Wednesday, April 12, 2006

The White House feels it should get more credit for the health of the economy. So on April 7, the day the latest upbeat jobs numbers were released, President Bush appeared on national television to personally promote the good news.

Jobs rose 211,000 in March, up 2.1 million over a year ago, and were more than 5.1 million above the post-recession job low in August 2003. The unemployment rate, at 4.7 percent last month, was at its lowest since mid-2001.

But the president told only part of the story. The numbers he referred to were for nonfarm payroll jobs and come from a monthly survey of businesses. The U.S. Bureau of Labor Statistics (BLS) also reports monthly on total civilian employment, a more comprehensive measure based on a household survey counting working people rather than jobs.

In addition to workers on nonfarm payrolls, the household survey counts workers in agriculture, the unincorporated self employed, private household workers, unpaid family workers, workers on unpaid leave, and also picks up some off-the-books employment. Because the sample size of the household survey is smaller than that of the payroll survey, month-to-month changes in total employment are often not statistically significant. However, for larger year-over-year and longer period changes, the data are statistically significant and are useful in delineating cyclical movements and trends.

Though not mentioned by the president or reported by most major media, the total employment picture was even brighter than that portrayed by the nonfarm payroll data.

In March total employment was up a hefty 3.1 million over last year (adjusted for population control revisions) and was 6 million above the level of August 2003. The February year-over-year increase was almost as great. In March the employment utilization rate — the ratio of total employment to the working-age population — rose to 63 percent, its highest in more than three years.

These are boom-time economywide numbers reminiscent of the headiest days of the mid-1990s expansion, hardly deserving of being swept under the table. You can bet the Fed is paying attention.

Though the BLS press release for March said, “Total employment was up in March to 143.6 million,” there was no mention of the large year-over-year increase or the significant gains over the economic recovery.

To find those data, you have to search the BLS Web Site until you locate a 16-page document comparing the jobs and employment numbers, Page 7 of which presents the annual and recovery-period changes that should have been reported in the press release. Though many economists prefer the payroll figures, the two data sets differ in concept, method, and coverage, and both have validity. The BLS itself has said, for a complete picture of labor market trends, it’s necessary to look at both the payroll and household numbers.

The administration needs to stop being its own worst enemy. It wants to paint the best economic picture possible but won’t dip its brush in the brightest colors on its palette.

To some extent the influx of illegal immigrants, a half million or more a year net, has helped to raise the employment numbers. But it would be a mistake to believe that if the immigrant labor supply were better controlled, total employment would greatly suffer.

Most illegal workers are poorly educated and have low skills. If their numbers were reduced, competition for jobs would lessen and wage rates and working conditions would improve. Though total unemployment is low, young people, minorities, and high-school dropouts still have unemployment rates well above average, and there are still many people outside the labor force who would also gladly take better-paying jobs.

A reduced supply of cheap immigrant labor might mean some marginal businesses would fail and some businesses would be forced to improve productivity or adopt new technologies to survive. Profit margins might suffer for a time. Some prices might rise, but probably not by much. In the longer run, the increased incentive for businesses to raise productivity would relieve price pressures, boost profits and lead to faster economic growth and generally higher living standards.

The better-paying jobs resulting from a controlled immigrant labor supply would likely attract enough available legal residents into employment that the overall job count would not be significantly diminished. America and Americans would benefit.

Alfred Tella is former Georgetown University research professor of economics.

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