Why It's So Difficult To Predict The Job Numbers

The October unemployment numbers cast a brighter picture than economists expected. NPR's Senior Business Editor, Marilyn Geewax talks to guest host Celeste Headlee about what the strengths and weaknesses of the economy are right now, and why it's been so difficult to read.

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CELESTE HEADLEE, HOST:

I'm Celeste Headlee. This is TELL ME MORE from NPR News. Michel Martin is away. Coming up, we'll take a look at how the housing market is doing all across the country.

But first, during last month's government shutdown - was that just last month? A lot of economic reports were delayed, some of them were even canceled. Now a flood of new numbers have come out and the picture they paint is actually a little brighter than most people expected. Joining us to explain what's going on and what we still don't know is Marilyn Geewax, a senior business news editor with NPR. Welcome back.

MARILYN GEEWAX, BYLINE: Hi. Good to be here.

HEADLEE: Let's talk about jobs. That was some of the data that we expect every, you know, every week and we didn't get it. So last Friday, we learned employers hired 204,000 workers in October, and we all expected that number to be way down because of the shutdown. So do we have any idea why it was better than expected?

GEEWAX: Turns out it looks like there was more momentum in the economy than most people had been thinking. Economists were pretty negative about what was going to happen in October, and yet, it turned out that, in leisure and hospitality, about 53,000 people were hired.

HEADLEE: Well, a lot of people had leisure.

GEEWAX: There you go. But there was also healthcare and retail, and those jobs tend to be taken by women. And what they really saw was that, for women, it's like the recession has finally ended. Employment among women is back to where it was before 2008 and 2009. The problem in the economy continues to be more with men because those construction jobs, financial services, manufacturing are still well below where they had been. But even at that, there was some bright news in October. Manufactures picked up about 19,000 more workers. A lot of that reflects this surge in energy. We've got cheap energy and that's allowing plants to operate more cheaply and it's attracting foreign investment. So we're starting to see more manufacturing going on. And that's certainly a positive sign for the economy. But, you know...

HEADLEE: What's the private side, though, Marilyn? I mean, we're still seeing this downturn in public sector jobs...

GEEWAX: Yes.

HEADLEE: ...Which has traditionally been place in which a lot of people pull themselves up to the middle class.

GEEWAX: Right, and there's always plenty of bad news to go around here. There's still - I mean, seriously, we did have some good news in October, but if you're one of those 11.3 million people who are still out of work...

HEADLEE: Yeah.

GEEWAX: ...It's a tough economy. The unemployment rate overall is 7.3 percent. That's lousy. I mean, those are terrible numbers. We're five years into a recovery, we should be doing better than that. But, you know, given that people had expected worse in October, this was a somewhat encouraging report. But the thing that - one area that, as you look at these numbers that some economists are questioning is whether or not the Labor Department is doing a good enough job of capturing who really is working and who isn't because we've had the surge in people who are, in essence, freelancers - digital freelances for the most part. People who are, you know, web designers and they create apps, they write from home. A lot of those people are really not on payrolls. They don't have steady jobs. They're not building up pensions. They don't get paid vacation time.

HEADLEE: But because they earn something, they can't apply for unemployment benefits...

GEEWAX: Right.

HEADLEE: ...'Cause they've earned money that week.

GEEWAX: So they're not being really captured in the data. When you think about how does the government know if you're unemployed or not, you know, every month the Bureau of Labor Statistics will ask employers, who's on your payroll, and numbers get turned in who's officially on the payroll. Well, I think any number of young people can tell you, it can be pretty tough to be an official part of somebody's full-time payroll. Those jobs can be very hard to get. And then the other thing the Labor Department does is call households and actually ask you, were you working last week or not. And you can look at unemployment claims, those kinds of measures to see what's happening in the economy. But there are an awful lot of people who are not on anyone's payroll, but they're not collecting unemployment because they don't really consider themselves to be unemployed. They're just waiting for the next freelance gig.

So you may be a software engineer who really would like to spend two weeks rock climbing or taking care of your mom or I don't know, whatever, working on a house-flipping project. But you don't work for a couple of weeks, and you don't call yourself unemployed. You're not in the labor force, but you're not really out of the labor force. And then when you need some more money, you go and hook up with who is offering some freelance work, and then you can get a, you know, a paying job that lasts two weeks. And you get paid and then you're either in or out of the workforce depending on how you want to think about yourself.

HEADLEE: But I had thought, Marilyn, that there was a lot of concern over the fact that we're moving to a part-timers economy, right?

GEEWAX: Right, and there's that, too.

HEADLEE: Right. And yet, I thought that when we actually looked at these numbers that they weren't as bad as we had expected. That, in fact, employers were adding full-time jobs.

GEEWAX: They are, but it's just this idea that there is - you look at the labor force participation rate and it seems like a lot of people are not participating in the economy. That the last time that we had a number this low - 62.8 percent of the population being in the workforce - was 1978, and that's before a lot of women surged into the workforce. So we're back to the levels, officially, where it looks like an awful lot of people are just sitting on the couch. But what I'm saying is that these freelance jobs, whether it's walking the neighbor's dogs or, you know, raking leaves or whatever freelance work you're doing - everything from a software engineer to a dog walker.

HEADLEE: A guest host at NPR. Right.

GEEWAX: There you go. Could be a part-time worker, could be a freelance worker - they're not quite as easy to measure. And, you know, you think about the entire economy, it's a lot tougher to measure everything. Back in the 1950s, you could pretty easily measure the U.S. economy - how many cars were coming off the assembly line...

HEADLEE: Right.

GEEWAX: ...How many bales of hay were over there. We were very good once at measuring rope. You know, how much rope were we making? But you think about today's economy, and it's a lot harder to measure it. How do you measure the value of tweeting? I mean, obviously, the stock market is putting a lot of value on Twitter, and yet, when you tweet something...

HEADLEE: Yeah, they're new IPO.

GEEWAX: ...Was that an economic output? I mean, I don't know. Or were you just sort of wasting your time?

HEADLEE: Have you read most of these tweets, Marilyn? 'Cause, no...

GEEWAX: There you go.

HEADLEE: ...Not very valuable.

GEEWAX: So some of it is very hard to - how do you measure an economy that is so digital, that is so elusive in some ways, where people may be working but they might be working in flip-flops from a beach?

HEADLEE: That's not necessarily a good or bad thing. It's a change.

GEEWAX: Right. And the question is...

HEADLEE: It's just a different thing.

GEEWAX: ...Are we measuring well this new economy that we're living in? And some people feel that the Labor Department should step up with more questions and more complex ways of measuring the economy. But, of course, because of budget cuts, it's tough for the Labor Department to have the funding they need to expand their data collection. But also, I spoke with somebody at the Bureau of Labor Statistics, and he was saying there's value in the steadiness of the report.

HEADLEE: Right.

GEEWAX: That is, they've been asking the same questions, fundamentally, since World War II.

HEADLEE: And keeping it the same consistency.

GEEWAX: And that way, you have a very consistent look at the labor market. But others say, no, consistency is not valuable if you're mismeasuring.

HEADLEE: Right.

GEEWAX: So it's a conundrum.

HEADLEE: Well, today is Veterans Day. We've got a little over a minute left, so I wanted to make sure that I asked about veterans and how they're doing as far as the unemployment rate.

GEEWAX: Well, they're a little bit better than the population in general. It's 6.9 percent unemployment for veterans, but that's still...

HEADLEE: That's still pretty bad.

GEEWAX: ...Kind of lousy. You know, back in August, it was 6.2 percent, so something's going wrong for them. It could be these government cutbacks. A lot of our younger veterans tend to get jobs with defense contractors, and if you have those sequestration cuts that we've referred to earlier in the year, those budget cuts, that can hurt. So, you know, it's a little disappointing. We have nearly 11 million veterans who are in the workforce, and, certainly, you'd like to see all of them working.

But when you look at the statistics, the older veterans, the baby boomers still from Vietnam era that are in the workforce and the first Gulf War veterans, they're doing pretty well. They are employed for the most part and actually doing better than the population in general. But it's the young folks that are hurting.

HEADLEE: That's NPR Senior Business Editor Marilyn Geewax. Marilyn, thanks so much.

GEEWAX: Oh, you're welcome.

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