Wednesday, November 13, 2013
2-pg PDF of this release
Job numbers, especially as we emerge slowly from the Great Recession, are an important marker of economic recovery. And for politicians of every stripe — especially those who have set goals for job creation — they are an equally important marker of political success. For these reasons, our attention is drawn to the monthly national jobs report, and to the state numbers that follow a few weeks later. And, for these reasons, it is important to get the numbers right.
National and state numbers come from the Establishment Payroll Survey, conducted each month by the Department of Labor (DOL) in cooperation with State Departments of Labor or Workforce Development. The DOL calls workplaces (private and government), asking how many people are employed. The survey results are tweaked to accommodate seasonal adjustments and sampling issues, and then yield a count of nonfarm jobs broken down by sector. Often the monthly release includes adjustments to the numbers from previous months.
The result is a measure of net job creation (adding up all the gains and all the losses), the number behind the typical headline: “Iowa added [fill in number] jobs in [fill in month].” By this straightforward measure, Iowa lost about 62,000 jobs during recession (December 2007 to January 2010) and (through August 2013) added about 70,000 jobs during the recovery — for a net gain of just under 8,000 jobs. Since Governor Branstad took office in January of 2011, we have added 56,600 jobs. Since the beginning of this year we have added 12,500 jobs.
Counting the number of jobs lost or gained is a pretty coarse measure of how we are doing, in part because that assessment depends on a lot of other moving pieces. This is especially true when we are aiming for certain targets — such as “creating” a certain number of jobs, or “getting back” to prerecession levels of employment. For this reason, our monthly “Iowa JobWatch” accounts for both the raw job numbers and for change over time in the state’s labor force. Our current jobs deficit — the number of jobs we would need to recover from the recession and keep up with population growth — is 55,100.
Let’s review: Using the establishment survey to calculate net job growth yields a rough measure of jobs gained and lost over any given period of time. Over any extended period of time (such as the current business cycle), it makes sense to account for changes in the labor force as well — so in a growing economy the targets are actually a little higher.
So how does all of this relate to Governor Branstad’s much-advertised goal of creating 200,000 jobs during his term, and the accompanying claims that we are halfway or three-fourths of the way there?
The administration invented a new measure of “Gross Over-the-month Employment Gains” in which Iowa Workforce Development adds up the gains in sectors that were adding jobs while ignoring those sectors that were losing jobs. Such a formula has no statistical or real world relevance. It is like counting deposits to your savings account but not the withdrawals; or like counting the touchdowns your team scores but not the ones that the other team scores.
But, for the sake of argument, if you add up the numbers in that line on IWD’s downloadable nonfarm jobs spreadsheet, you’d come up with 122,500 jobs created since January 2011, when the Governor took office. Yet, the Governor’s office is throwing around an even higher number, 163,500 jobs — the source or calculation for which remains a complete mystery.
We have been following these numbers every month for 10 years. It’s important that Iowans have real, reliable and independent data to understand the economic context for public policy debates and choices. New state numbers will come out November 22. If you want to know what the economy is doing, go on that day to the Iowa Policy Project website — www.iowapolicyproject.org. We will have it added (and subtracted) properly for you.
— Iowa Nonfarm jobs, August 2013 (latest numbers): 1,532,500.
— Nonfarm jobs are 7,600 above the level at the start of the last recession in December 2007.
— Iowa averaged a monthly increase of 1,700 jobs over the last 12 months, and 2,100 in 2013.
— Governor Branstad set a goal of 200,000 new jobs over five years. Iowa's economy has produced 56,600 net new jobs through the first 31 months of his term.
— To add the remaining 143,400 jobs, Iowa would need to 4,900 new jobs per month over almost 2 1/2 years (29 months). Iowa has not sustained growth of even 2,000 jobs per month over a calendar year since the 1990s.
— Another approach to evaluating job growth would use estimates by the Economic Policy Institute, which projects jobs needed to make up for jobs lost, plus keep up with population growth. Iowa’s population has increased by 4.1 percent since the start of the 2007 recession; so, despite a net gain of 7,600 jobs since then, Iowa remains 55,100 jobs behind what would be needed not only to regain all lost ground during the recession and also keep up with population growth. (See graph at left).