Jobs nonsense from ZeroHedge
ZeroHedge is ridiculous and terrible, a fever swamp of conspiracism, far-right paranoia, and permabearishness. Spreading disinformation about the employment statistics might not be their worst sin, but decent naïfs often fall for this sort of thing, so it’s worth a refutation.
The Bureau of Labor Statistics applies a statistical model, known as the birth/death model, to its monthly survey of employers—the source of “the U.S. economy created x thousand jobs last month” headline. The survey covers over 600,000 employing establishments, but misses new business formations at first. The b/d model is an attempt to account for those overlooked jobs created by new businesses. (As its name suggests, the model also tries to account for business failures, but in normal times, those are far outweighed by new establishments.)
Ever on the lookout for a gloomy conspiracy, ZH found an advisory firm that says that this b/d model is responsible for almost all the job growth since 2008—93%, to be precise. What ZH doesn’t tell you is that the BLS cross-checks its monthly establishment survey once a quarter with the near-complete coverage of the U.S. formal employment universe provided by the unemployment insurance system, and releases a set of revisions to the employment data every year benchmarked to that UI count. With those benchmark revisions, the BLS retunes the b/d model based on the previous year’s results. Since 2000, the benchmark revisions have averaged 0.1% of total employment; since 2009, 0.0%. Disregarding signs and just averaging the absolute values of the revisions yields 0.2% since 2000, and 0.1% since 2009. (The fact that the averages of the absolute values are slightly larger than the averages of the signed revisions suggests that the monthly measures are not biased in one direction or other.)
What this shows is not that the BLS numbers are fake but, quite to the contrary, that its models are actually very good. And it shows that ZH and its source have no idea what they’re talking about.
Tyler Durden must have gotten punched in the head too many times.