New Economy, Old Math is an article in TCS Daily by Congressman David Dreier (R-CA), who is Chairman of the House Rules Committee. He is calling for new tools in how we measure employment. Old measures do not consider the rapidly growing trend of self-employment and other nuances captured by the Current Survey Series household survey.
In fact, the public and private sectors have historically overlooked the household survey and relied on the payroll survey to gauge national job growth. When we look back to the pre-WWII economy, favoring the payroll survey makes sense. At the time, there was relatively little variety in the types of jobs available or the way they were created. Familiar companies, such as U.S. Steel and General Motors, dominated national employment.
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The disparity between these jobs surveys became particularly apparent throughout the early stages of the post-recession recovery in 2002 and 2003. While the payroll survey lagged for months, the household survey demonstrated a strong and growing workforce, where self-employment accounted for a third of all job creation.
Following the end of the recession in November 2001, job creation in the household survey had rebounded by the following May. Although there were some ups and downs in the ensuing months, the household jobs numbers never again dipped below the November 2001 level. By November 2003, more than 2.2 million net new jobs had been created, and the pre-recession jobs number had been surpassed.
By contrast, the payroll survey did not demonstrate net job growth until August 2003, and didn't return to the November 2001 level until April 2004, nearly two years after the household survey had caught up. And the payroll survey's pre-recession jobs number was not surpassed until February 2005. This prolonged lag in the payroll survey's job creation numbers led to claims of a "jobless recovery." While every other major indicator of economic strength surged forward, from GDP to productivity, the payroll survey persisted as an anomaly of negative news. In an already dynamic economy, the increased churn created by economic expansion only highlighted the growing inadequacies of a Depression-era payroll survey. Using mid-20th Century methods to take a snapshot of the 21st Century employment picture simply does not work.
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