A Tale of Two Employment Surveys


Source: New York Times

Who do you believe: The people who write other people’s payroll checks, or the folks who pay themselves?

That’s the discrepancy between the two key payroll surveys. This is not a matter of semantics or obscure statistical theory: The interpetation of this data divergence of the most commonly referred to surveys is the key to determining whether we are in a self sutaining recovery or not. And that will have a significant impact on policy makers: Whether the FOMC changes their bias language tomorrow, and how soon thereafter they start raising short term interest rates.

Ultimately, this issue — in conjunction with the situation in Iraq — will be the determinant of the 2004 Presidential election.

Here’s what the NYT had to say on the matter:

“The self-employed are a group that statisticians have a hard time dealing with, and the apparent growth in that group may or may not be a good sign for the economy. Some people who say they are self-employed may really be out of work and trying to bring in money as consultants or freelance workers. Others may be doing very well, living a dream of boss-free success.

In any case, the government reported that the number of self-employed workers rose by 156,000 last month, to 9.2 million. That gain was a primary reason that the unemployment rate dropped to 5.9 percent.

The number of people on nonfarm payrolls – a number that excludes the self-employed – rose just 57,000, far less than expected, and that led most analysts to call the report a disappointment.”

Grasping at the Statistics on the Self-Employed
By Floyd Norris
NYT, December 6, 2003

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  1. nyc99 commented on Dec 8

    Employment Surveys – Believable or Not?

    Barry L. Ritholtz helps clear the confusion resulting from the discrepancies we see in employment numbers. Who do you believe: The people who write other people’s payroll checks, or the folks who pay themselves?The Big Picture: A Tale of Two…

  2. Anonymous commented on Dec 8

    When you were making a buck and a half annually and find yourself out of work it is best to claim self-employment as opposed to the “not wanted by anybody” that unemployment implies.

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