Too Busy Working

United States unemployment stands today at a 5-year low of 4.4%, and revisions are trending upward. Maybe you missed this news last week. It seems as if most people did—probably because they were all too busy working.

There are two widely analyzed reports on the employment situation in the US:

• Establishment Survey: a heavily weighted index toward government entities (representing only 17% of the economy) and does not accurately capture employment changes within small and medium sized corporations (representing more than 50% of all employees in the US). Additionally, only 60% of the establishment survey is completed by the first release – leaving the results open for huge subsequent revisions.
• Household Survey: This survey reported a gain of over 437,000 jobs in the most recent announcement. We prefer this one because it's more comprehensive and a better reflection of employment in total.

While we believe the Household survey is better, neither is particularly accurate because they don't adequately account for a significant part of the economy: the self-employed and other very small businesses. Millions of citizens make their living or generate extra income through things not found in employment statistics at all.

The misconstrued employment situation underscores a point we often make: most economic data is suspect at best because the surveys aren't versatile or comprehensive enough to keep up with a dynamic, market-based economy.

And we don't buy the false argument that new jobs aren't of a "high" quality. Thomas Sowell (a senior Fellow of the Hoover Institute at Stanford) often puts it this way: almost any kind of job creation is good job creation because it means people are entering the workforce. And people generally enter the workforce at low levels; they don't start out as CEOs. They start out as clerks and waiters—the low person on the hierarchy. As they get older and gain experience and education, they move up. Today's laborer is tomorrow's middle manager; and today's middle manager is tomorrow's executive.

With any luck, our commentary will fall on deaf ears…everybody will be too busy working to worry about employment.