I've spent a bit of time looking around for someone else commenting on this business of net job creation during the Bush presidency, and I haven't found much of it. I have occasionally found a mention that acknowledges the increase in the employment figures reported by the household survey, but generally there is a pooh-poohing that it's not really proper to say that one data series is better than the other. This, generally, is true; as I pointed out in the last article, it's wrong to ignore one in favor of the other when one needs to consider both of them to gain a comprehensive perspective. But there's something a bit unusual going on in the economy right now that is illustrated only by the household survey of employment.

There is a neat graph in an article posted over the weekend over at Econopundit, which shows a graph over time of three data series: the payrolls survey; the household survey; and a Yale model which is a predictor of total employment. All three give different numbers, which isn't really the point. Econopundit picks up on one of the key points shown on the graph, but misses on another.

First, as Econopundit points out, the Yale model gives different absolute numbers than measured by either survey series, but as his graph shows, it does track very closely and has a highly positive correlation with actual employment. When the model says employment should go up or down, it generally does, and generally in proportion to the quantity predicted. And right now, under current tax policy, the Yale model predicts 10 million new jobs over the next four years. It probably isn't a coincidence that John Kerry has positioned himself to take credit for this development, by promising minor tinkering with the tax code which, he says, will create--ahem--10 million new jobs over the next four years.

The other point which I think is key is that, as Econopundit's graph shows, while the spread between the payroll and household surveys has evolved over time, nowhere else on the graph but presently do we see the two data series moving in completely opposite directions for a four-year period such as 2000-2003. The mere fact that such an unprecedented divergence of the two series has been going on for so long demands our attention, and points to some highly unusual employment market developments.

Employers right now, buoyed by consistent productivity gains, simply don't want to hire new people even though business has picked up. Overtime and temporary labor and outsourcing to independent contractors has supplied the difference. This has been good for the companies in question, who retain far greater flexibility in staffing and manpower levels; it has also been good for the independent contractors themselves, who now find themselves working for wages and profits, not just wages. It's a rather new trend, which deserves much more consideration and discussion than it has generally received. Demagoguing over jobs lost when measured by just one data series does not serve the country or the economy very well.