Disparate Jobs Data Add Up to a Mystery

More than half a million unemployed people say their fortunes improved dramatically last month: They got a job.

Now if only someone could prove it.

According to the government’s regular survey of the nation’s households, 629,000 people started work in July. But when the government asked companies how many jobs they had added to their payrolls, the answer was only 32,000.

If they’re not working in a store, office or factory, what are those 597,000 other folks doing? Working as consultants? Selling bric-a-brac on EBay? Mowing their neighbors’ lawns?

Or are they actually unemployed but so ashamed that they’re lying about it?

“I can’t tell you,” said Tom Nardone, chief of the Division of Labor Force Statistics of the federal Bureau of Labor Statistics. “We just don’t know why there’s a difference between the surveys.”

The split was also pronounced in California, where the state’s payroll survey showed employers cutting 17,300 jobs in July. But the household survey found a gain of 44,000 jobs.

These new workers resemble the dead in the movie “The Sixth Sense”: Only some people can spot them.

Those catching a glimpse seem to be mostly Republicans. Vice President Dick Cheney, for instance, can see them clearly. They’re freelancers, private contractors, people working at home. They’re not on the roster of any corporation’s human resources department but are prospering anyway.

They’re people, for example, like his wife.

At an Aug. 11 campaign appearance in Missouri, the vice president said Lynne Cheney “does very well in terms of her own professional career and line of work, but she doesn’t work for anybody.... If you’re in business for yourself, if you’ve got your own small business and so forth, you don’t get picked up by those other numbers.”

The “other numbers,” the corporate payrolls, have been slumping this summer.

That’s an ominous sign for the reelection prospects of Cheney and President Bush. Whatever attention isn’t being focused on Iraq is on the economy, which means jobs. Rising employment makes people feel secure. They know that if their own job doesn’t work out, there are many more out there.

Calculating employment is a massive task. To estimate payroll levels, the Bureau of Labor Statistics queries 400,000 so-called work sites every month about their hiring activities.

Whether the reason is outsourcing to China and India, rising corporate healthcare costs, increased efficiencies from technology or just general queasiness, the work sites haven’t been in a hiring mode for a long time. Since March 2001, two months after the Bush administration took office, company payrolls are down a cumulative 1.2 million.

But when the government asks 60,000 people directly about employment, as it also does every month, the jobs picture looks healthier. Although the 629,000 jump in July was unusually high, the cumulative increase in the household survey since March 2001 is 1.8 million jobs.

Naturally, the administration likes the household numbers much better. Cheney isn’t the only one championing them.

“The divergence between the household and the payrolls survey is very striking, and I’ll leave it to statisticians to try to reconcile those numbers,” Treasury Secretary John W. Snow said after the July numbers were released Aug. 6. “I suppose that the real number lies somewhere in between.”

Nardone, the BLS statistician, has been trying just such a reconciliation. By smoothing, revising and adjusting the July data, he eliminated a third of the new employed, leaving 402,000 unexplained new workers.

But over the longer term, tweaking the household survey to bring it in line with the payroll survey actually increased the gap. Since July 2003, the cumulative difference, even after reconciliation, is 1 million jobs.

Commentators and economists with conservative affiliations have been echoing Snow’s remarks, when they’re not exceeding them.

“The BLS for more than a decade has been undercounting job creation, unable to keep up with changes in the structure of American business,” columnist Robert Novak charged recently.

Allan Meltzer, a Carnegie Mellon University economist and a scholar at the American Enterprise Institute, a conservative think tank, said the terrific household numbers might overstate what is really going on, but that “the truth is much better” than the weak payroll numbers, which signal a troubled economy.

The summer’s lousy payroll numbers, Meltzer said, “just don’t fit very well with what we’re seeing -- rising wages, increasing disposable income, improvements in manufacturing employment.”

Even partisans acknowledge that the household numbers, which are used to calculate the monthly unemployment rate, are highly variable. Although the payroll numbers have increased every month for the last year, if sometimes very modestly, there have been three occasions when the household survey reported a net decrease in jobs.

In February, for instance, when payrolls rose 21,000, household employment plunged 265,000. No one in the administration suggested then that the real employment truth lay somewhere between the two.

Many economists reject the notion that the monthly household reports offer insights that the payroll survey doesn’t. The administration “is just trying to muddy the waters,” said Dean Baker of the left-leaning Center for Economic and Policy Research. “The household numbers are just too erratic.”

If you focus on the self-employed, the matter becomes even murkier.

The number of full-time self-employed workers increased in July by 175,000, which lends initial credence to Cheney’s claims that many of the newly employed are working for themselves.

However, few of the 9.5 million people who are now self-employed exist at Lynne Cheney’s level. A Bush-Cheney campaign spokesman declined a request to put a dollar figure on her husband’s assertion that she was doing “very well.”

Lynne Cheney earned money last year from Reader’s Digest, on whose board she served, and the American Enterprise Institute. The couple said the $321,000 they donated to charity in 2003 came “primarily” from royalties on her books.

Many self-employed writers are closer to charity cases themselves. Consider Diane Feen, a 54-year-old freelance writer in Boca Raton, Fla. “My take-home pay for the entire summer will be about $1,700. I see my income and workload dwindling every year,” she said.

To make ends meet, Feen lives with her mother. “I think that many people are working from home because they have no choice. My single friends are struggling more than ever,” she said. “And I used to be connected and upper middle class. I used to shop at Bergdorf and Saks and I used to buy goat cheese.”

If self-employed is a euphemism for poor, all workers will suffer. Much of the power in the economy over the last few years has come from consumer spending. The fewer consumers with money to spend, the worse off everyone will be.

A few days before Cheney spoke in Missouri, the BLS published a study on the self-employed. Contrary to the myth that the boom times of the 1990s led to an explosion of freelancers and contract workers, the study showed that the percentage of the population that is self-employed actually declined all through the decade.

“People like the stability of being a salaried employee,” said Steven Hipple, the BLS economist who wrote the report.

Ever since the recession of 2001, however, an odd thing has been happening: The percentage of self-employed has been going up.

“What that says to me is that people are turning to self-employment because it’s their only option,” Hipple said.

Robert Fairlie, a professor at UC Santa Cruz, crunches the self-employment numbers slightly differently. He looks only at people who go to the trouble of incorporating themselves -- a sign that they’re very serious about their work.

This number, Fairlie said, has remained roughly constant over the last 25 years. “This feeling that everyone is now an entrepreneur -- it just isn’t the case,” he said.

In the end, the mystery of the half a million new employed remains. Over a decade, economists say, the household numbers and the payroll numbers correlate pretty closely. Maybe what’s going on now is just a blip, statistical noise that can’t be recognized as noise.

“We over-analyze these data on a month-to-month basis,” said Raymond Stone of Stone & McCarthy Research Associates. “We think of these numbers as being true measures, but they’re really only estimates.”