Media responses to Washington’s latest jobs report are almost universally upbeat. The Wall Street Journal, for example, called the employment data “stronger than expected.” While such assessments are accurate, a closer look at the numbers reveals a more nuanced picture.
By one measure, the jobs market is historically strong. According to the Labor Department’s survey of businesses, some 256,000 employees were added to payrolls in December, with 2.2 million added cumulatively over the prior 12 months. While manufacturing employment dropped slightly, gains in retail, medical services, and other industries more than made up the difference.
The Labor Department’s survey of individuals, however, paints a different picture. It found that total employment is up by 537,000 over the past 12 months—not bad, but barely one quarter the amount indicated by the payroll accounting. Additionally, the department reported that the number of people unable to find work had increased by nearly 600,000 in December.
The disparity in these two metrics offers insight on what is happening to American workers. The stronger figure, from the Labor Department’s tally of company payrolls, is subject to overcounting: if a person works at two or more companies, he is counted two or more times in the total. The department’s individual survey, however, simply asks people if they are working; if they are, it counts them as employed once, whether they have one, two, or five jobs.
Given the difference between the payroll and the individual-survey tallies, it seems that many Americans are working more than one job. This suggests that many Americans cannot make ends meet without such doubling or even tripling up on employment—and tells us something about why, despite the supposedly robust jobs market, many people still feel financially beleaguered, measures of household confidence remain so low, and so many people claim that the economy has let them down.
A comparison of these figures also reveals the effects of illegal immigration. Since the Labor Department does not ask employers to disclose their workers’ immigration status, payroll figures often include illegal-immigrant employees. When the department polls individuals, however, illegals might feel insecure about reporting a job. This means, in practice, that the individual-survey results likely understate the true employment numbers. Considered in light of the growing number of Americans who report being unable to find work, it also suggests that illegal immigrants may be taking needed jobs.
It is the nature of statistics that no single figure adequately captures the full economic picture. That’s why the Labor Department, in its wisdom, provides several measures. The gap between those measures helps explain why many Americans’ view of the economy differs from that of the media.
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