A Large Revision to Payroll Employment

Jared Bernstein and Menzie Chinn have wonderful charts and excellent analysis of the implications of that BLS benchmark revision. As Jared notes:

The preliminary revision, announced Friday, was larger than usual: up 810,000. This means that as of March 2006, there were this many more jobs than previously reported, and that employment grew more quickly between March 2005 and March 2006. Given the historically weak record of job growth over this recovery, some have wondered whether this larger than average revision significantly alters that record. The answer, as shown here, is clearly not.

In a similar vein, Menzie writes:

Third, we come to perspective. I thought it would be useful to see whether the revision, against a backdrop of 136 million employees, changes one’s view regarding the trends in employment growth during this expansion vis a vis the previous one. The answer is no. While large in absolute number, the revision does not change the fact that employment growth has been remarkably low in this expansion. Finally, if my assumptions are not far off the mark, then the upward revision in the employment growth up to March 2006 merely accentuates the deceleration in employment growth in recent months.

As Jared quips, the “job market still sucks” even if it doesn’t look quite as bleak as the payroll survey was suggesting before this revision. Menzie also notes that this revised payroll series is not as far off from an adjusted household series, but I would not go as far as Carlos Torres:

The payroll revision “lends additional credence to the signal that the household survey had been sending – that the job market was very tight,” said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. “It explains why consumers have stayed so strong. It’s because they’ve been seeing good gains in their paychecks.”

Sorry to disagree with you Carlos, but real wage growth has not been strong and the employment to population ratio is still stuck at 63.1%.