Friday, November 7, 2008

Birth Death Model Overstates Employment... Again

The Birth Death Model once again overstates employment. In other words, things are a lot worse than the 6.5% rate presented to us. Per The Big Picture:

Since 2003, the B/D adjustment has been part and parcel to BLS' Current Employment Statistics (CES) program, the official measure of US employment. In brief, the Birth Death adjustment imagines (hypothesizes) how many jobs were created by companies too new and/or too small to participate or be found by CES. The model attempts to create what is perceived as a BLS error at the start of any recovery, when many new jobs are created but missed by BLS.
Does anyone think small businesses have really added 50,000 jobs to the financial sector over the past 12 months?
Source: BLS


  1. Well, in one sense you might argue that of all the financial sector folks that have been laid off, some have probably started boutique firms or consulting or something like that. But 50k in one month?

    And I'm way more skeptical of the 300k+ 'small business' jobs in the Leisure & Hospitality. Although, maybe one new bartender for every 1000 people in the country isn't that unfathomable 'in these hard times.'

  2. just to be clear, the chart shows the change over the past year (not the month of october vs. last october). i.e. the 50k in financial services jobs is over the past 12 months.