State Job Loss Total Too High, Official Says; Revision Is Due

The huge job loss reported in California due to the recession was exaggerated and soon will be revised, a state official said Friday.

The government now says it overstated the number of people who were working when the economy last peaked in mid-1990 and then overstated the number of people who lost their jobs during the recession.

California, it turns out, has not lost 800,000 jobs since the recession began, as has been widely reported. The actual figure will be lower but will not be released until early June.

The error, and the correction, are part of a nationwide audit of labor statistics involving an examination of the methods used by data processing firms that count workers for private employers and report that information to the government.

Nationwide, the U.S. Labor Department concluded it overstated by 540,000 the number of people employed before the recession.

“We expect California to be a large piece of the national revision,” said Steve Saxton, who gathers statistics for the state Employment Development Department.

The error occurred in two phases, Saxton said.

First, the data processing companies over a period of years in the late 1980s began using computer programs that counted more workers than were actually on the job.

Some were tallying paychecks instead of employees, so a single worker who got a separate overtime check and a bonus check might be counted as three employees.

Others were counting payroll figures over a month’s time instead of weekly as federal guidelines required. So a worker paid twice a month would be counted as two employees.

As the companies developed new computer software, they discovered the errors and corrected them. The new programs went into widespread use in January, 1991. The result: a dramatic drop in the number of workers reported on the job.

At first, analysts thought the findings were an error, because they diverged dramatically from a monthly sampling of payrolls also collected by the government. Eventually, though, the lower numbers were accepted, and the federal government and the states revised their employment figures downward.

“The figures for 1991, when they came out, and 1992 looked much lower than the prior figures,” Saxton said. “Everyone assumed that was due to an economic event. Now we’re finding that these jobs that we thought had been lost never existed. We corrected away jobs that did not exist prior to that point in time.”

The next revision will be closely watched by California economists. Some said Friday that they will be skeptical if the 800,000 figure is revised dramatically downward, because there is plenty of other evidence that the state has endured a deep recession, including depressed tax revenues, stagnant housing construction and slow retail sales.