Tuesday, June 23, 2009
Just One Small Discrepancy
This article discussing BLS's mass layoffs report for May lends additional force to my skepticism:
The number of mass layoffs by U.S. employers rose last month to tie a record set in March, according to government data released on Tuesday that suggested the labor market has yet to stabilize.It would be virtually impossible for mass layoffs amounting to 312,000 jobs to constitute the vast majority of the jobs lost in May, and the official results of the establishment survey were that only 345,000 non-farm jobs were lost. No other piece of data matched that one. Not ADP, not the establishment survey, not the initial and not continuing claims. The number of mass layoffs reported for May was the highest since this data has been collected.
The Labor Department said the number of mass layoff actions -- defined as job cuts involving at least 50 people from a single employer -- increased to 2,933 in May from 2,712 in April, resulting in the loss of 312,880 jobs.
When times are tight, one of the main strategies is to allow attrition to work - it is certainly cheaper. There are also a huge number of total US workers in small companies that will never show up in a mass layoff report because there are too few total workers. I strongly suspect that the Births in the Birth/Death adjustment were overcounted due to reliance on data obtained before the sharp downturn, and I think many of them will disappear in a later revision.
And, btw, continuing claims are dropping mostly because people are falling off the rolls. There are now people dropping off the extended benefit rolls.