Employment Truth
by Dr. Doug Cardell
I’ve been asked to clarify the politicized accounts of the recent history and the current state of employment in the US. It’s complicated, but I’ll break it down. While this discussion will focus on current issues, they are a good example of how these differences occur and will remain relevant well into the future. Let’s start with the competing claims. Last month, the Biden administration released a jobs report saying that 353,000 jobs were added to the economy in January 2024, raising employment to 161,152,000. Opponents claim that the economy lost 450 jobs, falling to a level of 154,256,000. Who’s right? As I said, it’s complicated. In some sense, they are both right. The Bureau of Labor Statistics (BLS) uses three different measures to asses employment. One method, the payroll survey, is based on a survey of employer payrolls, that is, how many people got paid. Another method, the unadjusted households survey, is based on a survey of households to find out how many people are employed. The third, the adjusted households survey, adjusts the household survey so it more accurately matches the kind of employees counted in the payroll survey. For example, the payrolls survey excludes farm workers, while the household survey does not. The administration's claim of adding 353,000 jobs is based on the results of the January payroll survey. Its claim of a total of 161,152,000 total jobs is based on the unadjusted household survey. It’s interesting that these two reports contradict each other. The claim of adding 353,000 jobs based on the payroll survey does not mention that this same survey reports total jobs as 157,700,000. The claim of 161 million jobs total based on the unadjusted household survey doesn’t mention that this survey reports a loss of 31 jobs in January following a 683 loss in December. The administration’s opponents are using the adjusted household survey to report a loss of 450 jobs down to 154,256,000 total jobs. The graph below displays the three survey reports for the past seven years.
The first three years show the adjusted household survey and the payrolls survey reporting essentially the same data. The last three years show an increasing disparity between the two. Why? According to the BLS, “Employment estimates from the payroll survey are a count of jobs, while the household survey provides an estimate of the number of employed people. If a person changes jobs and is on the payrolls of two employers during the same reference period, both jobs would be counted in the payroll survey estimates. The household survey, on the other hand, will simply reflect one employed person in its measure.” This means that in the last three years, more people have more than one job. In January, 3,444,000 people may have had two jobs. I say “may have had” because some may have changed jobs in the middle of the month which would lower that number and some may have had three or more jobs which would raise the number. The Biden administration claims more people are employed than ever. That’s true, however, the population is higher now. In recent years, the highest per-person employment rate was December 2019 during the Trump administration. Today’s number is 2,307,000 million employed people more than in 2019, but the population is 6,007,611 higher now than then. The most recent per-person employment is .471 jobs per person (remember, many of these people are children or retired). In December 2019, the per-person employment was .473 jobs per person. The difference may not seem like much, but today, the 2019 ratio would mean more than half a million more jobs than now. If employment is high, why doesn’t it feel that way? The main reason is the influx of foreign-born workers. You can see in the graph below that the percentage of foreign-born workers in the economy has increased substantially. Note the decline in native-born workers from 2017 to 2019 and the reversal in 2019. The number of native-born workers peaked in late 2020. The peak was followed by a rapid downward trend continuing until today.
What caused this downturn? Honestly, that’s almost impossible to prove definitively. However, it seems that relaxed border policies beginning in 2021 are the most likely cause. It seems more than coincidental that the increased influx of foreign-born persons has been accompanied by an increase in foreign-born workers employed, but the result is 4,524,000 new foreign-born workers added to the workforce. As you see in the graph, the number of foreign-born workers was increasing when Trump took office. The Trump administration's policies appear to have reversed the flow and increased jobs for native-born workers. During the Biden administration virtually all of the jobs added by the economy have gone to foreign-born workers. So what do we conclude from all this? The Biden administration's case for economic progress is weak at best. The per capita employment rate is lower than four years ago, not by much, but even a small decrease is hard to perceive as an improvement. Of the survey measures we have discussed, the unadjusted household survey is the best measure. It includes the most classes of workers and prevents people who have changed jobs or are working two jobs from being counted twice. By that measure, the current employment state is no better than tepid. Furthermore, the increasing gap between the adjusted household figures and the payroll figures indicates that more and more folks have to work two or more jobs to stay afloat, unlike in the first three years we looked at, in which the two measures indicated that having to hold two or more jobs was unusual. Finally, the relaxed border controls are very likely the primary cause for the increase in foreign-born workers compared to native-born workers. This has the effect of depressing wages for lower-skilled native-born workers. Therefore, taking the evidence as a whole, the administration’s claim of excellent economic progress is false. The employment picture was better in 2019 than now, and it has been harder on native-born workers than those foreign-born. The administration is reporting data that has been selectively chosen to make its record appear much better than it actually has been. The administration has been telling the truth but it is guilty of deception.
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