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Adjustments Behind The Numbers Shape Job News

Jul 7, 2012
Originally published on July 7, 2012 8:57 am




This is WEEKEND EDITION from NPR News. I'm Scott Simon. Eight-point-two percent, that's the number economists and politicians are looking at closely. It is the unemployment rate for the month of June. The U.S. Labor Department reported that the economy added only 80,000 jobs last month. As the economy continues its very slow recovery, it's worth asking, is the jobs report always the best indicator? NPR's Sonari Glinton has more.

SONARI GLINTON, BYLINE: Every month here on NPR, we do a bunch of stories about the employment figures. And after a while, regardless of what the actual employment number is, it sort of feels like we've sung this song before. It's from an old familiar score.

RENEE MONTAGNE, BYLINE: The Labor Department released its jobs report, and January - it turns out - was a very good month...

DAVID GREENE, BYLINE: ...69,000 jobs last month, far fewer than most forecasters were expecting.

ROBERT SIEGEL, BYLINE: The government's employment report for December showed 200,000 jobs added to payrolls.

MELISSA BLOCK, BYLINE: ...and they said unemployment would be higher than they previously thought.

GLINTON: More than expected, less than expected. This was one of the few months where economists' expectations came close to the reality. The forecasts were for 90,000 jobs. The Labor Department says the economy gained 80,000. But that was this time.

PAUL ISELY: Well, I mean, there's lots of reasons that we're wrong.

GLINTON: Paul Isely is a professor of economics at Grand Valley State University.

ISELY: Right now, what we're seeing is the potential for the seasonal adjustment to be off by a little bit. And it doesn't have to be off by much to cause these numbers to go way array.

GLINTON: You see, the employment numbers we get, how many jobs were added, well, they're adjusted each month. Employers pick up a whole lot of workers for the holidays in December, and factories tend to shut down in the summer time. Economists account for those seasonal changes so we can get a clear picture of what's happening each month. Paul Isely says things have changed since the Great Recession, but how we adjust for those seasonal factors, that hasn't changed.

ISELY: So it gives people this thought process of, oh, it's the beginning of the year and look at how big the job numbers are. We're really accelerating out of this recession and we're going to go gangbusters.

GLINTON: And then, in the middle of the year, people go...

ISELY: Oh, it's so bad. And because it's bad, I need to draw back. And it can have some real affects on how businesses and people plan for the future.

GLINTON: Isely says the jobs picture is probably a lot less volatile than we think. Mark Vitner agrees. He's an economist with Wells Fargo. He says when you back at last year, as a whole, things were steady. But in the heat of last summer, people were, well...

MARK VITNER: ...freaking out that the - that we were on the verge of another recession. And I think the same thing may play out this year, that we'll see that we didn't - that we shouldn't have been as optimistic about the apparent pickup in hiring that we saw earlier this year. And that the fear of a slowdown in the second quarter is probably overblown.

GLINTON: That all raises the question: Are us economics geeks missing the forest for the trees? Linda Barrington is a labor economist at Cornell University.

LINDA BARRINGTON: When we look at the monthly unemployment number, we are not just looking at the leaves instead of the forest. We're trying to predict the shape of a specific leaf.

GLINTON: Barrington says there's a really big question nobody is asking about this recovery. It's our third jobless recovery in 20 years. Why do we keep having them?

BARRINGTON: What's changing in the restructuring of jobs in the U.S. that is making it harder and harder for people to get back on their feet after a recession has hit? We're not going to answer that by looking at this month's numbers by everybody holding their breath to see what Friday's number is going to be.

GLINTON: Try changing that in an election year.

Sonari Glinton, NPR News. Transcript provided by NPR, Copyright NPR.