Did the Government Really Hire that Many People?

Michael Mandel

Is the unemployment rate really 4.4%? I've got some doubts.

A big reason why the unemployment rate has been dropping is an apparent hiring spree by government bureaucrats. The number of people reporting that they had public sector jobs rose by 147,000 in October and 169,000 in September.

Since last March, public sector employment has risen by a very solid 430,000. Without this increase, the unemployment rate would still be stuck at 4.7%, just what it was in March.

However, these numbers come from the household survey, which is based on responses from individuals. The payroll survey, which is based on data from unemployment insurance records, shows a much slower growth of government jobs...only 183,000 since March.

430K vs 183K--that's a big difference. It says something when we can't even figure out how many people are being hired by our public servants.

Which number should we believe? If the lower number is true, then the unemployment rate is closer to 4.6% than 4.4%. I tend to lean that way.

However, to be fair, there are some reasons why the higher number might be more accurate. One possibility is that there's massive hiring by the Federal government in intelligence agencies like the CIA, the National Security Agency and the like, which aren't included in the payroll survey. Another possibility is that small school districts have been hiring like mad. They would have been missed on the initial survey, but that will be picked up as the statisticians revise their data.

    Before it's here, it's on the Bloomberg Terminal.