Sunday, February 22, 2004

INSIDE BASEBALL: STATISTICAL POLITICS OF JOBS

The government collects labor statistics through two major surveys each month: the Current Population Survey--a survey of 60,000 households used to determine the unemployment rate--and the Current Employment Statistics Survey--a survey of establishmnets used to determine the number of payroll jobs.

A statistical phenomenon is at work in the current job-loss recovery. The population survey is showing more employment growth than the establishment survey, mainly because of overzealus estimates of population growth from undocumented immigration (the Census bureau is almost certainly overstating immigration, particularly when considering the tightened restrictions and militarization of US borders in the post-9/11 era, and the economic slowdown which dampens the incentive to migrate).

Pause here and imagine you are Karl Rove. Which jobs number would you choose to emphasize? Now remember, the one showing lower numbers (the establishment survey) is the one that was designed to measure jobs for the purpose of evaluating economic policy.

Guess which one the administration chose? That's right, the rose-tinted household survey, a move that startled even Alan Greenspan to comment on such a disingenuous use of statistics:

The Federal Reserve has just thrown cold water on the household data. It concludes that the gloomy payroll data is essentially accurate and that the household survey is probably off base.

"I wish I could say the household survey were the more accurate,'' Alan Greenspan, the Fed chairman, said in his testimony at a House hearing on Feb. 11. "Everything we've looked at suggests that it's the payroll data which are the series which you have to follow.''

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