October’s Jobs Report Was Positive, Muddied by Shutdown

Furloughed government union workers demonstrate on the side of Constitution Avenue October 2, 2013 in Washington, DC. Hundreds of thousands of government workers have been furloughed during the government shutdown as the House of Representatives and Senate remain gridlocked over funding the federal government.
National Journal
Catherine Hollander
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Catherine Hollander
Nov. 8, 2013, 3:50 a.m.

Eco­nom­ists use the jobs re­port as a key sign­post for track­ing the growth of the eco­nomy. But, thanks to the gov­ern­ment shut­down, Fri­day’s re­port is send­ing muddled sig­nals.

The eco­nomy ad­ded 204,000 jobs, and un­em­ploy­ment ticked up to 7.3 per­cent last month, ac­cord­ing to the Oc­to­ber jobs re­port re­leased by the Bur­eau of Labor Stat­ist­ics.

But the 16-day par­tial gov­ern­ment shut­down blurred the in­form­a­tion in the thor­oughly picked-over re­port, mak­ing it dif­fi­cult to tell pre­cisely how well the eco­nom­ic re­cov­ery is go­ing, even as the re­port con­tained some pos­it­ive signs, such as an up­ward re­vi­sion in the pre­vi­ous two months’ re­por­ted payroll num­bers.

The monthly jobs re­port is com­piled from two sep­ar­ate sur­veys, each of which was ex­pec­ted to show some shut­down ef­fects, al­though the im­pact was ex­pec­ted to be stronger in the house­hold sur­vey, which asks people to re­port their em­ploy­ment status dur­ing one week each month. (Much more on how the data are col­lec­ted here.)

The house­hold sur­vey is used to cal­cu­late the un­em­ploy­ment rate and was par­tic­u­larly tough to read in the wake of the par­tial gov­ern­ment clos­ure. The ref­er­ence week for that sur­vey was Oct. 6-12, which was dur­ing the shut­down. Work­ers who say they wer­en’t work­ing that week but were ex­pec­ted to re­turn to their jobs — i.e., fur­loughed fed­er­al work­ers — were sup­posed to be clas­si­fied as “un­em­ployed, on tem­por­ary lay­off.”

This caused a par­tic­u­lar point of con­fu­sion, BLS said in a spe­cial sec­tion of the Oc­to­ber re­port on the shut­down’s im­pact. The num­ber of fed­er­al work­ers who were clas­si­fied as un­em­ployed on tem­por­ary lay­off rose in Oc­to­ber, as ex­pec­ted, but there was also an in­crease in the num­ber of fed­er­al work­ers who were clas­si­fied as em­ployed but ab­sent.

“BLS ana­lys­is of the data in­dic­ates that this group in­cluded fed­er­al work­ers af­fected by the shut­down who also should have been clas­si­fied as un­em­ployed on tem­por­ary lay­off. Such a mis­clas­si­fic­a­tion is an ex­ample of non­sampling er­ror and can oc­cur when re­spond­ents mis­un­der­stand ques­tions or in­ter­view­ers re­cord an­swers in­cor­rectly,” the agency said. It does not change these re­sponses.

The oth­er sur­vey, the es­tab­lish­ment sur­vey, asks busi­nesses to count any­one who re­ceived pay dur­ing the pay peri­od that in­cludes the 12th of the month as em­ployed. Be­cause the fur­loughed fed­er­al em­ploy­ees will re­ceive back pay, they wouldn’t be coun­ted as un­em­ployed here. But private con­tract­ors who were out of work due to the shut­down would have. However, BLS noted, “There were no dis­cern­ible im­pacts of the par­tial fed­er­al gov­ern­ment shut­down on the es­tim­ates of em­ploy­ment, hours, and earn­ings from the es­tab­lish­ment sur­vey.”

The Of­fice of Man­age­ment and Budget sep­ar­ately de­tailed the eco­nom­ic im­pact of the shut­down in a 27-page re­port re­leased on Thursday. The shut­down and debt-ceil­ing brink­man­ship cost the eco­nomy 120,000 new private-sec­tor jobs dur­ing the be­gin­ning of Oc­to­ber and will shave between 0.2 and 0.6 per­cent­age points off gross do­mest­ic product growth in the fourth quarter, the re­port said, cit­ing the White House Coun­cil of Eco­nom­ic Ad­visers as well as private fore­casters.

An­oth­er im­pact of the shut­down on the Oc­to­ber jobs num­bers? They were a week late.

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