Reg's Blog

Senior and Post-Acute Healthcare News and Topics

Fables, Tales and Job Reports

Before too much rancor sets in among readers, I’ll admit that my content has strayed just a bit lately from health policy, etc. to politics and economics.  This too shall pass and rather quickly.  This post is for a friend and reader who e-mailed me earlier about the ADP job report and what it means for the current political debate regarding the economy.  The following is my brief answer.

For those who don’t typically follow economic data, the ADP report is a monthly barometer tied to private, non-farm, non-governmental payroll data.  ADP is the largest processor of payroll in the U.S.  Their report is the result of accumulating payroll data and arithmetically, modeling the data into employment changes (jobs added, jobs lost).  Today’s report indicates that 158,000 private, non-farm, non-governmental jobs were added in October.  On first blush, this is a plus as most economists were forecasting less than 100,000 new job adds in the month.

Politically spun, this a plus for Obama and while not a total downer for Romney, a shot across the bow.  The report rallied the stock market as expected.  Coming less than a week before election Tuesday, the report will either gain momentum based on tomorrow’s BLS report (federal job and employment data from the Bureau of Labor Statistics) or turn idle if the math doesn’t jive.  I suspect a high degree of alignment.

To the title of the post and the reply to my friend and reader: The accuracy of the ADP number and the BLS numbers is highly suspect.  While their respective releases make prominent news their corrections don’t.  Consistently and over time, the corrections are where the real story is.  Before anyone, including my friend, “jumps the shark” (a reference to Happy Days and Fonzie) and takes today’s report and tomorrow’s report as indicative of anything, let alone a sign to vote one direction of the other, consider the following.

  • Even at 158,000 new jobs for October, the ADP report if accurate only indicates very slow growth.  Job losses for the month were still above 350,000.  Push and pull at the two with fifth grade math skills and a bit of common sense, this is not a sign of robust growth or even a foot-hold on longer term recovery.
  • The ADP report does not cover the “core” of relative job data.  For example, we don’t know “what type of jobs” (part-time, full-time, permanent, etc) or at what rate of pay.  As is typical at this time of the year, seasonal retail is bulking-up and part-time, low to moderate wage jobs are added.  These are not permanent jobs with benefits or for that matter, “game changers” for recovery.  Similar to the last BLS report that dropped the unemployment rate, free-lance, part-time, ad hoc and so forth can be counted a variety of ways and reported as employment or jobs.
  • ADP has recently changed its calculation methodology to “more accurately reflect” real time changes in employment.  Important to note is that ADP’s data is proprietary and only results are shared.  A quick glimpse difference in this report is a rather large shift to job growth among large businesses.  While I won’t state openly that this is troubling from a validity standard, it is outright curious as to this point and through recent periods, large business job growth has been “zip”.  Also somewhat curious to me is the strong results in construction job growth against a decrease in manufacturing.  I buy the manufacturing but I question a 23,000 jump in construction if for no other reason than I’d like to see the type of job, especially at this time of year.  True, new housing construction is up but commercial is flat and government spending for infrastructure is at low tide.
  • Finally, ADP like the BLS data is consistently “wrong” and not just by a little.  Post period revisions are common and rarely, especially of late, are the revisions “up”.  For example, the BLS data and the ADP data are effectively the same in their raw state yet the difference between the two over recent periods (last three years) annualized to 400,000 jobs; ADP overstatement.  The ADP methodology revision I referred to is supposed to correct this gap but as it is new (first month), only time will tell.  I am skeptical at best.  Under the old estimating method, September’s report was 162,000 new jobs later revised to only 88,000.

Economic data like jobs reports, etc. point-in-time or snapshot reminds me of a phrase used by former British Prime Minister Benjamin Disraeli: “There are three types of lies – lies, damn lies and statistics”.  For any of this data to truly become meaningful from a complete economic perspective, it must be consistent over time.  Jobs are only a fraction of the issue with the greater weight of type of job, wage, benefits, sector, etc. all required additions.  Similarly, new jobs as a sole measure must balance out organic labor growth (new workers), existing unemployment levels at the U6 level (the total number of people unemployed and underemployed including those who have given up looking for a job which today remains precariously close to 15%), and rolling job losses.  At 158,000, if accurate, this is approximately a net “gain” of 58,000 jobs as by consensus measures, 100,000 new workers enter the economy monthly.  The truest measures are wages/income and percent of total population capable and willing to work, working/employed on a consistent basis.  Don’t look for this economic measurement to be truly positive and reflective of a go forward change in momentum prior to next Tuesday or for that matter, any time in the near future.

November 1, 2012 Posted by | Policy and Politics - Federal | , , , , , , , | 4 Comments

One Week

One week from today is the national election for president, every seat in the House of Representatives, and one-third of the Senate.  Additionally, there are numerous gubernatorial elections and local or state-wide races at issue.  No other nation on the face of the earth affords, nay protects, the rights of all of its citizens to partake directly in government.

The U.S. is unique in that its government is a representative form of democracy.  We directly elect those we wish to represent us at every level of government; local, state and national.  The power, used correctly, is that each voter contributes directly to current and future outcomes of the governing process.  The power used incorrectly, or in my view abused, occurs when we get government by abdication.  Power can be used correctly to instill direction and movement.  It can be misused, creating havoc, uncertainty and upheaval (Syria, Egypt, and Libya come to mind as recent examples).  Power can also be fallowed; left unused and thus on-the-shelf, inappropriately placed perhaps waiting for some future opportunity.  In our form of electoral process, power is given and protected often at great human cost, with the intent of use, not misuse and not left unused.

In 2008, the national election was prized as a great example of engagement and voter turnout – just a shade over 60%.  In terms of turnout of the voting age population, the number was just under 57%.  By any statistical measure, more than one-third of eligible voters abdicated their individual power and decided that the other less than two-thirds would decide their course for the next four years.  While I have no statistics in terms of how many voters merely failed to vote for a national race yet participated locally, I suspect the real results are inverted – they voted nationally and failed to cast a local or state-wide vote.

Projections for this cycle suggest a lower turnout than in 2008.  How sad.  Even sadder is the certain lament I will hear from folks about the outcome, the course of the country and the assorted woes and struggles that are apparent for most who choose to abdicate their power.  The disconnect between how “things” work and who influences direction is a crevice that demands attention.

Like the candidates or not, next Tuesday is a monumental day in the U.S.  To anyone paying attention, the choices on our ballot are clear.  As I have said before, I am not partisan moreover, opinionated for reasons I articulate in my writing.  Frankly, I could care less how people vote, just so they do.  Government by abdication scares me in what is left of this free (or mostly) society.  I fear slippage will continue if we can’t marshal our collective rights, utilize them, and express our personal and where applicable, collective opinions.

As I wrote previously, elections have consequences.  Those who vote typically understand the consequences far better than those who don’t vote.  Today, the potholes and sink holes are fairly evident yet what we fail to grasp is the depth.  Like all elections, this one is consequential but for reasons perhaps to economically wonky and policy wonky for many to grasp.  I just hope that the sense of either right-course or wrong-course is palpable enough today to muster a stronger turnout than predicted.

For me, the direction is clear.  I am at heart, an economist and a policy guy.  I love the detail and spend much of my days working with folks on the guts and outcomes of health and economic policy.  I think I see the big picture and gravitate to the broad solutions rather than the micro.  I am after all, someone who has built businesses and had success by finding solutions and compromises across broad issues and strategies.  I think of things as issues where convenience breeds unintended consequences and follow most acutely, the wise words of my father: ‘Tell people the truth, even if you know it’s not what they want to hear, tell it to them just the same”.

I know election hype is less about truth in the media or the debates as people seek style rather than substance and the forums provide little opportunity for substance.  Yet substance is available for those who seek it.  Records are public, depicting action and inaction.  Most outcomes are known or knowable for those who want to ponder and probe just a tad deeper than the conventional news cycle.  Character is fairly displayed.  We can frankly, make clear decisions with sound logic on the policies and ideas that matter and if brave enough, tune out the conventional opinions, polls, political caricatures and robo calls.  We have the power and while it is cliché, a comic book hallmark stated it best: “With great power comes great responsibility”.

October 30, 2012 Posted by | Policy and Politics - Federal | , , , , , | 1 Comment