Thursday, June 11, 2009

BLS's Birth Death Model says that 1.2 million jobs were created in the last year

According to the Bureau of Labor Statistics almost 1.2 million jobs have been "born" since April 2008. I don't think I believe it.

First a little bit of information for why they use a Birth-Death model:

In 2008, the CES sample includes about 150,000 businesses and government agencies drawn from a sampling frame of Unemployment Insurance tax accounts which cover approximately 390,000 individual worksites. The active CES sample includes approximately one-third of all nonfarm payroll workers. The sample-based estimates are adjusted each month by a statistical model designed to reduce a primary source of non-sampling error which is the inability of the sample to capture, on a timely basis, employment growth generated by new business ormations.

There is an unavoidable lag between an establishment opening for business and its appearing on the sample frame and being available for sampling. Because new firm births generate a portion of employment growth each month, non-sampling methods must be used to estimate this growth.

In the last 14 months the BLS says that of the ~1.2 million jobs created, 156,000 have been in construction (doubtful with complete crash of the housing market), 153,000 in the "Trade, Transportation and Utilities industry, 200,000 in Professional & Business Services, and 458,000 in Leisure & Hospitality.

Call it intuition---but since the Great Recession started, I find it hard to believe that there have a net 1.2 million new jobs---I would think that there would have a been a net million job job losses---If you disregard, the net "births"---I believe the unemployment rate would be almost 1 percentage point higher (around 10.2%)---And if you believe that there have a net-reduction of jobs from small businesses, the unemployment could actually be closer to 11% (vs. 9.4% 'as reported' in May 2009).

1 comment:

Todd said...

The intent of ANY government's information is deceit and misdirection. ALL politicians are in it for themselves and their cronies and they drool every time they're re-elected because then they get to suck up all of that PAC money.