I seem to have hit a nerve with last Friday’s Daily Edge questioning the validity of the Bureau of Labor Statistics guess that 243,000 seasonally adjust jobs were created in January. To reiterate, withheld income and employment taxes paid to US Treasury daily indicate about a 1% nominal growth rate in wages and salaries. That is much too slow a growth grate to generate 243,000 new jobs.
Those few who objected to my analysis focused solely upon seasonal adjustments. My point is not that the seasonal adjustments by themselves are the issue. Yes each January several million jobs are lost. And yes, the BLS claims to have a methodology as to how to adjust that. I really do not care about how and why they come up their seasonally adjusted job estimate.
There are two issues about the jobs number that are important. The first one, as I said earlier, is via analyzing income tax withholdings that wages and salaries are growing much to slowly to generate very many jobs. A second and a much bigger and more important issue, is why does the Bureau of Labor Statistics still use surveys of employers and surveys of workers, which are then benchmarked to stale quarterly state unemployment tax data, a methodology first developed over 30 years ago?
When employers banks send the amount of money withheld from all employees paychecks to the US Treasury each and every payday, included in that information is total pre tax and total after tax income for all. Not only is wages and salaries available in real time but so is how many people are employed, how much are they making, where they are working and in what industries.
Why does the BLS and Bureau of Economic Analysis not use this real time Treasury data? What are they afraid of? The only reason they might not want to use real time data is that then who would need the thousands of govt economists who are good at doing surveys and seasonal adjustments? Not one person who responded to last Fridays Daily Edge asked or commented about my question as to why the BLS does not use the real time data. Nobody!
All the worlds financial markets trade in real time. The US government uses snail mail technology for the most important national financial information; incomes and employment.
This is not a new argument for me. I first wrote an oped in the Financial Times in 2007 asking why the Treasury does not use the real time data imbedded in withholding payments. The answer I got was to mind my own business. Maybe those of you out there who are big Ron Paul fans, perhaps you can ask him why he does not support using real time government data. I even tried to have several journalists do a story and those journalists got stonewalled by the BLS and BEA.
This is truly crazy making to me. That our government would ignore real time data so that the status quo of existing government jobs can continue is not a surprise. But what is a surprise is that no one else seems to care besides me.
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