Rachel Greszler
The Bureau of Labor Statistics announced a major downward revision of its reported payroll job gains, effectively wiping out 28 percent of the past year’s reported gains. These overstated job gains play into a recent multiyear trend in which reported payroll jobs have risen twice as fast as the reported number of additional people working in the United States. This raises the question of which data report—the survey of employers’ payrolls or the survey of household employment that estimates the number of workers—best reflects the U.S. labor market.
Historically, the two different government reports have always shown that the number of people working in the United States exceeds the number of jobs on companies’ payrolls primarily because not all jobs are payroll jobs. Although this is still, just barely, the case today, the gap between workers and payroll jobs (reported in the monthly jobs report) has narrowed to a historical low of 1.6 percent compared to an average gap of 5.2 percent over the past two decades.REF
This declining gap means a significant divergence between the number of reported payroll job gains and new workers, which raises the question: Is the labor market strong, having added 7.8 million new payroll jobsREF over the past five years,REF or is it lacking, with only 3.7 million more workers out of an increase of 9.4 million in the working-age population? The answer is almost certainly a little of both, with the economy having fewer payroll jobs than reported and potentially more workers than are counted.
This Backgrounder examines historical trends in payroll jobs and total employment and considers potential reasons for today’s unparalleled gap.
Two Distinct Measures: Payroll Jobs and Employed Workers
The monthly “jobs report” from the Bureau of Labor Statistics includes data from two different surveys. The number of jobs gained or lost comes from the establishment survey that polls nonfarm employers, » Read More
https://www.heritage.org/jobs-and-labor/report/what-explains-the-unprecedented-gap-between-reported-job-gains-and-new