People throw out statistics all the time, certain that numbers bring certainty to whatever they have to say.
Recent jobs data reminds us numbers don't lie — except when they do
The government recently revised states' workforce declines, which cut Minnesota's decline in half — a reminder of the illusory nature of economic data.
March 15, 2023 at 10:03AM
A data analytics degree is a surefire ticket to a job at many businesses these days. The "language of statistics" is the dominant vernacular at a leading U.S. university, says a recent magazine article about the shrinking number of humanities majors.
Sports fans analyzing player moves cite granular data about that player's performance. Heartless employers impose objective measures to rate their employees. And many sellers of goods want their buyers to fill out a survey about how they did, hungry for data beyond the value of the transaction.
Keep a critical mind as you swim in this ocean of data and numbers, or as you listen to that sales pitch or to a relative arguing that something is just so.
In his 2018 book "The Growth Delusion," journalist David Pilling shows how illusory economic data can be, particularly the most fundamental measure of all — gross domestic product. "It can count a bottle of Evian in the supermarket but not the economic impact of a girl in Ethiopia who trudges for miles to fetch water from a well," he writes.
The federal government's annual revision of state and local employment data, which affected Minnesota's monthly jobs announcement last Thursday, led me to re-check something I expressed certainty about in my first column in January — that Minnesota is seeing its workforce shrink faster than most states.
The new revised data shows the decline in Minnesota's workforce isn't nearly as steep as the old data said it was.
What's more, the overall U.S. workforce is said, by the new data, to be a bit larger than it was before the pandemic. The old data showed it was 1.5% smaller.
Narratives take hold and are reinforced by numbers. And this decade's big narrative — though currently overshadowed by the inflation and interest rates — is that labor in the U.S. is changing from abundant to scarce.
This is mainly due to the retirement of the baby boomers, our biggest generation of workers. The more restrictive immigration policies started in the Trump years, and deaths of working-age people from COVID-19, also play a role.
The revision of the state and local employment data happens as the federal Bureau of Labor Statistics combines its ongoing surveys of households with information that comes from the Census Bureau. This leads to a recalculation of "all the factors that go into their formula," says Angelina Nguyen, director of the labor market information office at the Minnesota Department of Employment and Economic Development.
This process at the federal level is the reason why DEED, which around the 20th day of each month typically announces jobs data from the previous month, waits until March each year to discuss what happened in January.
As my colleague Kavita Kumar reported last week, the latest revisions meant Minnesota's unemployment rate did not fall below 2% during summer 2022, as was initially reported.
Diving deeper into the revisions, Minnesota's workforce of approximately 3 million people has shrunk by only about 47,000 from the start of the pandemic with this new data, not the 94,000 I cited in January using the original data.
The state's place in the national picture is also better. Under the old data, Minnesota had the sixth-biggest percentage decline in workforce since the pandemic's start. After the revision, it's in 12th place.
If we know there are going to be such important revisions to economic data, why report the initial numbers in the first place? Like weather forecasts or corporate announcements, incomplete information is enough for prudent action.
"It's a balancing act because we want to share data as soon as it becomes available," Nguyen said. "And so we do monthly releases ... and then, once the BLS gets better data, it makes sense to go back and revise."
While the revisions show a more modest workforce decline in Minnesota, it's still incredible to see such shrinkage after a century and a half of growth.
The prospects of a return to growth don't seem to be getting better. Many economists expect at least a short recession later this year. I'm still doubtful that will happen, but it would create even more drag on workforce size.
State budget officials, in their latest announcement two weeks ago, estimated Minnesota would add 1,000 jobs a month for the 2024-25 government fiscal cycle and beyond. That's not much, but it's not decline. They also still expect growth in individual income tax collection, though at much lower rates than recent years.
How state workforce size data changed in latest BLS data revision
Growing states that are growing faster: Arizona, Florida, Indiana, North Carolina, Oklahoma, Texas, Utah
Growing states that are growing slower: Alabama, Alaska, Colorado, Delaware, Georgia, Idaho, Montana, Nebraska, Oregon, South Carolina, South Dakota, Washington
Growing states that turned into falling states: Rhode Island, Tennessee
Falling states that turned into growing states: Arkansas, Kansas, Nevada, New Jersey, North Dakota, Virginia
Falling states that are falling slower: Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maine, Minnesota, Missouri, New Mexico, New York, Pennsylvania, Vermont, Wyoming
Falling states that are falling faster: California, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, New Hampshire, Ohio, West Virginia, Wisconsin
Pioneering surgeon has run afoul of Fairview Health Services, though, which suspended his hospital privileges amid an investigation of his patient care.
