By Dan Kennedy • The press, politics, technology, culture and other passions

About that “zero” job-growth number

The economy gained 45,000 jobs in August — 62,000 in the private sector. Yet the media have been telling us since Friday that the United States added “zero” jobs, as the economy essentially ground to a halt.

I’m not here to defend anyone. In fact, 62,000 is a terrible number, and is really all the proof we need that the fragile recovery has flickered out. But for news organizations to adopt the methodology used by the government amounts to a form of innumeracy.

The key to this is that the government counts the 45,000 Verizon workers who were on strike as having lost their jobs. There may be reasons for the government to do that, but it’s ludicrous for the media to repeat it. They didn’t lose their jobs, they’re back at work and thus those 45,000 jobs shouldn’t enter into anyone’s calculations.

So who did lose their jobs? Government workers — 17,000 of them. And, as I already noted, the economy added 62,000 private-sector jobs. Thus there is no basis for asserting that there was zero job growth.

Oh, wait — there is one thing: the “optics of a giant zero in the jobs column,” as the New York Times puts it. It’s a stark bit of political symbolism. It’s just that it also happens not to be true.

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  1. Stephen Stein

    Conservatives like to remind us that Obama keeps blaming Bush for the state of the economy in 2009.

    But I’d like to remind them that 0 is a whole lot larger than -800K (which is the number of jobs the economy was hemorrhaging when Obama took office).

    • Dan Kennedy

      @Stephen: Let’s not forget that Reagan and Bush Sr. spent 12 years blaming Carter.

  2. Dan, both you and the larger media have it wrong. There were FEWER than zero jobs created! That’s right.

    How can that be?

    1. Just accounting for new entrants into the labor market, we need to create 90,000 jobs a month. We didn’t do that.

    2. People are falling outside the BLS counting every month because they’ve exhausted ALL their benefits. Right now more than 46% of the unemployed have been so for longer than 27 weeks. How many people have fallen off the BLS radar? Tough to say. Nobody wants to count them!

    Dan, just to get us back to the employment levels of Dec 2007, we’d have to average 245,500 new payroll jobs per month (ibid.) for 6 years.

    Of course, there’s some disagreement about these numbers. Depending on who you’re reading, the numbers for sustaining employment will be 70-200+k.

    Other good news/bad news issue: retirement of baby boomers. They are retiring, which frees up some space in the job market, but from what I’ve seen I’m not sure if anyone knows the numbers exactly. Oh, and the bad news? Baby boomer retirement has probably slowed because of the crappy economy.

    From the NY Times article you cited: “Revised numbers showed that job growth in June and July was smaller than previously indicated.” — THAT’S a problem. More often than not, revisions go up, not down.

    I could go on an on … this is all just to say, I don’t understand your sunshine take on the unemployment numbers.

    For more reading:

    • Dan Kennedy

      @Bill: “Sunshine take”? Not me. But I think you’re confusing apples and oranges. A net total of 45,000 jobs were created in August. That’s entirely separate from how many jobs need to be created in order to accommodate a growing work force. As you say, we need far more than 45,000 jobs a month. My point is that 45,000 is not zero.

  3. L.K. Collins

    Didn’t Obama say shortly after he was elected, that if he hadn’t fixed the economy in three years, he didn’t deserve to be re-elected?

    Fair to judge Obama on his own commitments, isn’t it?

    The difference between now and 2008 is that Obama has is name added to the list of those at fault for our ailing economy.

    But I guess that’s what you get believing in the messianic cult that was built around him.

    Can’t help but notice all of the liberal pundits that are now tagging Obama as incompetent. Buyer’s remorse seems certainly to have set in.

  4. Mike Rice

    It’s always someone else’s fault, politics in America today along with inaction. Pathetic.

    Meanwhile, communist China is waiting in the wings.

  5. Christian Avard

    Another missing piece to the debate over the lack of job growth is the fact major corporations in the last quarter saw record profits … again. CBS reported on it last night. My question is why aren’t these corporations who are seeing record profits investing in employment? Seems like an obvious thing to do. Then again, this is the business world. It’s certainly not the friendliest.

  6. Michael Wyatt

    No offense, but I’ve never looked to journalism majors to understand numbers of any sort.

    Think markets more reacted to the revisions to the prior two months which knocked things down by 50,000. On a positive note, think Obama’s reigning in of the EPA on Friday may signal that he’s finally getting the message.

  7. Mike Benedict

    @MikeRice: If any other country was having the success China is seeing, the GOP would hold them up as a model of how to do things right. China has little regulation enforcement, gives lots of breaks to employers, and doesn’t suffer from those pesky little things like a free press. Of course, it is communist, so …

    @ChristianAvard: Businesses are hiring, just not here. They hire overseas, where wages are cheaper and none of those dumb rules about keeping your employees, you know, alive, apply.

    @MichaelWyatt: It doesn’t make a whole lot of sense to hire a bunch of scientists and say, “protect the environment and our health” and then take away their tools for doing just that. What strikes me as ironic is how if not for the EPA lots of old guys running companies and bitching about the government might very well otherwise be six feet under due to lung and other cancers.

  8. Michael Pahre

    The federal jobs report may be stated as being for “August,” but it is formally the jobs situation evaluated for the middle of the month, i.e., the 15th (or 16th). The Verizon strike was still going on as of that date, so the jobs report for August was correct in stating that those 45,000 people were out of work.

    And there is nothing wrong with the media repeating the government’s numbers, since the experts — from the Federal Reserve to the influential Calculated Risk blog — rate the monthly unemployment report as one of the U.S. economy’s top economic indicators.

    What you are right about is that the media should be stating the numbers with an asterisk. Still, there’s nothing wrong with the government’s quoted numbers.

    • Dan Kennedy

      @Michael: Not to quote myself, but let me quote myself: “The key to this is that the government counts the 45,000 Verizon workers who were on strike as having lost their jobs. There may be reasons for the government to do that, but it’s ludicrous for the media to repeat it.” Those folks did not lose their jobs, and they were not unemployed.

  9. Mike Rice

    @Mike Benedict: Something tells me that purchasing a copy of Darth Vader’s oops, Dick Cheney’s recently released book isn’t on your to-do list.

  10. @Dan: I’m going to actually agree with you here. Any job growth – even one job created – is more than zero. Period. Exaggerating and conning people but manipulating data should never be tolerated.
    I’m not a big fan of Robert Reich or his ilk. I can never forgive him for his endless apologies about Clinton’s bad public policy with the trade deals that carved out numerous job sectors from our economy and sent them overseas. However, on his blog, he wrote this, which took me a bit by surprise:

    “The Bureau of Labor Statistics reported Friday no jobs were created in August. Zero. Nada.
    Well, not quite. The strike at Verizon reduced the labor force by 45,000. Minnesota government employees returned to work, adding 22,000. So in reality, America added 23,000 jobs. Almost zero.
    In reality, worse than zero. We need 125,000 a month merely to keep up with population growth. So the hole continues to deepen.
    Since this Depression began at the end of 2007, America’s potential labor force – working-age people who want jobs – has grown by over 7 million. But since then the number of Americans with jobs has shrunk by more than 300,000.”

    Even I didn’t realize this or think of this, assuming that it is true. 125,000 jobs a month? That’s what we need just to break even with people growing up into the workforce never mind making up for the damage that both political parties have done to the country? That’s crazy.
    Of course, not a peep from Reich about the trade deals, globalization, or what his contributions to this mess (I would add, illegal immigration, which even Krugman and others admit have depressed wages in the United States). Instead, his solutions are more of the same that hasn’t worked: More government spending, more make-work, more $100 million to create 20 jobs, etc., along with some sort of government wealth redistribution program although he isn’t specific about that one. And he doesn’t make any suggestions on how we pay for all of this either. I mean, as everyone has already seen at this point, you can take every last cent of earnings from the rich and still not have enough money to cover the deficit for this year, never mind more stimulus.

  11. Let me also add this, because while I have some answers, I don’t have all the answers. What I do know is that we don’t make anything any more and because of that, we’re not creating any real wealth. The money flipping creates wealth for the very few. And now, there is class warfare envy about this from all sectors (including those seemingly educated who think that everyone was going to get to that point when most of us already accepted that we were never going to get to that point).
    Simply put, we don’t take a tree, make a chair, and sell that chair; we take the tree, ship it somewhere else to be made, and then buy it, if that. So a fraction of the process – the means of production – is taken right out of the puzzle on almost everything now. Instead of the person making the chair working and the clerk selling the chair working, only the clerk is working.
    And for all the talk of exports saving the country, the data tells us otherwise: The bulk of exports out of the United States are natural resources, like oil/natural gas, minerals, wheat, wood, and food. Yes, there are a few industries like aircraft, semiconductors, cars/parts, plastics, telecom, and pharma, that are doing well. But they make up about 25 percent of exports at this point.
    The trade deficit – which can be hundreds of billions some years – is the same as just taking all the money out of the economy and putting it on a slow boat to China, as Douglas Wilder used to say.
    Essentially, globalization has put us in a race to the bottom. The economy is correcting itself to lower our standards to those in Mexico, Brazil, and China. Combine this with a federal government that is too big and tax policy that is all over the map and you have even bigger problems.
    However, no one will admit to any of this because some professor in economics class taught them otherwise or they don’t hear about it on the evening news. There are reams of historical information that tells us otherwise though. Every president until the 1960s understood the importance of tariffs not only as a revenue mechanism but also one that keep the American standard of living high and the envy of the world. Washington knew this, Jefferson, a free trader later changed his mind after becoming a trade ambassador; Lincoln knew it (We can buy from British Steel and build the rail or buy the steel here and build the rail, keeping our money here); TR, a hero to many Republicans who busted up the big trusts, FDR, etc. Only until JFK started monkeying with the tariff rates did the aftereffects in the early 1970s (and the oil price shock) bring on the decline of the middle class.
    And no amount of wealth redistribution or government programs can make up for the wealth generated by the means of production.
    Let me close by saying that we need to do it something about this. There are badly needed defense cuts coming and soon, there will be hundreds of thousands of servicemen and servicewoman coming back from overseas with nothing to look at but part-time jobs at the local convenience store.

  12. Aaron Read

    It’s not as ludicrous as it seems, since job creation numbers are exceptionally fuzzy math to begin with. If the whole process can’t really be trusted to come up with “real” numbers, then I don’t see much problem with running with what the gov’t gives you when it happens to give you a nice headline in the process.

    Never mind unemployment numbers, which reflect the wonderful fiction that when someone stops looking for work (i.e. runs out of unemployment insurance) then they aren’t unemployed anymore! Magic!! [does jazz hands]

  13. C.E. Stead

    DK – live by the sword, die by the sword. In the past, when laid off workers were recalled, and there was a lot of this in stimulus spending, it was claimed as jobs CREATED, not jobs resumed. If I had claimed that Obama hadn’t created any jobs, the reaction would have been that people were back to work and that was al that was important.

    That wasn’t ‘true’ either.

    If the metrics are caclulated the same way for government statistical purposes, it represents a valid barometer. The reason this got so much attention is that the factors do not usually so neatly offset as to leave a zero in their wake.

    If you seize the credit, you have to take the blame. The fact that government doesn’t create jobs at all has never stopped anybody bragging.

    (BTW – do you have a citation for GHW Bush blaming Carter?)

  14. Aaron Read

    Well, google the phrase “blame Carter” and you’ll see people are STILL blaming him for all sorts of things: the instability in the Middle East, the housing crisis, the credit crunch, etc etc etc.

    It seems logical that if he’s still being blamed even though FIVE other Presidents have come after him, that at some point GWH Bush probably blamed him, too.

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