Could the Employment Picture Be Better than the Government Reports?

Groups tracking unemployment may have access to better stats.

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Last week, the country's economic spirits were taken on a two-day roller coaster ride. On Thursday, numbers from payroll firm ADP suggested a jump in employment, estimating that the private sector added 157,000 jobs in June, fueling hopes for a recovery that was back on track. Twenty-four hours later, the bubble burst when official government unemployment numbers said that the economy created only 57,000 private-sector jobs in June. Subtract the 39,000 jobs lost in the public sector, and the economy added 18,000 jobs last month, creating a 0.1 percent bump in the employment rate. ADP isn't the only firm whose figures contradicted the Labor Department's; as of June 30, polling firm Gallup put the U.S. unemployment rate at 8.7 percent. Business association the Conference Board's Employment Trends Indicator, released this week, saw a minor improvement in the June jobs scene, even after the Labor Department indicated otherwise.

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Though it appears that several outside indicators were overly optimistic—or just flat-out wrong—about June's jobs situation, the truth is much more complicated. Different organizations produce their own employment estimates by capitalizing on their own access to exclusive data. ADP's figures reflect its many clients' payroll data—the company estimates that it pays 1 in 6 U.S. employees. The Conference Board's Employment Trends Index boils eight separate employment indicators, including data from the board's consumer confidence survey, down to one score. The Society of Human Resource Management, an association of human resource professionals, predicts employment trends a full month ahead of time, based on surveys of human resource executives at manufacturing and service-sector firms. Even online job websites, like, construct employment indices based on online job posting volume. And because these organizations all have access to data that the Bureau of Labor Statistics does not have, they are together able to provide fresh insights into broader job market and economic trends.

There is a mismatch between jobs and workers.

The Society for Human Resource Management predicts both drops in employment and increased "recruiting difficulty" for July. In other words, despite slews of unemployed workers, many of those firms that are hiring are still not finding sufficiently qualified candidates for their high-level jobs. Industries like healthcare and manufacturing are now increasingly requiring specialized technical skills for many of their new positions. Disagreement over a governmental job training program, Trade Adjustment Assistance, is currently holding up congressional ratification of three bipartisan trade deals. The president wants the program included in the deals, but some congressional Republicans believe it should be cut and move through Congress on its own.

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Jobs are important, but other factors are key to economic confidence.

Gallup indicators of economic confidence and job market health do not appear to track closely together. Gallup's Job Creation Index, which measures the percentage point difference between employed people who say their workplaces are hiring and those whose employers are firing, has been on a slow but steady upward trend since early 2010. Currently it is at 14, up 8 points from where it was a year ago. The firm's economic confidence index, however, is at -42, down 11 points over the last year. This may reflect any number of economic factors, like increases in food or gas prices, or general pessimism about future job creation.

The job market is firmly stuck in neutral.

Though some private indicators seem optimistic and Labor Department numbers seem dismal, the full picture shows that job creation has simply ground to a halt. Gallup's job creation index has improved markedly over the last year but has flatlined in recent weeks. The Conference Board's Employment Trends Indicator was up slightly last month, to 100.0, but has hung between 99 and 101 since February (over the last decade, the index has ranged from 87.2 to 122.5). Taken together, all of these indicators indicate longer-term stagnation, with recent upticks or dips being very small. Even ADP's overblown June estimate of 157,000 new private-sector jobs would have represented a modest increase. Many economists predicted a June jobs increase of around 100,000, counting public-sector job losses, which is only barely in the range of what is needed to keep pace with population growth. Gad Levanon, associate director of macroeconomic research at the Conference Board, says that his organization's jobs indicator bears out this point: "It's flat at the moment, which isn't a good thing; it signals very weak job growth, but I would say it's still not signaling an outright decline in employment."