More Jobs Mirage In February—BLS Continues To Overestimate Job Growth

The

announcement
on March 4 that 192,000 new jobs were
created in February was greeted with a sigh of relief.
But the

number
is just more smoke and mirrors, as I will
show shortly. First, let`s pretend the jobs are real.
What areas of the economy produced the jobs?

According
to the Bureau of Labor Statistics, 152,000 of the jobs
or 79% are in private services, consisting of: 11,700
jobs in wholesale trade, 22,000 in transportation and
warehousing, 36,400 in administration and waste services
(of which 15,500 are temporary help services), and
36,200 in ambulatory health care services and nursing
and residential care facilities. Entertainment,
waitresses and bartenders accounted for 20,000. Repair
and maintenance, laundry services, and membership
associations accounted for 14,000.

As
one who has often reported the monthly payroll jobs
breakdown, I am struck by the fact that these categories
are the ones that have accounted for job growth for year
after year. How can this be? How can Americans, who have
had no growth in their real incomes and who are
foreclosed from their homes and maxed out on

credit card debt
, car payments, and

student loans
, spend more every month in bars and
restaurants? How can a few service areas of the economy
grow when nothing else is?

The
answer is that there were not 192,000 new jobs.
Statistician John Williams

estimates
the reported gain was overstated by about
230,000 jobs. In other words, about 38,000 jobs were
lost in February.

There
are various reasons that job gains are overstated and
losses understated. One is the BLS`s

"birth-death model."
This
is a way of estimating the net of non-reported new jobs
from business start-ups and job losses from business
shut-downs. During recessions this model doesn`t work,
because the model is based on good times when new jobs
always exceed lost jobs. On the
"death"
side, if a company goes out of business
because of recession and, therefore, doesn`t report its
payroll, the BLS assumes the previously reported
employees are still in place. On the
"birth"
side, the BLS adds 30,000 jobs to the
monthly numbers as an estimate of new start-ups.

Williams
estimates the
"death"
side is really reducing employment by about
200,000 per month, and the "birth" side is stillborn. Therefore,
"the BLS continues


regularly to
overestimate

monthly growth in payroll employment by roughly 230,000
jobs."
The

benchmark revisions of payroll jobs
bear out
Williams. The last two benchmark revisions resulted in a
reduction of previously reported employment gains of
about 2 million jobs.

Another
indication is that despite 10 years of population
growth, there are 8 to 9 million fewer Americans
employed today than a decade ago.

Some

"New Economy"
we have. If only we could have the old one back.


Paul Craig Roberts

[email
him
]
was Assistant Secretary of the Treasury during
President Reagan`s first term.  He was Associate
Editor of the
Wall Street Journal.  He has
held numerous academic appointments, including the
William E. Simon Chair, Center for Strategic and
International Studies, Georgetown University, and Senior
Research Fellow, Hoover Institution, Stanford
University. He was awarded the Legion of Honor by French
President Francois Mitterrand. He is the author of




Supply-Side Revolution : An Insider`s Account of
Policymaking in Washington
;
 
Alienation
and the Soviet Economy

and



Meltdown: Inside the Soviet Economy
,
and is the co-author with Lawrence M. Stratton of




The Tyranny of Good Intentions : How Prosecutors and
Bureaucrats Are Trampling the Constitution in the Name
of Justice
. Click




here

for Peter Brimelow`s
Forbes Magazine
interview with Roberts about the epidemic of
prosecutorial misconduct.