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Presto, a Better Jobs Picture (from the GOP's Heritage Foundation)

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papau Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 10:06 AM
Original message
Presto, a Better Jobs Picture (from the GOP's Heritage Foundation)

http://www.latimes.com/news/opinion/la-oe-kane25aug25.story

Presto, a Better Jobs Picture (from the GOP's Heritage Foundation)
By Timothy Kane
Timothy Kane is a research fellow in macroeconomics in the Center for Data Analysis at the Heritage Foundation.

August 25, 2004

Few people missed the headlines when the latest employment figures were unveiled earlier this month by the U.S. Bureau of Labor Statistics. The addition of only 32,000 new jobs, or 200,000 fewer than expected, alarmed everyone. Stocks swooned, reporters wrote economic obituaries and President Bush's political opponents crowed.

But hardly anyone noticed a new study, published the same day by the same federal agency, that shows payroll job losses have been consistently overestimated since the 2001 recession. How can this be? The problem lies in the way we measure jobs.

The BLS has two ways to do that. One is the payroll survey, which charts the number of jobs that employers report to the government. It shows we've lost 1.24 million jobs since March 2001 (including the 32,000 in July). The second is the household survey, in which the Census Bureau queries Americans directly about their job status. It shows we've added 1.81 million jobs since March 2001, including 629,000 last month. Why the discrepancy?<snip>


For now, though, the household survey should be seen as the standard for long-term analysis, and payrolls should be kept in perspective. If the economy is going to take center stage in the political debate, we need to ensure we're arguing from accurate figures. Thanks to the Bureau of Labor Statistics, we're getting closer to doing just that.

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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 10:15 AM
Response to Original message
1. That's a tad deceptive of them.
But hardly anyone noticed a new study, published the same day by the same federal agency, that shows payroll job losses have been consistently overestimated since the 2001 recession. How can this be? The problem lies in the way we measure jobs.


That's a stretch. It doesn't "show" that the other report under counted anyone. At best it "conflicts" with it. It's incorrect to treat one like the "gold standard" and the other is some poor stepchild of the "real" report.

The numbers conflict. It's as simple as that. They're going to fight it out this election year with Bush paying a lot of attention to the unemployment RATE (historically pretty good) and Kerry at the number of jobs (pretty darn poor). Both numbers are "valid" - they just disagree.
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papau Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 10:21 AM
Response to Reply #1
3. True - one bit of new info - Household replaces only 25% of sample each
month?

Statisically interesting to a nerd like me! Makes one wonder about the "randomness" of the "sample"
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 10:28 AM
Response to Reply #3
5. The sample ISN'T "random" so much as "representative"
The don't WANT to rotate out more than 25% specifically to avoid the "random" part of the equation from adding up too much. In fact, they rotate those families back IN to the group for one additional four month cycle the following year.

It combines two goals:

1) You want to see changes in that representative group - (obviously if you could poll the SAME 1100 people before and after the convention, any "bounce" would be more easily measured since there's less statistical noise)

2) You still want to rotate in other households to ensure that your data is not tainted by a stagnant pool of respondents (the chance that the sample will become LESS "representative" of the whole over time). Of course you also want to avoid burdening the same people excessively (these are LONG surveys, not just "did you work last month" - the people who take them average only TWO PER DAY) since they are more likely to start to avoid you (though I think there's a legal obligation involved just like the regular census).
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papau Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 12:11 PM
Response to Reply #5
7. How were the folks to be interviewed chosen?
Is there a "normaization" to population characteristics.

Is there testing of the randomness of the selection?
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 12:18 PM
Response to Reply #7
8. By party affiliation and donations to the RNC of course!
"The sample is selected so as to be representative of the entire population of the United States. In order to select the sample, first, the 3,141 counties and county-equivalent cities in the country are grouped into 1,973 geographic areas. The Bureau of the Census then designs and selects a sample consisting of 754 of these geographic areas to represent each State and the District of Columbia. The sample is a State-based design and reflects urban and rural areas, different types of industrial and farming areas, and the major geographic divisions of each State.

Each of the 754 areas in the sample is subdivided into enumeration districts of about 300 households. The enumeration districts, in turn, are divided into smaller clusters of about four dwelling units each, through the use of address lists, detailed maps, and other sources. Then, the clusters to be surveyed are chosen statistically, and the households in these clusters are interviewed. "

That's from their website. I'll see if I can find the link.

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papau Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 12:29 PM
Response to Reply #8
9. No need - the bias is obvious from the words - whether an important bias
Edited on Wed Aug-25-04 12:32 PM by papau
or not is open to question.

But the stat sample is not of "housholds" but is more on the order of "likely voter" screens - a bit of "art" - but applied to the universe rather than to the sample.

The clumping into geo areas - and then into another geo area clump of 754 parts skews the results - but who knows in what direction.

The adding of a stat sample procedure just cuts down on the time spent and does not add validity to the process (although it is necessary to cut down the time and not lose even more validity).

Of course they may luck out and get the stratified weightings exactly correct - but they have made it harder on themselves

Payroll is the gold standard for a reason.
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 12:49 PM
Response to Reply #9
10. Again, payroll ISN'T the "gold standard"
They are both completely valid surveys for what they measure. They merely contradict each other recently. And this is not a new event. I read a recent study that showed that republican presidents consistently do better by the household measurement than the establishment survey while Democrats establishment survey progress outstrips their household measurement.

Note that it wasn’t comparing Republicans to Democrats, but their relative performance based on how that performance was measured. I’ll see if I can dig up the report.

It would seem that they create different types of jobs. Or more likely, that varying tax policies effect the reletive NEED for jobs (on the margins)

But back to the “gold standard”. What was the employment picture under Reagan? Under Carter? Under Ford? People are FAR more likely to be able to tell you what the unemployment RATE was than the number of jobs there were. Common historical comparisons from year to year are done with the household survey. ECONOMIC evaluations of one month to another are more commonly done through the ESTABLISHMENT survey. That's why Greenspan wants to look at one more than(but not to the exclusion of) the other, he need timely measurements of changes because things fluctuate. But overall multi-year results including all goernmental (not just Fed) policies may be more accurately measured by a survey that take in to account who WANTS a job. Give every family in DC a nice home and you'll see the "unemployment rate" there plummet even though the local version of an establishment survey would show no new jobs.


But to your first point. What "bias" have you identified? This is the same process the census uses to identify households for the more detailed survey.
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papau Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 02:51 PM
Response to Reply #10
11. potential bias - the clumping by geo area must be reflected in the
weightings for the stratified sample -

A Nat'l poll has fewer hurdles to jump to get to a proper weighting - this is a bit more work

The bias (a bad word no doubt) is the fact more work means more chance of error.

In anycase what you are saying is that the 4% error - undercount - that always pops up (1980, then 1990, and I forget 2000) is based on a household survey like this one for jobs? interesting.

the employment picture - the jobs growth - is always taken from the payroll survey (and is quoted in histories of Reagan Admin, Clinton Admin, etc)- and the look backs that I am aware of do not show a change in workforce jobs to a higher percentage of folks making a real income from home in the 90's. The "put a job on your resume when the hiring sucks" is the only explanation that rings true - to me - as an explanation of the higher household survey count at this point in time.
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lanparty Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 10:53 PM
Response to Reply #11
14. BIGGER bias ...

Are unemployed households less or more likely to fill out the survey???

I think all this survey shit is bull when the IRS is sitting on the motherload ... PAYROLL RECEIPTS!!!!

Look I'm unemployed, but I do some computer work on the side. Should that count me as employed???? I have no health benefits and I'm poor. Compare this to 3 years ago when I was a programmer making $60,000.

No, I'm not self-employed. I'm trying to make some spare change. This is like counting the guy selling pencils on the street as fully employed.

Our methods of measuring employment are pretty damn fucked up. The only thing surveys should be used for is measuring the error between payroll receipts and the estimated amount of TRULY self-employed individuals from last years tax returns.

Don't give me that new business crap. Most new businesses go down into ashes. It is not a reliable measure of sustained economic activity. It's only a BLIP on the radar.

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MidwestTransplant Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 10:27 AM
Response to Reply #1
4. Just ask the market which is real
it knows and it showed us.
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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 10:40 AM
Response to Reply #4
6. Don't pay attention to one day market moves
unless we're talking about several hundred points.

For instance, that was about three weeks ago and the market is UP about 1.5% since the announcement (about a 3% rise since the market dump at the original news).
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Kierkegaard Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 10:15 AM
Response to Original message
2. Color me stupid...
I guess someone ought to tell all those people out there who are desperately seeking employment to wake up and smell the coffee. They already have jobs and they don't even know it!
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seasat Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 05:38 PM
Response to Original message
12. The discrepancy seems to me to be this:
Edited on Wed Aug-25-04 05:42 PM by seasat
The payroll survey measures a total number of jobs while the household survey measures a percentage of employed by the total number of employed or looking for a job. The percentage of people who can work and are actually employed has dropped. In other words, a lot of people are no longer looking for a job. It may be with the rise in child care costs that one parent is now staying home with the kids. It may be that a number of people took early retirement. I haven't seen a real good reason for the drop in percentage of working population employeed but it explains why the payroll numbers are lousy while the unemployment rate drops. Check out the charts below from economagic.com.



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Frodo Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 07:35 PM
Response to Reply #12
13. Bingo. That's right on the money.
Childcare costs (and other expenses related to having a second breadwinner like higher tax brackets) go up and that makes having two people working in some families less cost effective.

Add to that the per-child tax credits (begun under Clinton and recently expanded) and other other tax cuts and the jump between "must work to support family" and "can just barely afford to stay home" gets smaller and smaller. So for some percentage of families the "need" for a second (or third) job has decreased. So the unemployment rate can go down even while there is one FEWER job out there. And it isn't related to "discouraged" workers. Or it could just as easily be people who can afford to retire this year instead of two years down the road because they find they can sell their house near work for $100,000 more than they expected and can move out to the country and retire early. Maybe Clinton's tax breaks for college costs and other college savings benefits caused some people to stay in school longer and postpone entering the market.


Now comes a philosophical debate: Is it of less "value" to remove the need for a job then to create a job? There isn't a right answer to that. It depends on who you are. In a individual sense, I know plenty of people who fit one of those categories and are happier NOT working and I know plenty of people who gain great sense of self-worth from their careers and not working would be a huge drain (I've met a couple here on this forum), not to mention an unbearable financial burden.

Fortunately for us (and unfortunately for Bush) it would be an awfully hard argument to articulate politically. Frankly, I'd love to see the public reaction to Bush saying "Yes, but fewer people NEED a job now". That would go down in history with "let them eat cake!" - despite being somewhat true.
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lanparty Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Aug-25-04 10:57 PM
Response to Reply #12
15. I'm unemployed ...
... but I no longer count in unemployment figures. The reason is simple. The second you stop collecting a check, you no longer count in the unemployment numbers.

This has to be the BIGGEST numerical reporting fraud in our economic/political system. Under this system, half the population could be unemployed and WANTING a job, yet the unemployment rate could still remain just 5%.

Bush is playing a wonderful little game whereby he has hit the sweet spot of job loss. All you have to do is oversee a very steady job loss over a long period of time and you'll have excellent unemployment numbers despite all the unemployed people needing work.

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Jack Rabbit Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-26-04 12:04 AM
Response to Original message
16. I have had a few words to say about the Heritage Foundation in the past
From Democratic Underground
Dated February 20, 2002

Lies and Statistics
By Jack Rabbit

Republicans will call a parade of witnesses to say that welfare reform has worked wonderfully in weaning the poor from federal dependency on welfare and does what is needed, but more must be done to get the poor to take personal responsibility for their lives. Health and Human Service Secretary Tommy Thompson says that he and Mr. Bush want to "help those families that have left welfare to climb the job ladder and become more secure in the workforce." And Mr. Bush has said he want $100 million for experimental programs to encourage welfare mothers to get married.

Very few of the witnesses will be beneficiaries of aid programs. It's unfortunate that we won't see many poor people telling of the advantages and disadvantages of one form of government as opposed to another or how they have to stretch the rules of any system of aid in order to pay the rent and feed the kids. We will not hear - at least not from a low-wage earning mother - of how the cost of childcare must be computed into necessary monthly expenses and of how an aid program to help her pay for childcare might help her keep her job. Nor will we hear from the poor themselves about how low-wage jobs provide no medical benefits and how sometimes a child who might benefit from medical attention gets none.

Instead, most of the witnesses will be "experts." We will see well-educated men and women in business suits boldly raise their right hands, promise to tell the truth and sit down, look directly at the committee chairman with the sharp, confident glaze of one who has made his way in the world.

However, instead of telling the truth, these experts will present a display of spin worthy of Ari Fleischer, buttressed by charts, graphs and fancy terms like "regression analysis" and "bivariate correlations."

These experts present themselves as social scientists. They draw their conclusions from data set to a variety of statistical analysis. Are these experts really scientists? Or are they, like attorneys in a trial court, in the business of spinning the facts on behalf of a particular client in order to sell a particular point of view that might or might not resemble the truth?

One of the Republican-friendly witnesses will no doubt be Robert Rector, an author and a senior research fellow at the Heritage Foundation (see http://www.heritage.org/staff/rector.htm). Rector recently said that, in light of the success of welfare reform and the reduced caseload, the federal government should reduce the states' block grants by 10 percent and spend $300 million, three times the amount suggested by the administration, on programs to promote marriage among the poor . . . .

It is noteworthy that in his 2001 testimony about Food Stamps, Mr. Rector has a great deal to say about the effects of aid programs on children and how aid programs discourage marriage and promote out-of-wedlock childbirth. One might expect to hear much of this from Rector and others such experts as they testify in the coming weeks. It does, after all, support Mr. Bush's plan to promote marriage as a poverty-fighting program.

It might be noted that in all of Mr. Rector's citing of statistics, data and graphs to illustrate his point, he seldom reveals anything else about the studies which he cites. Were these randomly chosen cases? What was the sample size in these studies? Anyone who has studied statistics knows that a larger sample will better reflect the universe that the data purports to represent. Finally, who performed that study? Was it an independent group of social scientists? Or was it a group who made an assertion about welfare being evil and went looking for facts to fit the pre-ordained conclusion? One would have to spend a great deal of time researching that; that's time most us don't have.

These questions might not arise if the Heritage Foundation were not so predictable. The Heritage Foundation is a conservative research and educational institute - in other words, a think tank with a partisan mission. Their mission statement makes clear that they are formulating and promoting "conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense" (see http://www.heritage.org/whoweare/).

Given this, should we even expect intellectual objectivity from the Heritage Foundation? Or should we just expect them to formulate talking points for right-wing politicians?

Overall, Mr. Rector makes many specious arguments. In his 1999 testimony, he argued that Food Stamps counted as income in offsetting child poverty in an attempt to invalidate arguments that welfare reform had hurt the poor; however, in 2001, without stating that this was no longer the case, Rector attacked Food Stamps as part of a network of welfare that he blames for continued poverty. Is Rector saying that if aid offsets poverty, then it contributes to poverty? That seems to be the right-wing argument. In fact, Rector seems to be setting up the idea that all means-tested aid to the poor saps their ambition. His argument about welfare causing illegitimacy and in turn causing crime is almost laughable. While he has some reason to suggest that the old welfare rules discouraged beneficiaries from getting married, to turn around to say that illegitimacy causes crime is dreadful. How many of those illegitimate criminals were born to comfortably middle-class women with a future? Would Rector seriously argue that the child of an unmarried professional who chose to remain single is just as likely to turn to a life of crime as the child of a poor, inner-city teenager?

Read more.


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