"Our 21st Century Economy Needs 21st Century Jobs Statistics"

February 15, 2006

Mr. Speaker, today's job seekers have a vast technological arsenal at their disposal. They can search online for job openings. They can e-mail their contact of networks for leads. They can fax their resumes and conduct job interviews via video conferencing. And if they get enough of the rat race, they can start their own business. That is what goes on today, becoming their own boss.

This dynamic, technologically advanced picture of the American workforce is fundamentally different from that which existed in the late 1930s and 1940s. At that time, most workers typically had life-long employment in long-established companies. And heavy industrial manufacturers were among the most common employers.    

In six and a half decades, Americans have experienced a sea change in how we look for work, where we work, and how often we find new work. We have progressed into a wired, upwardly mobile, flexible workforce. Small business, self-employment, and independent contracting have become the hallmarks of our entrepreneurial innovation-driven economy.   

 With such a drastic transformation, you would expect the way we measure employment would have evolved too. Yet our most frequently cited survey of job creation remains mired in a Depression-era mindset and research method. The Bureau of Labor Statistics' payroll survey tracks payroll employment by surveying established businesses. This results in monthly job creation numbers. The household survey, on the other hand, tracks employment by household and produces the unemployment rate from that.    

While the household survey tracks all types of employment, from someone who holds a lifelong job at a big business to someone who just became their own boss, the public and private sectors have historically relied on the payroll survey to gauge national job growth. When we look back to the pre-World War II economy, favoring the payroll survey makes sense.    Today, however, Mr. Speaker, the employment landscape is entirely different. Just look at the area I represent in Southern California, with its biotechnology facilities, independent IT contractors and small, specialized consulting firms. Yesterday's start-up is today's big business, and today's brainstorm is tomorrow's start-up. It is not surprising then that the payroll and household numbers portray quite different results.    

The disparity between the job survey became particularly apparent throughout the early stages of the post-recession recovery that we enjoyed in 2002 and 2003. While the payroll survey lagged for months, the household survey demonstrated a strong and growing workforce, where self-employment accounted for one-third of all the new job creation that we saw.    

Following the end of the recession in November of 2001, job creation in the household survey rebounded by the following May. Although there were some ups and downs in the ensuing months, the household job numbers never again dipped below the November 2001 level. By November of 2003, more than 2.2 million net new jobs had been created, and the pre-recession job numbers had been surpassed.   

 By contrast, the payroll survey did not demonstrate net job growth until August of 2003 and did not return to the November 2001 level until April of 2004, nearly 2 years after the household survey had caught up. And the payroll survey's pre-recession job numbers were not surpassed until February of 2005, a year ago. This prolonged lag in the payroll survey's job creation numbers led to claims, and you will recall this, of the ``jobless recovery.''   

Mr. Speaker, while every other major indicator of economic strength surged forward, from the gross domestic product numbers to productivity, the payroll survey persisted as an anomaly of negative news.    

Only the household survey was able to accurately portray the strength of our workforce because of its ability to track the nontraditional employment that the payroll survey misses. In an already-dynamic economy, the increased churn created by economic expansion only highlighted the growing inadequacies of a Depression-era payroll survey. Using the 20th century methods to take a snapshot of the 21st century employment picture simply did not work.    

To launch an overhaul of our job surveys, I introduced H. Res. 14, which called on the Bureau of Labor Statistics to review and modernize the way we collect our jobs data. BLS conducted a report that analyzed the two surveys and evaluated options for change. While the report stopped far short of proposing a complete reform of the surveys, it did acknowledge that a growing discrepancy exists between the two numbers and determined that further analysis is necessary.    

Mr. Speaker, I am pleased that BLS has taken this very important first step. But it is only a first step. We must continue to push for reform so that our job surveys effectively track job creation. After all, policymakers rely on accurate economic data to draft effective legislation, and businesses need the right numbers to plan for their future. In an economy where the only constant is change, unreliable numbers will result in off-target legislation and poor business decisions.   

 A modern economy needs modern statistics, and we must make sure that we give it that.