Gov’t struggles with jobs data as pink slips mount

Discussion

January 10, 2009

Anonymous The Joplin Globe Sat Jan 10, 2009, 09:38 AM CST

WASHINGTON (AP) — It’s true the government reported Friday that employers cut a net total of 524,000 jobs in December. But that’s not the final word.

The Labor Department has sharply revised its payroll numbers for the past several months as its statisticians struggle to keep up with the fastest labor market declines in three decades.

Some of the changes are a result of additional data coming in from the 150,000 businesses and government agencies that the department surveys each month. But most of the changes that occur from the first estimate of total payrolls until the final figure two months later reflect updates to the seasonal adjustments made by the department’s numbers crunchers.

Those adjustments have produced huge changes in recent months. For example, the Labor Department initially said Oct. 3 that payrolls had dropped by 159,000 in September. Two months later, the government’s revisions had boosted the total to 403,000.

October’s figures have also been significantly revised up, from an original estimate of 240,000 to the 423,000 level the department issued Friday.

The department makes seasonal adjustments to smooth out the volatility that stems from temporary factors, such as winter holiday seasonal hiring by retailers. Those short-term changes distort the unadjusted figures and would obscure any underlying trends, department analysts say.

But if retailers don’t hire as many temporary workers, for example, as seems to have happened this year due to the slumping economy, the seasonal adjustments themselves must be adjusted.

The surge in layoffs in recent months can also throw off the government’s models, said Angela Clinton, an economist at the department’s Bureau of Labor Statistics.

The changes are also a result of additional information from employers. The department receives responses from about two-thirds of the companies it surveys for its first estimate. About 85 percent of companies respond for the second estimate. Most of the rest respond for the third estimate.

That’s a sharp improvement from the early 1980s, when most respondents submitted their surveys by mail and only one-third of responses were used in the first estimate. Now, most do so online or over the phone, the department says.

As for the seasonal adjustments, Labor Department analysts say they are getting a better handle on them. November’s initial estimate of job losses was revised downward Friday by only 51,000, from 533,000 to 584,000.

That’s less than September’s and October’s initial revisions and indicates the department is doing a better job with its first estimate, said Angela Clinton, an economist at the department’s Bureau of Labor Statistics.

December’s number will be revised next month and again in February. And many economists expect the job losses will be greater.

“We haven’t had losses like this in a long time, so it’s hard to know what’s going to happen next month,” Clinton said.