Thursday, February 05, 2004

It's not here, it's not there, did you hide it in your underwear? (Jobs)

Dan Drezner was written a nice piece arguing that the job-creation that current trade paradigm proponents advocate are happening, are in fact happening but at small firms. Dan writes:

" As I said in my last outsourcing post, anecdotes about large corporations laying off workers can crowd out information about smaller firms (traditionally defined as less than 500 employees) that are hiring more workers. Since two-thirds of all new jobs are created by small firms, the latter can more than compensate for the former... Obviously, this optimism must be seriously tempered by the shedding of jobs among large firms. Still, one hopes that this is a harbinger of healthy job growth across the board. "

Here is the body of my off-the-cuff response:

As for Dan, I applaud his stirring defense on job creation. Bravo! My rebuttal is this quote from Fed Reserve Governer Barnacke's speech. As he points out the payroll survey has already been revised to take into account startup and small business better. And this morning the oldman heard on the radio that unemployment numbers were up. However as is widely known, the payroll survey is a lagging indicator and the indices Dan cited are leading ones, so he may be right about sustained new job creation. Or the economy could just be having another hot quarter that will cool off again. Time will tell. Dan's defense was impressive. Most impressive. I look forward to crossing wits with him again in the future. Most definitely.

Until then, the oldman leaves you with the important excerpt from the Nov6'03 speech by Bernacke:

" On this latter point, however, a recent redesign of the payroll survey, which among other improvements allows new samples of employers to be drawn more frequently, has likely improved the survey's coverage of startup businesses. Indeed, the latest two benchmark revisions, in March 2002 and March 2003, both revised payroll employment downward; if the main problem with the survey had been a failure to measure employment by new businesses, the revisions would have been upward. "

This quote was previously cited in my 'Oh where did all the jobs go?' post.

Here is an MSNBC peice on tomorrow's widely anticipated unemployment report.

" This time around, some analysts again are expecting a big employment number, boosted in part by seasonal factors related to relatively weak retail hiring in the holiday season. On average analysts are expecting the government to report the economy added 125,000 jobs last month, which would be the best showing in a year but still barely enough to keep up with growth in the work force. But estimates are spread across a wide range of 90,000 to 300,000, according to Thomson Financial."

For the record, the oldman thinks that the employment report will be on the weak side. How weak, the oldman isn't sure but from what he's seen it may have improved but it doesn't feel all that strong. Which just goes to show that the oldman may have too small a sampling population to be representative of the nation. We'll see tomorrow.

More on this this topic, trade, Fed economic intervention, and more to come later this upcoming weekend.


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