The partisan duel over the latest Bush trick to embellish economic data.
By relying on existing businesses, the Establishment Survey may miss potential growth, especially when a recovery is underway. But it doesn't only underestimate. There are ways in which the Establishment Survey can overcount.Say you work 20 hours at Starbucks and 30 hours at Wal-Mart in a week, you'll be counted as two payroll jobs when you're really only one employed person. There are about 7 million such multiple job holders in the United States. Plus, while it's slow to count new companies, the Establishment is also slow to register dying companies. "The payroll survey probably overstates the weakness in the job market. I just don't think it overstates it by any significant amount," says Mark Zandi, the straight-shooting chief economist of Economy.com.
And even with its flaws, the Establishment Survey is "measurably more accurate than the Household Survey," says Zandi. It's bigger and more comprehensive. BLS says it has become more adept at latching onto new companies, by, for example, checking state records more frequently.
The Household Survey has its share of fuzzy math, too. BLS economists make calculations based on sampling and the census' estimate of population, which is a constantly moving target. One of the reasons the household figures look so good is that a census revision caused it to add more than 500,000 working Americans in January.
It's important to remember that the monthly numbers BLS reports are preliminary and the bureau often revises the monthly data it has already reported. In his paper, John Kitchen suggested that in a period when the Household Survey is rising, we should expect the payroll surveys to be revised sharply upward—in other words, BLS should provide ex post facto acknowledgement that it misread the true health of the job market. But so far in this cycle, that has yet to happen—in fact, BLS is actually revising recent figures slightly downward—suggesting that the Household Survey increases aren't yet as significant as its advocates hope.
The Establishment Survey may not be the best means for predicting job growth in the future. But the Household Survey, it turns out, isn't necessarily a better means for predicting job growth in the past.
Daniel Gross is the Moneybox columnist for Slate and the business columnist for Newsweek. You can e-mail him at email@example.com and follow him on Twitter. His latest book, Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation, has just been published in paperback.