Too Much Fudge In Job Numbers?Gene Koretz
Is the Labor Dept. overestimating the number of jobs being created each month? That's the question suggested by two seemingly contradictory reports.
Each month, Labor statisticians add a bias adjustment, or "fudge factor," to the payroll job count to correct for jobs created by new business startups that are missed by its survey. The department recently announced that it was raising the fudge factor to 165,000 jobs per month for the fourth quarter. And that means that its regular survey picked up only 29,000 new payroll jobs out of the 194,000 reported for October.
Labor Dept. technicians acted because new data indicate that they have been undercounting jobs for some time. They now believe, for example, that they missed about 760,000 jobs from March, 1993, to last March.
The problem is that the Commerce Dept. publishes another index, which reflects net business formations. And while this index rose through 1993 and early 1994, it has been trending down since March of this year--from 127.5 in that month to 123.5 in September.
"One of these series has to be wrong," says economist Douglas Lee of NatWest Securities Corp. "Either new startups and the jobs they produce are rising, or they are both slowing in tandem."