How bad does economic reporting get in a presidential election year? Consider last week’s performance by The New York Times.
Exhibit No. 1: All the papers, not just the Times, made a huge deal out of job losses during last two months of 22,000 and 63,000. The latter figure, the Saturday Times exclaimed, is “the biggest monthly loss in five years.”
In fact, five years ago - January to August 2003 - nonfarm payrolls fell by 444,000. Did that massive job loss in 2003 mark the start of recession? Of course not.
Yet New York Times writer David Leonhardt declared an “End to the Good Times” on March 8 by claiming three consecutive months of job loss (it was actually one or two months, depending on which survey you use) proves “recession … is now unavoidable.”
Today’s hysteria looks even more absurd if you dig into the data.
If that were true, then 2003 should have been the start of a really nasty downturn. Indeed, Times columnist Paul Krugman, in an interview with Rolling Stone that May, announced the economy “is, for all practical purposes, in recession - whatever they say officially.” The economy has added 8.2 million payroll jobs since then.
Today’s hysteria looks even more absurd if you dig into the data. Only half the unemployed in February had actually lost a job, and a fourth of those were temporary layoffs. The rest either quit or did not have a job before.
And half the unemployed were out of work for fewer than 8.4 weeks - down from an average of 8.7 weeks during the prior four months. Only 17.5 percent had been unemployed for 27 weeks or more - down from 19.3 percent in November.
Finally, only 4.8 percent said they were unemployed - well below the 5.8 percent average since 1960. Adding discouraged workers - those who say they’ve stopped looking for a job out of frustration - just lifts that jobless rate to 5.1 percent.
Exhibit No. 2: Peter S. Goodman’s March 2 Times business feature asking, “Is a Lean Economy Turning Mean?”
Like Krugman and Leonhardt, Goodman tried to change the subject - from unemployment to the percentage of the population over the age of 16 that is working at a civilian job. But a drop in that employment-population ratio does not prove, as Goodman imagined, that it is “tougher than ever to find a job.” It may just mean more people prefer to go to school, take care of children or retire - or serve in the military.
Goodman made much of the fact that “62.8 percent of all Americans age 16 and older were employed at the end of last year, down from the peak of 64.6 percent in early 2000.” So what? Some 405,000 more young people were on active military duty in 2007 than in early 2000 - and only civilian jobs get counted among the “employed.” There are also more aging baby boomers retiring.
Besides, early 2000 was the pinnacle of the high-tech stock bubble. Looking at 1993 to 2000 (the Clinton years) as a whole, 63.4 percent of the population was employed in civilian jobs - insignificantly different from last month’s figure of 62.7 percent, despite the enlarged armed forces.
Exhibit No.3: In a March 5 report, claiming low unemployment rates are “deeply misleading,” Leonhardt suggested that full-time jobs have become so scarce that hundreds of thousands were supposedly forced to work in part-time jobs. “Over the last year,” he said, “employment has risen by 100,000, but … there are also 600,000 more people who are working part time because they could not find full-time work.”
In fact, the number of full-time jobs rose by 445,000 over the last year, while the number of part-time jobs fell by 297,000.
Moreover, the “part-time” category includes anyone who worked fewer than 35 hours during the survey week - often because they work in occupations with variable hours, like construction or retailing. Those working short hours “for economic reasons” (including bad weather and seasonal jobs) still add up to just 3.3 percent of all workers, and most aren’t looking for a 9-to-5 schedule. The number of part-timers who said they “could only find part-time work” has fallen since December and is only 13,000 larger than a year ago.
Exhibit No. 4: In that March 5 report, Leonhardt frets about “the percentage of prime-age men (those 25 to 54 years old) who are not working … In January, almost 13 percent of prime-age men didn’t hold a job, up from 11 percent in 1998 [and] 11 percent in 1988.”
Only 2.5 percent of men who aren’t in the labor force claim to have looked for work or to be discouraged from looking. Yet Leonhardt claims “various studies” show that “these nonemployed workers … would, in fact, like to find a good job” but “can no longer find work that pays as well.”
This conflicts with other information that’s readily available. For example, the University of Chicago’s famed General Social Survey shows that the percent of Americans satisfied with their jobs has hovered near 86 percent for decades, while the percent who are “very satisfied” with their jobs rose from 44.9 percent in 1996 to 49.4 percent in 2006.
One of Leonhardt’s two named sources is Jay Stewart of the Bureau of Labor Statistics - yet Stewart’s research undercuts the “no good jobs” claim. In a 2006 study in the journal Demography, Stewart uncovered a “cadre of men who spend large amounts of time not working. In an average year, about 85 percent of male nonworkers are men who will end up spending nearly one in five years not working, and 68 percent will end up spending one in three years not working … In the years that they do work, these marginal workers tend to work fewer weeks.”
How do these lazy fellows survive between rare jobs? For some, it’s the European way - abusing disability benefits and other government aid. Stewart cites “convincing evidence that the liberalization of the [disability insurance] program in 1984 resulted in an increase in the nonwork rate.” Stewart found that even more of these chronic nonworkers depend on wives, parents and other family members.
What do these nonworking men do? Stewart found that “household work and education account for only 31 percent of the time freed up by not working. The remaining 69 percent is spent in leisure and personal care activities.”
The US job market has sometimes been better than it was in the past two months, but it has also been much worse (as in 2003) without telling us anything useful about the future.