Employment vs. Jobs Discrepancy - December 2013 Data

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Published : January 11th, 2014
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Category : Opinions and Analysis

The wide discrepancy between jobs and employment continues for a third month.

Jobs vs. Employment Discussion

Before diving into the details, it is important to understand limits on data, and how the BLS measures jobs in the establishment survey vs. employment in the household survey.

Establishment Survey: If you work one hour that counts as a job. There is no difference between one hour and 50 hours.
Establishment Survey: If you work multiple jobs you are counted twice. Neither the BLS nor ADP  weed out duplicate social security numbers.

Household Survey: If you work one hour or 80 you are employed.
Household Survey: If you work a total of 35 hours you are considered a full time employee. If you work 25 hours at one job and 10 hours at another, you are a fulltime employee.

Following are numbers from today's BLS jobs releases.

December 2013 vs. December Prior Years

CategoryDEC 2008DEC 2009DEC 2010DEC 2011DEC 2012DEC 2013
Employed Household143,369 138,013 139,266 140,836 143,212 144,586
Jobs Establishment134,425 129,373 130,395 132,498 134,691 136,877

Monthly Averages December 2013 vs. December Prior Years

CategoryDEC 2009DEC 2010DEC 2011DEC 2012DEC 2013
Yoy Change Household(5,356)1,253 1,570 2,376 1,374
Yoy Change establishment(5,052)1,022 2,103 2,193 2,186
Monthly Average Household-446104131198115
Monthly Average Establishment-42185175183182

Notice how closely in sync the household survey has been to the establishment survey in terms of average gains or losses. A divergence developed in 2013.

Here is the data I posted last month (I did not check for revisions).

November 2013 vs. November Prior Years

CategoryNov 2008Nov 2009Nov 2010Nov 2011Nov 2012Nov 2013
Employed Household144,100 138,665 139,046 140,771 143,277 144,386
Jobs Establishment135,130 129,593 130,300 132,268 134,472 136,765

Monthly Averages November 2013 vs. November Prior Years

CategoryNov 2009Nov 2010Nov 2011Nov 2012Nov 2013
Yoy Change Household(5,435)381 1,725 2,506 1,109
Yoy Change establishment(5,537)707 1,968 2,204 2,293
Monthly Average Household-4533214420992
Monthly Average Establishment-46159164184191

Last month the discrepancy between reported employment and reported jobs was 191,000 - 92,000 = 99,000.

This month the discrepancy between reported employment and reported jobs is 182,000 - 115,000 = 67,000.

These discrepancies started in 2013.

I asked the BLS to take multiple social security numbers into consideration. They cannot because all they have is raw counts. ADP could, but wouldn't, citing privacy issues.

However, there are no privacy issues. A program would be trivial to write, but most likely one would not even have to do that. A sort utility extracting and counting duplicate social security numbers would suffice.

I believe Obamacare is the reason for the discrepancy.

Obamacare Effect

Prior to Obamacare
34 hours worked = 1 parttime job household survey
34 hours worked = 1 job establishment survey

Enter obamacare
Person cut back to 25 hours and takes a second job for 10 hours
Here is the new math

25 + 10 = 1 fulltime job on the household survey.
25 + 10 = 2 jobs on the establishment survey.

In my example, the household survey totals up all the hours and says, voilla! (35 hours = full time). So a few extra hours that people pick up working 2 part time jobs now throws someone into full time status – thus no surge in part-time employment, but there is a surge in jobs.

Establishment Survey Jobs Surge Ended This Month

Interestingly, the surge in jobs in the establishment survey ended today. See Big Miss: Nonfarm Payrolls +74,000 vs. 205,000 Expected; Unemployment Rate 6.7% as Labor Force Shrinks by 347,000.

Two Possibilities

  1. Perhaps today's weak job report is a one-time thing. Some economists blamed the weather. 
  2. The other possibility is the Obamacare effect has mostly played out, and Establishment Survey results going forward  will not get a multiple job boost for the rest of the year.

If the Obamacare multiple job surge has indeed played out, monthly establishment survey job gains are going to be weaker than most expect for 2014.

Mike "Mish" Shedlock
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Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. He writes a global economics blog which has commentary 5-7 times a week. He also writes for the Daily Reckoning, Whiskey & Gunpowder, and has over 80 magazine and book cover credits. Visit http://www.sitkapacific.com
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