Cafe Hayek - Latest Comments in The Real Story of Job Growth

Re: The Real Story of Job Growth

Norbert Bryan — Mon, 17 Dec 2007 08:20:56 -0000

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Re: The Real Story of Job Growth

Morgan — Mon, 09 Oct 2006 16:11:31 -0000

szara:

I think it is pretty drastic, when you think about it. That's a 14.5% increase. In any case, I commend you on an excellent suggestion for checking theory against data.

I get different numbers from the NIPA tables (table 1.12 national income by type of income, here: http://bea.gov/bea/dn/nipaw... ), but they're relatively consistent with yours - proprietors' income as a share of national income rises from 8.17% in Q1 of 2000 to 9.09% in Q3 of 2005 (then drops to 8.63% by Q2 of 2006). That 0.92% equals roughly an extra $100 billion of proprietors' income.

How much do you suppose proprietors income is, on average? $25,000? Just a SWAG, but that would give 3.9 million more proprietors in 5 1/2 years. Compare that to 3.11 million jobs created (establishment) versus 6.99 million (household).

Re: The Real Story of Job Growth

szara — Mon, 09 Oct 2006 13:04:12 -0000

If there is such a massive secular shift to self employment that the CES survey is obsolete, wouldn't it show up as a rapidly growing properietors income share in the Bureau of Economic Analysis NIPA tables?

But the share of proprietors income to total income has increased from 8.3% in 1996 to 9.5% thus far in 2006. That's an increase, but it's not particularly dramatic.

Re: The Real Story of Job Growth

Tom — Mon, 09 Oct 2006 07:58:32 -0000

"But I keep being told it was a massive secular change in the economy generated by republican economic policy."

I don't think that is true. The debate seems to be which statistic is the most accurate. It seems the household survey is. Your arguement that the establishment survey gets out of whack then comes back in line on a regular basis does nothing to disprove this.

Re: The Real Story of Job Growth

spencer — Sun, 08 Oct 2006 09:47:26 -0000

Xmass-- exactly, i agree with you completely.

Thank you for making my point.

the unusual development was the late 1990s,

not the early 2000s.

My original point is that the more rapid gains in household employment in the early 2000s was no big deal.

But I keep being told it was a massive secular change in the economy generated by republican economic policy.

Re: The Real Story of Job Growth

Xmas — Sat, 07 Oct 2006 17:51:12 -0000

Spencer,

The late 90's was an unusual, exceptional even, employment boom. There was a strong demand for COBOL programmers for goodness sake.

Re: The Real Story of Job Growth

spencer — Sat, 07 Oct 2006 07:15:09 -0000

I'll be glad to send you the monthly data.

But here is another way to look at it.

Household employment as a % of payroll

employment:

1970.....110.8

1980.....109.9

1990.....108.5

2000.....103.5

2006,sep.106.8

Now the comment above are saying that there

is something very unusual and different about the strength of payroll employment in recent years. There is a long run trend of

household employment as a percent of payroll

employment to very, very gradually diminish.

But the ratio fell very sharply in the late 1990s and what we are now seeing is a reversal of the sharp drop in the late 1990s with the ratio essentially returning to the long run trend line. If the rebound in recent years is due to new technology why did it plunge in the late 1990s when we were in the middle of a great technology boom?

If you are going to quote Westbury you should be aware of where he is comming from.

He is a junior Larry Kudlow being groomed

to replace him. His job is to say everthing good that happens in the economy is due to the Republican tax cuts.

They are like a bunch of Druid priest telling you that the reason the sun rose

earlier on December 24 was all the ceremonies and sacrifices they performed on December 22.

Re: The Real Story of Job Growth

triticale — Sat, 07 Oct 2006 06:03:30 -0000

Spencer, to prove your point, show us that the household survey led the establishment survey by similarly vast amounts in every previous cycle since 1974, and then lagged enough to generate your averages. Otherwise it looks like you are trying to disguise a trend with old data.

Re: The Real Story of Job Growth

spencer — Sat, 07 Oct 2006 05:53:49 -0000

No, you missed my point. There is a well established cyclical pattern that the household survey leads the payroll survey in the early stages of the cycle. It happens every cycle. What we had this cycle was absolutely normal with the household survey leading in the early stage

of the cycle and the payroll growth catching up in the expansion phase of the cycle.

As far back as the data goes you will find that the household survey shows more employment then the payroll data.

Look at the absolute numbers you are quoting as a percent or a growth rate and you will see what I am talking about.

Re: The Real Story of Job Growth

Russell Nelson — Fri, 06 Oct 2006 23:29:44 -0000

And the reason self employment is growing so strongly is because of lower transaction costs due to the Internet. Without high transaction costs, the enterprise has no reason to exist.

Re: The Real Story of Job Growth

Morgan — Fri, 06 Oct 2006 20:27:15 -0000

Spencer:

The time frame over which the two diverges is 2001 to 2006, not 1974 to 2006. From March, 2001 through September, 2006, the household survey shows more than twice the job creation as the establishment survey - 6.99 million versus 3.11 million.

That's a big difference. And Russell is right, the obvious reason is that the establishment survey fails to count the growth in self-employment, which reached almost 1 million a year recently.

In the long run, the trend toward self employment may reverse, and cumulatively the two will come back into line - at that point the establishment survey, by counting people moving into the establishment, but not out of self-employment, will show larger increases than the household survey. It will still be wrong.

The bottom line is that for comparisons over any extended period of time, you should look at the household survey. On the time scale of a few months or less the establishment survey is a better measure, because of its larger sample and consequent smaller sampling error. Just keep in mind that it is subject to bias depending on the net flow into or out of self employment.

Re: The Real Story of Job Growth

spencer — Fri, 06 Oct 2006 17:14:54 -0000

Sorry left out the word averaged. Sould be that they have averaged 1.51% and 1.54% growth, respectively.

Re: The Real Story of Job Growth

spencer — Fri, 06 Oct 2006 17:12:21 -0000

Actually, since January 1974 the growth of employment as measured by the payroll survey has been 1.51% while the household survey has been 1.54%. That really does not look like a significant dirfference.

In 2002-03 the household survey showed stronger employment, but that is the normal cyclical develpment as household employment normally leads the payroll data at economic bottoms. But over the middle and late stages of the cycle they normallydisplay about the same growth as they have this cycle.

I see no evidence that there has been anyything but the normal historical cyclical patterns this cycle for the two measures.