Why is US Jobs Data Not Adding Up?
What a difficult paper to write but excellent. I suppose establishment survey is the same as the non farm data but swapping back and fore between them in the post is natural. Yes on a second read it is clearly stated to be so.
Somewhere recently it was said economists have no true theory of inflation. The inherent differences between establushment and household survey suggests the employment data reporting is a problem also. Add to this the fact that the measuring of a recession is up in the air too. It would all suggest a dismal science falling apart with no precise knowledge of its foundational data and so at any given time and even the important times when the various monthly data is released nothing is really known. Is it an assault on economics. I suppose not but it sure makes things confused.
But our host has performed an excellent task highlighting how the consequences are confusing and contradictory with different policy solutions required.
I decided not to edit the typo establushment because it seemed appropriate for the confused state on employment as potentially very embarrassing.
Excellent analysis as always!
First time reading your work. Very insightful! Just subscribed
I’m an engineer with new found interest in economics thanks to you! I learn so much just by reading your pieces.
You mentioned the multiple job holdings pre-pandemic was acyclic but it tracks well ( proportional) with the employment levels - won’t that make it cyclic ?
Are there limitations to get self-employed people included in some type of updated establishment survey? I know the self employed population has historically been relatively small. But if the freelance/contract workforce continues to expand through freelance and gig platforms in the coming years, I would imagine the fed would want much less noisy data for this sector.
Could the establishment survey update to force businesses to disclose 1099 payrolls on a monthly basis?
Do response rates differ between the HH and establishment surveys? And have they changed over this period? It seems like one source of divergence - maybe on the HH survey the response rates for unemployed people have recently risen relative to employed people.
I suspect that the PPP program might have had a negative impact on the accuracy of the employment survey. One of the variables affecting repayment of the loan was number of employees, and I wonder if employers getting a monthly call from BLS about their employee count wouldn't develop a tendency to exaggerate.