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Disparate Jobs Data Add Up to a Mystery

August 23, 2004|David Streitfeld | Times Staff Writer

More than half a million unemployed people say their fortunes improved dramatically last month: They got a job.

Now if only someone could prove it.

According to the government's regular survey of the nation's households, 629,000 people started work in July. But when the government asked companies how many jobs they had added to their payrolls, the answer was only 32,000.

If they're not working in a store, office or factory, what are those 597,000 other folks doing? Working as consultants? Selling bric-a-brac on EBay? Mowing their neighbors' lawns?

Or are they actually unemployed but so ashamed that they're lying about it?

"I can't tell you," said Tom Nardone, chief of the Division of Labor Force Statistics of the federal Bureau of Labor Statistics. "We just don't know why there's a difference between the surveys."

The split was also pronounced in California, where the state's payroll survey showed employers cutting 17,300 jobs in July. But the household survey found a gain of 44,000 jobs.

These new workers resemble the dead in the movie "The Sixth Sense": Only some people can spot them.

Those catching a glimpse seem to be mostly Republicans. Vice President Dick Cheney, for instance, can see them clearly. They're freelancers, private contractors, people working at home. They're not on the roster of any corporation's human resources department but are prospering anyway.

They're people, for example, like his wife.

At an Aug. 11 campaign appearance in Missouri, the vice president said Lynne Cheney "does very well in terms of her own professional career and line of work, but she doesn't work for anybody.... If you're in business for yourself, if you've got your own small business and so forth, you don't get picked up by those other numbers."

The "other numbers," the corporate payrolls, have been slumping this summer.

That's an ominous sign for the reelection prospects of Cheney and President Bush. Whatever attention isn't being focused on Iraq is on the economy, which means jobs. Rising employment makes people feel secure. They know that if their own job doesn't work out, there are many more out there.

Calculating employment is a massive task. To estimate payroll levels, the Bureau of Labor Statistics queries 400,000 so-called work sites every month about their hiring activities.

Whether the reason is outsourcing to China and India, rising corporate healthcare costs, increased efficiencies from technology or just general queasiness, the work sites haven't been in a hiring mode for a long time. Since March 2001, two months after the Bush administration took office, company payrolls are down a cumulative 1.2 million.

But when the government asks 60,000 people directly about employment, as it also does every month, the jobs picture looks healthier. Although the 629,000 jump in July was unusually high, the cumulative increase in the household survey since March 2001 is 1.8 million jobs.

Naturally, the administration likes the household numbers much better. Cheney isn't the only one championing them.

"The divergence between the household and the payrolls survey is very striking, and I'll leave it to statisticians to try to reconcile those numbers," Treasury Secretary John W. Snow said after the July numbers were released Aug. 6. "I suppose that the real number lies somewhere in between."

Nardone, the BLS statistician, has been trying just such a reconciliation. By smoothing, revising and adjusting the July data, he eliminated a third of the new employed, leaving 402,000 unexplained new workers.

But over the longer term, tweaking the household survey to bring it in line with the payroll survey actually increased the gap. Since July 2003, the cumulative difference, even after reconciliation, is 1 million jobs.

Commentators and economists with conservative affiliations have been echoing Snow's remarks, when they're not exceeding them.

"The BLS for more than a decade has been undercounting job creation, unable to keep up with changes in the structure of American business," columnist Robert Novak charged recently.

Allan Meltzer, a Carnegie Mellon University economist and a scholar at the American Enterprise Institute, a conservative think tank, said the terrific household numbers might overstate what is really going on, but that "the truth is much better" than the weak payroll numbers, which signal a troubled economy.

The summer's lousy payroll numbers, Meltzer said, "just don't fit very well with what we're seeing -- rising wages, increasing disposable income, improvements in manufacturing employment."

Even partisans acknowledge that the household numbers, which are used to calculate the monthly unemployment rate, are highly variable. Although the payroll numbers have increased every month for the last year, if sometimes very modestly, there have been three occasions when the household survey reported a net decrease in jobs.

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