U.S. summer job gains underestimated
The government sharply underestimated job gains for most of 2021, including four months this summer in which it missed more job growth than at any other time on record.
In the most recent four months with revisions, June through September, the Bureau of Labor Statistics (BLS) reported it underestimated job growth by a cumulative 626,000 jobs - that’s the largest underestimate of any other comparable period, going back to 1979. If those revisions were themselves a jobs report, they’d be an absolute blockbuster.
In an average month before the pandemic, estimates would be revised by a little over 30,000 jobs, or just 0.02% of all the jobs in the United States. The recent revisions to the jobs reports have been much larger.
The missing jobs surfaced through revisions to the widely watched nonfarm payrolls number that BLS releases each month. The data is considered preliminary until it has been revised twice. The fixes are typically minor, but recent revisions have been big enough to turn a substantial slump into a surprising surge.
These waves of revisions in the same direction tend to happen at turning points in the labor market. BLS relies on highly technical models to adjust for seasonal patterns, business closures and other factors, to catch new trends in the labor market and make revisions quickly.
It’s happened before during this pandemic. Revisions
in the already calamitous months of March and April 2020 found the economy had lost 922,000 more jobs than initially reported. Also, earlier in the pandemic, BLS drew criticism for a misclassification error in a different survey, which BLS economists said greatly understated the unemployment rate. Due to the way certain survey questions were interpreted, millions of workers who said they had a job but couldn’t work due to coronavirus shutdowns were marked as absent rather than as temporarily unemployed.
This time, the payrolls data has been obfuscated as businesses have been slow to respond to government surveys amid the chaos of the pandemic part of a larger pattern in which the deadly virus has wreaked havoc on federal statistics.
Angie Clinton, the BLS section chief who oversees the payroll number crunching, said there have been more large revisions since the start of the coronavirus pandemic, but that revisions are a sign of the system working as intended.
“We’re just improving the estimate using everything we know up through the month we’re releasing, really,” Clinton said. “I mean, it sounds counterintuitive to most people because revisions - they think, ‘Oh, they got it wrong the first time.’ But no, we got it right, based on what the sample told us. But going forward we receive more sample, some corrected records, and recalculate seasonal factors, which together may indicate a different story.”