July 2, 2004

Jobs Data: Corporations Add Jobs, But Small-Biz Adds More

The latest job numbers are out and they are good - 112,000 new payroll jobs were created in June - even though the press is telling you they are bad because analysts had expected double that.

So why is lower-than-expected job creation not bad news? Because it's only part of the story - and the media is ignoring lots of good news on the jobs-growth front.

The Payroll Survey tells only part of the employment story. The media generally ignores the data from the Household Survey, which shows a more robust economy than the Payroll Survey. The Household Survey is widely believed to captures thousands of small-business and independent-contractor jobs that the Payroll Survey misses, and is in fact the data the government uses to calculate the unemployment rate.

The media routinely reports the unemployment rate but doesn't dig deeper than the press release, and misses the bigger story.

Here it is: total employment in America was 139,031,000 in June, according to the Household Survey. That includes employees on a big company payroll, small-business entrepreneurs and employees, and independent-contractors who make a living without showing up on any payroll.

That's up 259,000 more people working just since the May report and 733,000 more since March.

The Payroll Survey, on the other hand, shows only 131,301,000 people working in June, up only 671,000 from March. The news media, by focusing only on half of the data, is under-reporting June's job growth by 62,000 jobs – and is ignoring more than 8.7 million working people.

President Bush's economic policies are fueling an economic recovery powered by small businesses, entrepreneurs and self-reliant independent contractors - the kind of people who have always been the backbone of the American economy. The kind of people who would be most harmed by John Kerry's plan to raise taxes.

UPDATE: Via Pejman, I found this commentary on the jobs data from economist Tim Kane, Ph.D.

The payroll survey simply ignores the growth in self-employed workers and microbusinesses. ... The Congressional Budget Office notably shifted its attention from payroll data to household data with this year's published Economic Outlook. The growing consensus of economists is that the payroll survey won’t be an equivalent gauge of labor markets until after its benchmark revision, which will occur in January 2005.