Jobless Overstatement

Discussion in 'Economics' started by ShoeshineBoy, Feb 1, 2004.

  1. Joblessness may be overstated:

    Self-Employment May Mask U.S. Job Growth
    Sat Jan 31, 8:39 AM ET Add Business - Reuters to My Yahoo!

    By Andrea Hopkins

    WASHINGTON (Reuters) - According to the most widely accepted measure of U.S. employment, public-speaking coach and consultant LeeAundra Temescu was not among the 130 million Americans who had a job in 2003.

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    But don't try telling her that.

    "Was I working?" the Los Angeles resident said. "In terms of speaking and writing and marketing and doing all that sort of stuff -- yeah, I was working."

    Because she is one of more than 15 million self-employed workers in the United States, Temescu is on nobody's payroll -- and thus does not show up on the Labor Department (news - web sites)'s employer survey used each month to assess the strength of the job market.

    The failure of the survey to count independent contractors has come under fire by President Bush (news - web sites)'s economic team and some analysts, who argue it underestimates job growth by ignoring one of the fastest-growing sectors of the economy.

    "There is a big error factor in those numbers," Treasury Secretary John Snow said after Labor reported a scant 1,000 rise in December payrolls. "I think they may well have understated (job growth), and we will see a restatement in the future."

    A rise in self-employed and other nonpayroll workers would bolster the argument of Bush supporters that the "jobless" nature of America's recovery has been exaggerated.


    While outsourcing is not new, a rise in self-employed contractors could explain the slow rebound in employment as counted by the payrolls survey, which shows 2.3 million jobs have been lost since Bush took office in January 2001.

    For the same period, a smaller study of households, based on the Current Population Survey, shows a 700,000 rise in employment -- a seemingly contradictory sign that has fueled Republican skepticism about the accuracy of the bleaker payrolls data.

    According to the Current Population Survey, the number of self-employed Americans surged 3.9 percent in the last three years, far outstripping a 0.6 percent rise in overall employment.

    But experts also take issue with the household survey, saying it is too small, too volatile and possibly overstates population growth. Moreover, it registers a worker as employed even if he or she works only one hour in the survey week.

    Federal Reserve (news - web sites) Governor Ben Bernanke said the household survey's accuracy could also suffer if individuals misunderstand the questions "or for one reason or another misreport their own labor market status or that of other members of the household."

    Self-employed consultant Temescu agrees. For much of 2003, she was one of 60,000 surveyed for the household report. Trying to categorize herself as "employed" or "unemployed" was tough in a week when she had no paying clients but was busy marketing. And she said the Census Bureau (news - web sites) questioners were just as confused about her employment status.

    "There were a lot of times when I'd give an answer and they'd go 'Oh, I don't have a code for that'," she recalled. "It was kind disconcerting to ... have to give answers that I know weren't accurate because I was constrained by the nature of the questionnaire."


    As president of SurePayroll, the fifth-largest U.S. payroll services provider, Michael Alter has seen a definite shift away from the traditional employer-employee relationships captured by the payroll survey.

    Last year, payments by his small business clients to independent contractors surged 12 percent -- and Alter himself says he is using more contract workers.

    "I personally believe there has been a structural change," he said. "You can get people who have very specialized skills for a very reasonable price, and you don't have to put them on staff full-time."

    Economist Joel Naroff believes the outsourcing trend, which took off in the 1990s, is here to stay.

    "Businesses have been looking to temporary help or outsourcing to lower their employment -- and therefore their health care and pension and other responsibilities," he said.

    Government data show employment costs rose 3.8 percent in 2003. Outsourcing work to a self-employed contractor cuts those costs by up to a third -- because health care, pensions and other benefits make up 30 percent of total compensation.

    "Clearly these kind of huge increases in health care costs encourage businesses to move toward temporary help, outsourcing, or setting people up as consultants," Naroff said. "It's clearly getting stronger."

    Meanwhile, Temescu shrugs off the government's inability to accurately count her employment and says the benefits of her situation are worth the risks involved.

    "The alternative of working as a salaried worker in an organization is even more unpalatable," Temescu said. "There is just something about working for myself -- I really, truly do love what I do."
  2. maxpi


    People seem to think we had a housing boom concurrent with high unemployment. Wake up, look around.

  3. My Genius Atlas Lrod Buhta. Only special interest groups lie to the public in face that things are better. Ask the people. Their are at the edge of bursting. You butts are sitting on a dangerous volcano. How long are you going to sit there and give us a barbecue .
  4. So would a day trader be considered by the government as to having employment?
  5. As far the govt statistics are concerned, everybody except those people receiving unemployment benefits is employed
  6. Actually straight from the horses mouth at

    How are the labor force components (i.e., civilian noninstitutional population, civilian labor force, employed, unemployed, and unemployment rate) defined?

    The official concepts and definitions used in the Current Population Survey (CPS) are followed. For a complete description, see Definitions of Labor Force Concepts (PDF 117).

    Civilian noninstitutional population. Included are persons 16 years of age and older residing in the 50 states and the District of Columbia, who are not inmates of institutions (e.g., penal and mental facilities, homes for the aged), and who are not on active duty in the Armed Forces.

    Civilian labor force. Included are all persons in the civilian noninstitutional population classified as either employed or unemployed (see the definitions below).

    Employed persons. Employed persons are all persons who, during the reference week (week including the twelfth day of the month), (a) did any work as paid employees, worked in their own business or profession or on their own farm, or worked 15 hours or more as unpaid workers in an enterprise operated by a member of their family, or (b) were not working but who had jobs from which they were temporarily absent. Each employed person is counted only once, even if he or she holds more than one job.

    Unemployed persons. All persons who had no employment during the reference week, were available for work, except for temporary illness, and had made specific efforts to find employment some time during the 4 week-period ending with the reference week. Persons who were waiting to be recalled to a job from which they had been laid off need not have been looking for work to be classified as unemployed.

    Unemployment rate. The ratio of unemployed to the civilian labor force expressed as a percent (i.e., 100 times (unemployed/labor force)).
  7. ShoeShine,
    I have been looking for a different job for a very long time now. There are hardly any jobs.
    Example: 1999/2000 when I put my resume on Hotjobs I it was viewed by employers 300 times within 2 weeks and about 25 of them contacted me. NOW, my resume was sitting on Hotjobs for the last four months, it was viewed 35 times, and I got 3 employers contact me. Note, that I am now much more experienced and have aquired a lot of valuable skills and certifications.

    Morale is, if you are in a zoo, standing in front of a cage with lions, but it says "Elephants", d o n o t believe your eyes.
  8. I agree with you. I was just posting it for information.

    Hey, it could be me! I'm in IT and I've painfully and fearfully noticed that the jobs out there are DRASTICALLY reduced from 5-6 years ago even though the economy has pulled out.
  9. Wonder if it has anything to do with the hundreds of thousands of H-1b/L1 visa holders that came in for the "shortage" of IT workers.

    If you work/worked in IT, neither the Democrats or Republicans represent you
  10. Yes, will see lower actual jobless rate and see higher stocks.
    #10     Feb 1, 2004