Last year, countless polls showed widespread disapproval of the state of the economy, especially regarding inflation. In response, the Biden administration hung its hat on supposedly blockbuster monthly job gains. But new data show those numbers overestimated job growth by almost 800,000 in 2023.
Each month, the Bureau of Labor Statistics reports how many nonfarm payrolls have been added across the country. These figures come from a survey of 666,000 businesses and offer timely updates on important economic data.
Unfortunately, these monthly reports are subject to a variety of statistical problems that can sometimes produce significant errors. One example seen in 2023 was with preliminary data consistently being revised down in subsequent reports.
Of course, many news stories don’t report on the downward revisions to previous months’ data, just the current month’s surprisingly fast growth. The result was that in almost every month of 2023, thousands of jobs being added to the economy were ones presumed to have already existed.
But even after downward revisions effectively wiped away hundreds of thousands of jobs from the cumulative total for the year, these monthly reports still overstated annual job growth.
The BLS also publishes a quarterly census of employment and wages. Unlike the monthly job reports, which rely on a relatively small survey, this census reaches about 18 times as many businesses, covering 95% of jobs in the United States, with figures available down to the county level.
One downside to the quarterly census is that the information is not nearly as timely as the monthly job reports, typically taking five months to be published. Nevertheless, the data is finally in for 2023, and it shows the previous estimates were off spectacularly, even after the huge downward revisions.
Adding up the cumulative change in those monthly reports for 2023 shows annual job growth of 2%. The wider-reaching census data, however, shows annual growth of just 1.5%.
At first blush, one-half of 1% seems like a mere rounding error. But in an economy exceeding 150 million jobs, that’s a significant difference.
Job growth was overestimated by more than 770,000 last year. Put differently, about 1 in 4 jobs that were supposedly added last year never existed. That’s like eliminating all of the jobs gained in three whole months of 2023.
Overly optimistic employment estimates help explain why polling of people’s perceptions of the economy has been so terrible yet the official data from the Biden administration has looked so robust, at least in terms of the number of jobs. Much of the other data has been downright rotten.
With prices rising faster than earnings, the average worker’s weekly paycheck buys 4.4% less today than when President Biden took office. Homeownership affordability has plummeted because the monthly mortgage payment on a median-price home has more than doubled. Three-quarters of Americans now view fast food as a luxury they can’t afford. Gasoline prices are up 46%.
And now, even the job numbers have lost their luster, especially when you consider that millions of those added jobs are from double counting. Whenever someone who is already employed has to get a second—or even a third—job just to help make ends meet, that increases the number of payrolls, without increasing the number of people employed.
The fruit of the tree of “Bidenomics” has ripened, and Americans don’t enjoy its bitter taste. No matter how much the fruit salesman tries to convince customers otherwise, the taste of his product matters much more than his advertising.
Rhetoric is no substitute for results, and proclaiming Bidenomics as a success has not persuaded suffering Americans.
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