# How's the economy doing? **URL:** \ **Category:** Great Debates\ **Created:** [May 9, 2004, 3:25pm UTC](https://boards.straightdope.com/t/hows-the-economy-doing/244293 "2004-05-09T15:25:20Z")\ **Posts on this page:** 3\ **Page:** 6
**Author:** ![manhattan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/manhattan/32/7_2.png) [@manhattan](https://boards.straightdope.com/u/manhattan)\ **Post date:** [May 13, 2004, 11:55pm UTC](https://boards.straightdope.com/t/hows-the-economy-doing/244293/101 "2004-05-13T23:55:24Z")
> [@Kimstu](#): > > We cool? Yeah, we cool. Sorry if I was harsh. > [@](#): > > What I was trying to get at, and what I think **MMI** ’s post confirmed, is that the Administration has been **consistently way off** in their own predictions about what tax cuts would do for job growth. I think that’s still a quite justified observation, despite the admittedly serious error of comparing the CEA’s predictions about the **proposed** cuts to the performance of the **enacted** cuts. Sure it is. They were. My point is that (heh) _pretty much everybody_ was way off _given the growth that occurred_. There were a fair number of people who predicted that job growth in 2003 would be anemic or even negative, but those folks also tended to have GDP forecasts which had a 1-handle – see below. > [@](#): > > It seemed to me that that Feb. 2003 BW article (and I always thought BW was a fairly mainstream source of business/economic opinion, not one of the outliers from “pretty much everyone”) was indeed looking to see more productivity growth over the past year **without** relaxation of the corporate cost-cutting that kept payrolls lean. If I’m understanding the rest of your comments correctly, you’re right that even the folks cited in that article still underestimated productivity growth. But they don’t seem to have been overestimating job growth. Two things. First, Absolutely BW is a mainstream mag – one of the better ones and a weekly read for me, even though all the factual stuff they report on is already on my desk before they mail the magazine – their analysis is often good, and frequently important whether it turns out good or not. OK, second thing. But that doesn’t mean that every article in it agrees with the mainstream – in fact, their whole purpose (one of them) is to try to bring insights that are outside the consensus. If productivity growth estimates were 8% for 2003, you can be sure that BW would have had an article saying, “now wait a minute.” And that it would have been a good one. Oops. This is three things, ain’t it? No one there made a specific prediction of job growth, as you say. But they kind of did, given an assumption of GDP growth. Basically, productivity growth is the combination of output growth and the units of labor required to produce it. So, if the economy puts out 4% more _stuff_ (stuff in this context includes services in addition to physical stuff, of course) and requires 4% more person-hours to do it, there’s no productivity growth. If they put out 4% more stuff on the same number of hours, there’s zero productivity growth. (It is, of course, much much more complex than that because some _stuff_ counts more than other stuff, measurement, &ct. &ct., but that’s the gist of it). So it’s possible that each of the people in the article, in addition to being low on productivity growth, was also thinking of a much lower GDP growth number, the sum of the two adding up to no job growth. But reading economists and talking to CEOs for a living, I’ll tell you that’s not anything like the consensus had in mind[sup]1[/sup]. As I said before, almost to a person if you said, “2003 will see 3.1% real GDP growth” they’d have said, “That means jobs. Lots of them.” A 3.1% growth with 2.5% productivity growth would, indeed, have meant jobs. If you had said, “2003 will see 3.1% real GDP growth and it will be comprised of much bigger gains in durable goods (7.1%) than in services (2.0%),” they’d have said, “OMG GOD FULL EMPLOYMENT INFLATION!!11!!!1!” Some of the headlines would even have looked a little like that. [sup]1[/sup]: In fact, I’ve spoken to a lot of CEOs who expressed astonishment at productivity growth _at their own companies_. They aren’t the norm, of course – the norm is that I get overpromised productivity growth: “We’ll lay off 90% of our employees and double production, bringing costs down by an infinity percent.” Lyin’ bastids[sup]2[/sup]. But the fact that even _some_ were surprised was something of a surprise to me. I normally hate surprises. [sup]2[/sup]: New Wall St. geek joke: How do you know when a CEO starts lying? When he reads the Forward-Looking Statements Safe Harbor Statement. ---
**Author:** ![manhattan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/manhattan/32/7_2.png) [@manhattan](https://boards.straightdope.com/u/manhattan)\ **Post date:** [May 14, 2004, 12:02am UTC](https://boards.straightdope.com/t/hows-the-economy-doing/244293/102 "2004-05-14T00:02:50Z")
> [@iamme99](#): > > The problem as I see it is that much of the media and certain people try to use these job figures as stand-alone numbers. So we get headlines like 600k odd jobs created in the last 2 months. All is good. The administration (whomever happens to be in power) knows better, but if the numbers work to their advantage, they jump on board to spin them further and rubber-stamp past policy decisions. I certainly agree that the overfocus on the one-month (or, to be fair, even two-month) number is annoying and potentially misleading – they have to denote a sustainable trend to be important. But the administration (this one or another) doesn’t “know better” – the numbers are what they are, and they’re available to everyone, including the portions of the numbers which are estimates. > [@](#): > > Furthermore, a bone I always pick with the BLS numbers is that they don’t report on the QUALITY of jobs that are created. Sure they do. They do reasonably extensive reporting on the industries the jobs are being created in, on the ratio of supervisory to production workers, trends in professions, average wages by industry and profession – all kinds of stuff. The don’t stick it in the press release, but the information is there. > [@](#): > > I’m not sure what you are saying regarding defense jobs. From the 2nd article, near the end, I quoted the following (below). I’m not sure why you feel that “Anecdotally, some of the manufacturing increase _may_ be disproportionately defense-related”. It says that in the 1st quarter of the year, defense work accounted for nearly 16% of the economic growth despite being just 3-4% of the economy. I must not have been clear – sorry about that. I was asserting that there isn’t any direct evidence that defense-related jobs are not being created out of proportion to the _growth_ of the economy – say, 15ish% of new job growth. But I was also saying that, absent direct evidence, anecdotally there seems to be some indication that the growth in jobs might be disproportionate to growth in the economy in the manufacturing sector. But again, anecdotes =! data.) Hope that clears things up. ---
**Author:** ![iamme99](https://avatars.discourse-cdn.com/v4/letter/i/57b2e6/32.png) [@iamme99](https://boards.straightdope.com/u/iamme99)\ **Post date:** [May 14, 2004, 7:57am UTC](https://boards.straightdope.com/t/hows-the-economy-doing/244293/103 "2004-05-14T07:57:01Z")
> [@manhattan](#): > > > [@iamme99](#): > > > > Furthermore, a bone I always pick with the BLS numbers is that they don’t report on the QUALITY of jobs that are created. > > Sure they do. They do reasonably extensive reporting on the industries the jobs are being created in, on the ratio of supervisory to production workers, trends in professions, average wages by industry and profession – all kinds of stuff. The don’t stick it in the press release, but the information is there. But none of that directly tracks part-time vs. full-time jobs. Though extensive analysis, you may be be able to infer some information on this phenomena but there is no direct tracking to the best of my knowledge. You may be interested in this direct reply I received from the BLS which I posted in an earlier thread a while ago on this subject. > [@](#): > > _ **In your statistic collection, how do you account for someone who is working two or three separate part-time jobs? For example, let’s say that someone was officially unemployed but actively looking for work and takes a job working 15 hours per week as a bank teller and a second job working as a cab driver 20 hours per week. Would you consider this as TWO new jobs having been created? If not, how would you differentiate this one person working two part-time jobs from one person working one full-time job?** _ > > I am replying to a message that was forwarded to the program office within the Bureau of Labor Statistics (BLS) that handles requests relating to the Current Population Survey (CPS). The CPS is a monthly survey of approximately 60,000 households and is a primary source of U.S labor force data. > > To answer your question, I’ll explain how BLS measures employment. Employment data are published every month in the Employment Situation Summary news release and come from two surveys. One survey is conducted among U.S. households and measures the number of people with jobs. This is the household hold survey, or the CPS. In the CPS, employment is defined as: > > Persons 16 years and over in the civilian noninstitutional population who, during the reference week, (a) did any work at all (at least 1 hour) as paid employees, worked in their own business, profession, or on their own farm, or worked 15 hours or more as unpaid workers in an enterprise operated by a member of the family, and (b) all those who were not working but who had jobs or businesses from which they were temporarily absent because of vacation, illness, bad weather, childcare problems, maternity or paternity leave, labor-management dispute, job training, or other family or personal reasons, whether or not they were paid for the time off or were seeking other jobs. Each employed person is counted only once, even if he or she holds more than one job. Excluded are persons whose only activity consisted of work around their own house (painting, repairing, or own home housework) or volunteer work for religious, charitable, and other organizations. > > Respondents in the CPS are directly asked whether workers in the household have more than one job. Thus allowing multiple job holders to be counted. > > The other survey, the Current Employment Statistics (CES) Survey is conducted among firms in the U.S. and is also known as the payroll or establishment survey. Employment in the CES is measured by the number of individuals on a company’s payroll. > > An important difference between the surveys is that the household survey provides a count of employed persons; whereas, the CES, the establishment survey, provides a count of JOBS. This difference refers to how multiple jobholders are treated by each survey. The establishment survey counts jobs because, for example, if one person worked two jobs, that person would be counted twice in the establishment survey because he or she would appear on both establishments’ payroll records. However, in the household survey > (CPS) the person would be counted as one employed person because he or she did some work during the reference week. > > Therefore, the unemployed person who finds a job with two employers, as you noted in your message, would be counted differently in each survey. In this case, the person would be counted twice in the CES for each job in the bank and the taxi. Yet, the individual would count as one employed person in the CPS regardless of the number of hours worked. > > The following web site provides further information regarding the two surveys and their differences. [http://www.bls.gov/cps/ces\_cps\_trends.pdf](http://www.bls.gov/cps/ces_cps_trends.pdf) > > On the topic of the number of jobs created during any time period, neither survey counts the number of jobs gained or lost each month. Rather, both measures give the overall level of employment. What is commonly referred as “job creation” is actually the net change in employment level over a given time period. > > I hope this information is helpful and if you have other questions feel free to contact me. > > Regards, > > Emy Sok, Economist > Division of Labor Force Statistics > Bureau of Labor Statistics > Tel. (202) 691-6382 [Previous page](https://boards.straightdope.com/t/hows-the-economy-doing/244293.md?page=5)