, health insurance costs something. It sounds attractive (for what reason, I don't know) to them to tax themselves more so they don't have to see their own health insurance bills. I (an independent contractor in California) would rather have a choice about my coverage (currently low rates, large--$2500--deductible) than pay more to the gov't in taxes for coverage I don't want or need. Posted by: David at January 20, 2004 01:58 PMBill, don't forget that to leftists, working for yourself isn't a "job". You only have a "job" if you're being exploited and oppressed. As for the rest, I blame Bill Hobbs' economic blogging. Posted by: Michael Williams at January 20, 2004 02:00 PMI agree. What's the methodology on the establishment survey? More and more jobs are being converted to contractor positions, which usually means the company doesn't list them on its payroll. (;-) Thus, with the large amounts of "independent contractors" out there these days (in all manner of fields, not just IT and CS), the numbers may actually come closer to adding up. Posted by: Jonathan at January 20, 2004 02:25 PMPeople who work for themselves are ussually better rewarded, and have a greater potential for economical advancement. The question is, why do we all want to be employees then? We do not want to risk. And we do not want to work as hard as possible to advance our own business. We have all (including me) become a nation of people who are way too comfortable by working the minimum to get a wage, and too afraid to advance! I admire those who become contractors or start their own business. They are the ones that catapult our economy into higher levels! Posted by: Jose Anes at January 20, 2004 02:51 PMRe: Jon Brennan Nope. I'm merely putting my personal perspective on this so-call jobless recovery. Yes, I'm not the entire economy, but my situtation is hardly unique. As the old saying goes, when your neighbor lost his job, it's a downturn. When you lost your job, it's a recession. Posted by: BigFire at January 20, 2004 03:20 PMThe Paragraph from Bear stearns showing that there was a 1.88 million upward revision from 92-93 is key. I remember well the Media was nonstop about a jobless recovery and all the angst out there with people losing corporate jobs. Then after about 6 months of Clinton being in office they started talking about how many who had lost there jobs in Corporate America had started there own business and were doing fantastic and many were hiring people as the economy picked up. I also was talking to our network guy right after the new year started. He started his business 3 years ago though had been working on his own for most of that time. In the last year is had two part time employees. The dividend changes in july allowed him leeway to expand. He has started the new year with two new fulltime employees and one parttime. These people are not counted in the survey though are employed. This is a story that is going on out there a million times over. Posted by: B Hoshor at January 20, 2004 04:29 PMI have a good job so far, but we see our employers salivating over offshoring work. The scary trend today, is to ship more and more stuff overseas, and not just manufacturing. I see this as a big campaing issue. I will probably vote for Bush, but if Dean doesn't get nominated, I might vote for somebody who at the very minimum will address this disturbing trend. I hear that the president will offer job retraining money for people to get jobs back. The problem with this is, what jobs? If the mentality of people like HP's CEO Carly Fiorina prevales, we don't need retraining in order to clean toilets. If the Dems are smart, they would capitalize on this issue. Posted by: Augusto at January 20, 2004 04:42 PMBusinesses are simply responding to the incentives provided by Congress. Tax subsidies were passed encouraging the buying of equipment, while nettlesome regulatory regimes were approved that discourage hiring of workers. Congress clearly wants people to create their own business, and they have passed laws to ensure this result. Posted by: Ian Callum at January 20, 2004 04:56 PMJust what does it mean to be "self-employed"? I thoght that most professionals, e.g., doctors, lawyers, etc., who work in solo practices or partnerships were "self-employed." If I am a proprietor of any business in which I have an ownership interest (other than a corporation), am I not "self-employed"? Just curious as to how this term is being used. Any info appreciated. Posted by: Gene at January 20, 2004 05:18 PMDid you mean James K. Galbraith? I am assuming he is related to John Kenneth? if so, the apple did not fall far from the tree. I agreed with much of Galbraith's analysis, though I thought it a bit over the top at times. In particular, looking at the graph that's the centerpiece of his "no jobs" argument, it's 2004 now -- wouldn't any revisions for 2001 and 2002 already be made? As far as self-employment, it contains a mix of very "real" jobs, like sole proprieterships, doctors, lawyers, consultants,... But I'm sure there's a sizeable chunk of crappy jobs (e.g., day labor) that people would in fact abandon for a steady check with benefits. Hopefully, you're right and more people have good jobs than we are currently counting. One more caveat: a big part of the drop in the unemployment rate (but not the level) is due to a decline in labor force participation -- a shrinking denominator rather than an increasing numerator. AB Posted by: Angry Bear at January 20, 2004 06:27 PMActually, Bill, the UT fellow is *James*, his son. :-) Posted by: evariste at January 20, 2004 06:57 PMI see that Roger beat me to it, never mind. Posted by: evariste at January 20, 2004 06:58 PMI meant James, not John, and will correct in the original post. And then, when I have done so, this and a few comments above will not make much sense. Oh well. Posted by: Bill Hobbs at January 20, 2004 09:23 PMI got laid off in December and it was the best thing that ever happened to me professionally. I am making the same take home as a contractor working about 12 hours per week as I made on the payroll (I'm not working for my old company as a pseudo-employee either). Also, I just hooked up with major medical today for less than I was paying for an HMO at my old job. And forget about COBRA! They wanted $1000 per month. What a rip off! If I'd known about this program before I'd have dropped my coverage at work years ago, and maybe even quit all together. Posted by: Scot at January 21, 2004 02:01 AMScot, Could you please tell us the health insurance source you are using now? I think many people would be interested. I know I would! Posted by: DLE at January 21, 2004 05:48 PMQuoting Galbraith: Uh huh. Right. Academics can get tenure. Civil servants can barely be fired if they commit an on-the-job murder. But for the rest of us, "job security" with an employer is at best a bad joke. (For those who still believe in it, it's not a joke at all...it's a cruel hoax that will eventually leave them destitute when they discover how false it is.) Corporations exist to benefit their shareholders, and they do this by benefitting their customers. Benefitting their employees only enters into the equation to the extent that it contributes cost-effectively to accomplishing one of the other two goals. And since people are the largest expense of virtually every business, staffing costs are going to be the first place that a smart manager looks to cut. It's a dog-eat-dog world out there. We _could_ always sit back and whine about how unfair it is, but I for one prefer my own happiness to my neighbors' misery, and so instead of whining about the absence of utopia I adjust my behavior to adapt to reality. This means self-employment...first as a contractor (still doing employee-style work for corporations), and then more recently as the proprietor of a proper single-person business, providing services as a vendor rather than an employee (or pseudo-employee contractor). Do I get "free" health insurance? No, I don't. But I also don't get the constant lingering fear that I could be fired at any moment if one of a hundred people above me in the hierarchy of some corporation decides to have a fit of pique. A favorable trade for me, I think. Posted by: Matthew Landry at January 22, 2004 02:36 AMThe U.S. joblessness report for February 2004 stunned What with downsizing, jobs being sent off-shore, 'What Color Is Your Parachute' Site, this 'Quintessential Job Hunt' Site. 'Search jobs! These guys are good! An executive I know had just Monster of a job site! Great resource: Its Canadian 'twin'... The Riley Guide: Employment Opportunities and Job-Hunt.org 'Online Job Search Guide...your RiteSite Executive Careers Service - looks And if YOUR job hasn't gone to India or China I saw some link about the offshoring of jobs in CA, and the stats actually show that more jobs left CA for OTHER STATES than were offshored. Posted by: muckdog at June 30, 2004 06:41 PMPost a comment
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