Editore"s Note
Tilting at Windmills

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January 8, 2005
By: Kevin Drum

FUN WITH NUMBERS....Brad DeLong has made this point many times before, and makes it again today, but I'd like to expand on it slightly myself. Why? In the forlorn hope that people who write about this stuff will see it and stop making the same mistakes over and over.

(And no, I'm not talking about NRO's Larry Kudlow, who is Brad's target du jour. I'm talking about journalists who make this mistake honestly.)

The mistake in question is the difference between total job growth and average employment level. Here's the raw data for the past few years in handy table format:




Starting
# Of Jobs




Ending
# Of Jobs




Total Job Growth


Average Employment Level Over Entire Year

Growth in Average Employment Level Over Previous Year

2002

130.66 million

130.10 million

-.6 million

130.34 million

---

2003

130.10 million

130.04 million

-.1 million

129.94 million

-.4 million

2004

130.04 million

132.27 million

+2.2 million

131.28 million

1.3 million

Do you see the difference? Total job growth in 2004 the number of jobs in December vs. the number at the beginning of the year was 2.2 million.

However, the average employment level throughout all of 2004 is a different number. To calculate it, you take the individual job numbers for each month and average them together, which means that it's usually about halfway between the starting and ending numbers. In 2004 that average number was 1.3 million higher than the average number from 2003.

As Brad points out, a year ago the White House forecast total job growth of 3.8 million, but growth in the average employment level of 2.6 million. In Larry Kudlow's case, he is pretending that the forecast of 2.6 million actually applied to total job growth and that therefore the White House forecast was spot on and supply side economics is a triumph. He knows better, of course, and is just hoping that his readers won't catch him in this lie. (We already know his editors won't.)

However, there are others who make this mistake in good faith, since it's not always clear which number is which if this isn't your primary area of expertise which it's not for most reporters.

But now you know. Total jobs and average employment level are two different things. If you write about this stuff, be sure you know the difference.

UPDATE: Edited slightly to try and make the explanation clearer. More details about "average employment level" below the fold if you're interested.

The Bureau of Labor Statistics reports the total number of nonfarm jobs every month. To get the "average employment level" for a given year, you simply add up the numbers for each month and divide by 12. This gives you a number that's normally about halfway between the January number and the December number.

For extra credit, calculate it yourself! The chart below shows the monthly numbers for the past decade. For 2003, just add 'em up and divide by 12. Then do the same for 2004. The difference between the two numbers is the growth in the average employment level.


Kevin Drum 4:17 PM Permalink | Trackbacks

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