Low Job numbers or not?



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jobs were created last month, an ostensibly anemic number and way below the 250,000 job gain most experts were expecting.

Seemingly contradictory, the household survey, reported a gain of 629,000 jobs in July, on a seasonally adjusted basis. Before seasonal adjustment, the gain was an even larger 839,000 jobs. That may partly reflect that there are more agricultural jobs in the summer. The unemployment rate, which uses household survey data, dropped to 5.5% from 5.6%.

This divergent survey numbers beg the question, which survey is correct?

HOUSEHOLD VS. PAYROLL SURVEY
The two government surveys that provide these numbers each month look at two different groups when determining job growth or decline. The payroll survey questions 160,000 employers while the household survey questions 60,000 households. Both surveys seem to have been showing a consistent discrepancy for the last 13 months.

Republicans, who often use the household survey, say that the job picture is excellent, while the Democrats, who like to quote the payroll survey, say the job picture is bleak. When you look at the details, you can see why. Over all, the household survey now shows that employment has risen by 1.9 million jobs, or 1.4 percent, since President Bush took office, while the payroll (also known as the establishment survey) shows employment is down by 1.1 million jobs, or 0.8 percent.

SMALL BUSINESSES ARE THE KEY
The higher household numbers are a direct consequence of the growth in small businesses, enjoying one of its largest booms of the last decade. If you subtract one survey number from the other, it could be argued that small businesses have created up to 3 million new jobs since President Bush took office. Although most experts would argue the validity of this number, there is universal agreement that small businesses are having a dramatically positive effect on our economy.

Since over 75% of small businesses are not incorporated, most of their new hires don?t show up on the payroll survey. Often, small businesses will hire new employees as independent contractors to avoid paying taxes and benefits. However, these new hires would show up in the household survey.


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