Stupid Republican Tricks On the Op-Ed page of The Wall Street Journal today is another example of the strange tactic of some Republicans of pretending that problems just don't exist. Economist Allan H. Meltzer argues that job losses over the past few years are illusory.
Has Alan Greenspan misread the employment data? So it seems. At their meeting last week, Mr. Greenspan and his Federal Reserve colleagues referred to the "weakening" labor market. It isn't so. And it is not just the Federal Reserve that repeats this mistake. Most professional articulators deplored the loss of jobs and the weaker labor market after the last employment report appeared a few weeks ago.
Don't believe these reports or the recently announced 6.8% productivity growth rate. And don't believe the widely reported loss of millions of manufacturing jobs since the Bush administration took office. All these alleged facts are either wrong or greatly exaggerated, based on the same faulty source.
Meltzer argues that the way the government calculates job growth is flawed, since the figure are based on two different surveys. One, the Establishment Survey of businesses quickly catches job losses, but the other, the Household Survey is slower at picking up job gains.
There is nothing new about the difference between the two surveys. They normally differ, and the difference is not constant. After every recession, the difference increases because many new firms start. It takes a while for the Labor Department to catch up, so the number of jobs reported by households drifts further away from employment reported by firms. The difference narrows in long expansions such as the 1960s and the 1990s as the Labor Department learns about the new firms. . . . Recently, the difference has grown rapidly, more rapidly than in other recoveries. In August, the difference was nearly eight million jobs. That's one reason why productivity growth has been so strong. Productivity has increased, but so has employment.
A reasonable sounding argument, but he basis much of his conclusion on a big galloping lie:
For the year ending in August, the Establishment Survey shows a loss of 463,000 jobs. The Household Survey shows that the economy added 313,000 new jobs in the same period. The Establishment Survey also shows the much discussed job loss since the Bush administration took office -- 2.7 million jobs. The Household Survey reduces the loss to 220,000, not good but far more typical of a period with recession and slow recovery. As the speed of recovery picks up, the latter loss will disappear by early next year.
This is a lie that was trotted out in early September to explain away the wretched August jobs report. I blogged about it then. The Labor Department itself shot down this argument handily:
In a statement to Congress' Joint Economic Committee, Kathleen P. Utgoff, commissioner of labor statistics, noted, "Some observers have speculated that the household survey provides a better indication of the trend in employment at and around turning points in the business cycle. It is our judgment that the payroll survey provides more reliable information on the current trend in wage and salary employment."
Utgoff said the much larger size of the payroll survey sample, which is benchmarked each year by comprehensive data from federal unemployment insurance returns filed by firms, makes it more reliable.
Since November 2001, the end of that year's recession, the number of payroll jobs has declined by more than 1.2 million, while employment shown by the household survey has gone up by about 1.4 million. However, a substantial portion of that increase was due to a population adjustment introduced last January, and Utgoff characterized employment shown by the household survey since the recession's end as "essentially flat."
It seems pretty ballsy for the WSJ to put this editorial in a newspaper targeted at financial professionals, a group that has had significant job losses in the last three years. I doubt that such an editorial would appear in any Midwestern paper, since we know that the job losses in the manufacturing sector are real. The jobs haven't moved from one employer to another, they are gone. Then General Mills plant just a mile from my home closed last year. The DaimlerChrysler factory built five years ago employs fewer workers to build more Jeeps than the antiquated plant at the end of my street, and those surplus jobs are gone. Hell, my own company has one third of the employees it had just four years ago, and we just had a record-setting year. Toledo isn't experiencing a statistical fluke, it's losing well-paying manufacturing and professional jobs. And the same is happening all over the country. I quoted this in my blog post from early September:
"The jobs report is just awful," said Bill Cheney, chief economist at John Hancock Financial Services in Boston. "Businesses across the board are figuring out ways to do more with fewer people. Practically every sector of the economy got rid of jobs in August."
Cheney also voiced a concern shared some analysts that if employment does not begin to increase substantially, the strong economic growth now expected for the rest of this year might begin to wane in 2004.
"If even 5 percent or 6 percent . . . growth isn't enough to get any net hiring, the risks rise that the stimulus from the tax cuts and defense spending could produce a one-time boost that will fizzle out next year," Cheney said.
10:55:18 PM 
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