Why You Should Be Looking at Jobs Number Trends, Not Monthly Data

After New Jersey Labor Commissioner Hal Wirths said that monthly jobs numbers are “worthless” one budget reporter decided to look further into the importance of labor figures. Michael Hill recently sat down with NJ Spotlight reporter John Reitmeyer to discuss what he found.

Hill: Labor Commissioner Hal Wirths said that monthly jobs numbers are “worthless”. The other people you spoke with, did they agree with him?

Reitmeyer: Maybe not in the same language, but they definitely downplayed the significance of jumping to conclusions every month when jobs numbers come out and taking them as some sort of a gospel measurement of what’s going on in our state economy.

Hill: How much do monthly job numbers really tell us about the overall economy in the state and the state of the economy? I guess that’s what people are more or less getting at.

Reitmeyer: Yeah. So they’re a good measurement of both employment and of raw jobs. What they give us every month is an unemployment rate and they also give us a scorecard on whether we gained or lost jobs that month and there’s also some granular detail if you want to take the time to look into it. All the way down to the job sector, like say did construction have a good month or not? The problem is the numbers are based off surveys. Surveys have margins for error. They’re also looked at again and again and sometimes revised and so there will be fluctuations that look astounding one month and then the revisions come out and they may become much more modest. They may grow larger, but the revisions tend to tell the story after the fact.

Hill: And that’s when we hear seasonally adjusted numbers and things like that.

Reitmeyer: That would be one of the factors that they look at to make these adjustments, certainly.

Hill: Are there better economic indicators, better numbers out there, better ways to determine just how well we’re doing month to month?

Reitmeyer: Well, what the economists would tell you is there are, you should look at a number of different things. So the unemployment surveys and the jobs surveys would be one thing. Also look at how many people are filing for unemployment insurance. There’s also payroll data that comes out as well and so taken together they tend to paint a wider picture than just say the raw number.

Hill: And when people look at the numbers from April, for instance, they see a decline. I’ve heard a lot about how that’s attributed to the Verizon work stoppage.

Reitmeyer: So, definitely we just received a federal jobs report a week ago and that was definitely something that economists said should have been looked at as a factor. Many people viewed it as less than impressive, but you have to take in mind that there were a number, especially in this region, of people who technically weren’t working because of that strike who now it seems like will be working again.

Hill: Are the monthly job numbers good for anything realistically?

Reitmeyer: Well, they’re really good for politicians who want to lob some bombs because, like we saw when the federal report just came out, not too long Donald Trump came out with a tweet that called it a bombshell against the Obama administration. Gov. Christie once attacked then incumbent Democrat Jon Corzine for a jobs report that was very high at the time.

Hill: So the governor himself has, while he has more or less, criticized someone else for “cherry picking”, he more or less has done the same thing.

Reitmeyer: Well, I think if you really read what the governor has said, especially as he’s been in office for a number of years, you can tell that he has tailored his comments on the unemployment issue to trends, and that’s what the economists say. The unemployment numbers are less important than the trend. Have you put together three, four, five months where you’ve had job gains? Have you put together months where you’ve had job losses? I think what you see with the governor’s commentary more recently is he’s starting to go right to that line of thinking.

Hill: So is that what most of the folks you talked to agree then: follow a trend, not just one month but look at two, three, four, five, six, seven months or so?

Reitmeyer: Absolutely and that’s what makes this year difficult because January and February got off to a poor start. We had a really good month of March. We’ve been up and down. April had some losses. We’re still waiting for the May numbers. It’s been hard for lawmakers. They’re trying to craft a new budget and they’re trying to see into the future what the economy is going to do. It’s a lot easier to do that when you have a nice, easy trend line, but for New Jersey it’s been fluctuating.

Hill: I know in some of the reports that you have some of the people warn against knee-jerk reactions in looking at some of these monthly numbers.

Reitmeyer: Yeah, and that would go back to the idea of drawing a conclusion assuming that the numbers again, remember that there’s margins of error. They’re surveys, they tend to be revised. They’re actually further revised every year by the federal government, what’s called bench marking, and so if you’re, it’s all about the information. So if you’re making decisions you want the best information possible and the lesson is sometimes these monthly job reports, though they get kicked around in the political arena, aren’t necessarily the best information for decision makers who are making policy.

Hill: Are we as journalists guilty of perpetuating though the importance of these monthly jobs numbers?

Reitmeyer: I think that we have to be smart in the way that we present them. You’ll notice a lot of times when we get the information it’s called preliminary, or it’s shaded a little bit. If we don’t do a good enough job of portraying that these do have some tendencies to be revised then yeah, I think journalists, in general, could do a better job of that.

Hill: Especially when the numbers come out, as you said, say that they’re preliminary and then go from there.

Reitmeyer: Yeah, or to write about trends, also. To report on trends in the case of New Jersey this year the trend has been up and down, but last year we actually had a really good year for job growth last year and the trend was a pretty constant line up.