Invented Employment Statistics

January 9, 2007

Invented Employment "Statistics"

We often rant about how the headlines over Silicon Valley job gains are not reflected in real life.

To illustrate the point, we invented a new statistic "CHARGE" (Construction, Healthcare/ Hospitality and Retail, Government, Education) jobs. A distressingly large portion of new jobs show up in this category.

Of course, there's nothing "wrong" with CHARGE jobs. However, they are the polar opposite of the types of jobs mainstream pundits keep proclaiming are again being created in Silicon Valley.

As if the CHARGE jobs revelation isn't bad enough, we also discovered the local paper's monthly jobs report includes invented data.

Let's start with the employment table exactly as it appears in the local paper:

Nov'06 1MoChg 1YrChg

Total Workforce 855.3 0.4% 0.6%

Employed 817.1 0.1% 1.3%

Unemployed 38.2 7.6% -12.2%

Unemployment % 4.5% 7.1% -11.8%

JOBS

Total Jobs 894.8 0.2% 1.6%

Total Farm Jobs 6.2 -18.4% 0.0%

Goods Producing 217.8 -0.3% 0.6%

Services Providing 670.8 0.6% 1.9%

GOODS PRODUCING:

Construction 46.3 -1.5% 1.8%

Computer Periph. 28.5 0.0% 2.5%

Semiconductors 51.6 0.0% 1.6%

Electronic Instrmnts 19.0 -1.0% -5.5%

Nondurable Goods 12.4 0.0% -1.6%

Other Mfg. 60.0 0.3% 0.3% <--?

SERVICES:

Trade, Transport 137.5 2.2% 1.6%

Information 36.4 0.8% 3.4%

Financial Act. 37.1 0.8% 1.9%

Prof/Bus Services 162.4 0.2% 1.9%

Health Care /Soc Asst 69.2 0.6% 1.5%

Leisure /Hospitality 74.1 -1.7% 3.6%

Education 78.6 1.6% 1.9% <--?

Government 50.1 -0.2% 0.4% <--?

"Other" 25.4 0.0% 0.8% <--?

The footnotes read, "Source: California Employment Development Department," which is otherwise known as California EDD.

At risk of distracting from our main point here, let's critique the additional cheerleading which accompanies the table:

"Silicon Valley's job market heated up more in November."

---A gain of 0.4%, raising the 12-month gain to 0.6%, qualifies as "heated up more"?

"Seasonal October-to-November job gain was more than twice the typical increase."

---So are 40% (or whatever) of the November gains only "seasonal"?

"Local retailers (added)... 1,200 jobs in department stores... and 900 jobs at clothing... stores."

---Do you see "retail" anywhere in the published list? EDD places "retail trade" under "Trade, Transportation." If this is what they meant to claim, 69% of new jobs in "trade, transportation" were in retail.

"For the 33rd consecutive month, the information sector expanded on a year-over-year basis."

---Yet the total is still only 36.4ku or barely 4% of total jobs. Who cares?

Back to the point at hand, here are some interesting tidbits from the EDD database:

1) There is no single EDD line item called "Education." "Educational and Health Services" is shown as 95.7K jobs. There is no subset matching the newsparers "Educational Services" at 28.9Ku jobs and NO sub-entry in the database listed at 78.6K.

2) "Government" is listed at 93Ku by EDD, not the 50.1K listed in the paper. Did the paper invent a new subset? Or decide to "discount" the EDD number?

3) There is no entry for "Other manufacturing" or "Other services." These are catch-alls invented by the writer to make the totals add up. They are effectively meaningless.

In short, the paper invents several new categories of jobs. A reasonable person would question if the numbers in these newly-invented categories were invented as well.

Using "real" EDD data, let's now check November, 2006, 2005, 2001 and even 1996 jobs:

Nov'06 Nov'05 Nov'01 Nov'96

Total Workforce 855.3 850.2 919.0 906.6

Employed 817.1 806.6 850.9 875.4

Unemployed 38.2 43.5 68.1 31.2

Unemployment % 4.5% 5.1% 7.4% 3.4%

JOBS:

Total Jobs 894.8 880.7 865.0 904.2

Total Farm Jobs 6.2 6.2 4.7 5.1

Goods Producing 217.8 217.1 271.6 280.4

Services Providing 670.8 666.8 684.5 618.7

GOODS PRODUCING:

Construction 46.3 45.5 46.1 34.8

Computer Periph. 28.5 27.8 46.6 44.9

Semiconductors 51.6 50.8 65.2 71.6

Electronic Instrmnts 19.0 18.0 29.1 34.9

Nondurable Goods 12.4 12.2 16.6 20.8

Other Mfg. * * * No such category * * *

SERVICES:

Trade, Transport 137.5 135.3 143.1 140.9

Information 36.4 35.2 37.5 27.0

Financial Act. 37.1 36.4 35.7 31.7

Prof/Bus Services 162.4 159.4 183.1 161.9

Health Care /Soc Asst 69.2 68.2 65.5 56.3

Leisure /Hospitality 74.1 71.5 67.7 60.9

Educational Svc.s 30.9 30.1 26.9 23.9

Government 97.8 96.9 98.8 90.1

"Other" Services * * * No such category * * *

"CHARGE" Jobs 318.3 312.2 305.0 266.0

35.5% 35.4% 35.3% 29.4%

Conclusion:

Santa Clara County is -9.4Ku jobs below November, 1996 but +29.8Ku jobs vs. November, 2001.

Despite our kvetching, there are still +5.1Ku y-o-y new jobs over the last 12 months.

So what's wrong with that? I'll tell you what's wrong:

A) When you back out new CHARGE jobs, we actually LOST JOBS over the last 12 months!

B) CHARGE jobs are running just over 35%. This is an apparently-permanent shift of +6% (= 50Ku+) jobs into sectors paying minimal wages, subsidized by the tax code and/or not expected to actually turn a profit.

Does that sound like a jobs recovery to you?

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The above is not intended as advice to buy, sell or hold any stock, bond, real estate nor any other financial product or service. Buy and sell at your own risk (just like we do.)