Friday, September 7, 2012

Gallup’s New Employment Statistic

When the House voted to defund the Bureau of Labor Statistics and its often depressing unemployment reports, they had something like this in mind. The government need not create its own economic statistics because the private sector would fill the gap. The House might not be happy with the new employment rate statistics from Gallup, though, because its “payroll to population” rate makes the employment picture look decidedly more grim than the official 8 percent unemployment rate.

Official employment statistics are designed to look rosy. The Bureau of Labor Statistics counts you as employed if you worked at least one hour this week. No one pretends that one hour is enough to live on, but one hour is better than zero, right?

Gallup sets its cutoff not at one hour, but at 30. The rationale is that if you are working less than 30 hours per week, it is probably a problem. Of course, there are people who choose to work at every different level of activity, but the way things are now, Gallup’s thinking is more correct than not.

The next innovation in Gallup’s approach is to exclude business owners from the count of employed workers. Business owners, or self-employed workers, form a nebulous category that includes everyone from subsistence farmers to movie stars. There are more of the former than the latter, though, and currently even in the United States, most of the people who count as self-employed are either adults who are barely scraping by or teenagers who are barely working (as bloggers, for example). The Bureau of Labor Statistics counts everyone who works for themselves as employed, as long as they meet the one-hour threshold. The problems with this are obvious. A novelist who writes every day but sells only a few copies of e-books over the course of the year does not fit the usual idea of “employed.” We need better measures of where self-employed workers fall on the continuum of success, but as a first approximation, Gallup’s blanket exclusion of business owners is surely the more realistic approach.

Finally, Gallup skips over the complex and trouble-prone issue of determining who is really looking for work, or would be doing so if there were jobs. It instead compares its count of employment to the total of all adults 15 years of age or older.

And the result? Jobs are not all they are cracked up to be. Sweden and Belarus are the only two countries where more than half of adults hold full-time jobs. In Canada and the United States, 41 percent of adults have full-time jobs. That puts these countries in the top tier, but still well behind more economically stable countries like Estonia and Denmark.

Looking at that payroll to population rate — 41 percent, or barely two out of five — it is abundantly clear that we can never realistically get to the 60 percent rate that would represent the state of good jobs for all. The political emphasis on jobs is good, as more jobs could go a long way toward solving people’s financial distress, but there must be better access to work for those who want to work but who will never consistently get on the payrolls. This need is all the more urgent in countries like Iran and Madagascar, where much of the infrastructure for employment exists, but where the payroll to population rate is much lower — only 9 percent for the two countries I mentioned.