Jobs, Layoffs & Pink Slips — Truth vs. Fiction
Kurt Brouwer August 4th, 2008
Anyone who has been paying attention to the jobs situation ‘knows’ that things are pretty bad. After all, could headlines such as these be wrong?
Jobless rate climbs as 51,000 jobs vanish
AP August 1, 2008
If you assumed the headlines you see actually mean something, you are not alone. However, you would be wrong.
Here is another example. This headline is from a story on CBS News. Upon reading the story, you would quickly realize that the actual facts presented tell a tale that is the opposite of what the headline shouts out in bold type:
Many CEOs Warn Of Looming Pink Slips
Nearly one-third of the country’s top executives expect to cut payrolls in the coming months, reflecting fallout from the housing bust as well as soaring energy prices.
At the same time, a survey by the Business Roundtable, released Wednesday, showed that most executives expect sales and capital investment to remain at current levels or even improve over the next six months…
According to this piece, 31% of CEOs [nearly one-third] expect to cut payrolls, but the rest expect to keep them constant or even increase payrolls. How is that story worthy of the headline?
Now, in all fairness, there has long been a struggle between those who write the stories and those who put in the headlines. However, both are part of the journalistic process and if editors did not agree with the sentiments of the gloomy or sensationalistic headline scribes, they should change the process.
Let’s step back from the pink slip abyss for a moment and look at a chart or two from the U.S. government’s Bureau of Labor Statistics (BLS). This chart shows the total nonfarm employment in the U.S., adjusted for seasonality:
Employment, Hours, and Earnings from the Current Employment Statistics survey (National)
Source: Bureau of Labor Statistics
As you can see, the total number of Americans who were employed as of July of this year is slightly lower than those employed as of last July. The number peaked in December and has been declining slightly ever since. When you see this chart, do you think of surging pink slips or vanishing jobs? In fact, to the eye the levels look about the same.
Employment, Hours, and Earnings from the Current Employment Statistics survey (National)
Series Id: CES0000000001 Seasonally Adjusted Super Sector: Total nonfarm Industry: Total nonfarm NAICS Code: N/A Data Type: ALL EMPLOYEES, THOUSANDS |
|||||||||||||
|
Year |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
Annual |
|
2007 |
137108 | 137133 | 137310 | 137356 | 137518 | 137625 | 137682 | 137756 | 137837 | 137977 | 138037 | 138078 | |
|
2008 |
138002 | 137919 | 137831 | 137764 | 137717 | 137666(p) | 137615(p) | ||||||
| p : preliminary | |||||||||||||
Source: Bureau of Labor Statistics
If you want to get technical, this table lists the numbers that underlie the chart above. As of the most recent BLS report, you can see that there were 137,682,000 people working in America last July and there are 137,615,000 working this July. The difference — 62 thousand jobs out of more than 137 million — is something like 1/20th of 1 percent. Does that statistically insignificant decline warrant a headline such as this one?
U.S. Pink Slips Surge In July
Forbes August 4, 2008
What does it mean to have surging pink slips? And, even beyond the absurdity of the image, did layoffs really surge or have we simply seen a fluctuating employment picture since July 2007? Employment went up a bit until December and since then we have seen a slight decline. Nonetheless, the actual number of employed folks has remained well over 137 million all along. Is that really news?
Here is one final chart from the BLS spanning the period of 1980 - 2008. As you can see, employment has generally risen over this period, yet there have been several time periods when employment growth slowed or even reversed for a while before resuming the upward march. Now, looking at it this way is not terribly exciting, but it’s far more objective than much of the reporting we see from the media every day.
Source: Bureau of Labor Statistics
I am not suggesting that the employment situation is awesome, nor am I assuming that job growth is going to resume next week. We are going through an economic slowdown and this is likely to continue a while longer. Nonetheless, the media’s portrayal of the jobs situation is at odds with reality as I see it.
For more on this topic, see Tom Blumer’s excellent piece at Pajamas Media
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[…] Aug. 5: Kurt Brouwer at The Fundmastery Blog looks at the long-term big picture, calls out the pink-slip surge lie (which the AP’s […]
Nice job, Kurt.
I just updated the related cross-post at BizzyBlog.com to reflect what you’ve done here. (My ability to update at PJM is limited)
http://www.bizzyblog.com/2008/08/02/aps-3-million-job-gap/
Also can’t help but think that the use of the word “surge” by Jeannine Aversa, who was once again the reporter, was a childish mockery of Bush. You see, his “surge” in Iraq worked, but pink slips are “surging” here. Get it?
Interesting point Tom. I never thought of it that way, but it makes sense. Hopefully, some in the media will be a bit more careful with how they report job-related statistics in the future.