I hate NFP Friday. The numbers are flakey. There are about 130mm workers. This morning we hear that total jobs increased by 80K. The reported number represents a change of 0.06%. This extraordinarily precise estimate is made based on a survey of only 1/8% of households. The error rate on the calculation is easily +/-250,000. And don’t get me started on the Birth/Death calculation.
Social Security reports income from payroll taxes. The following looks at the September, October and November numbers for 2008 through 2011 (SSA has Nov. 11’ estimate out). You tell me if there is any evidence of improvement.
The three month totals reflect the YoY improvement. But consider the 08 - 11 comparison.
My conclusion looking at the NFP #s versus the SS data is that there may be some jobs being created. But they don’t pay very much. On the whole, we still have not caught up to where we were three years ago.
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Your observations are confirmed by the Treasury's reporting of withholding taxes--still down from 2008 and only slowly drifting upward since 2009, FWIW.
ReplyDeleteThere is one problem though. This year there is a tax cut in social security tax. So that may underestimate this year's true strength.
ReplyDeletehave you taken that into account?
George H is correct.
ReplyDeleteFor 2011 only, the employee portion of Social Security is reduced to 4.2% instead of 6.2%. This payroll tax holiday was legislated as part of the Tax Relief Act of 2010. Starting 2012, the employee-portion of Social Security will revert back to the full 6.2%.
Looks like improvement. Can't make up the revenue numbers. Technically they can, but still.
ReplyDeleteGeorge H and Ricardo,
ReplyDeleteThe numbers I used in the charts reflect the 2% reduction in FICA for 2011. Treasury is paying SS monthly for that shortfall.
These are apples to apples comparisons.
@ George H -- Bruce is right to say that Treasury is making up the 2% to Social Security (makes you wonder why the accounts are separate, right?). If you are referring to the withholding numbers, remember that as part of the deal on the payroll tax cut, the Making Work Pay tax credit was eliminated and I believe that the new withholding schedule reflected both of these changes. By my estimation (and I'd love to have someone tell me I'm wrong) the Y-O-Y net reduction in withholding ought to be around 1% if everything else was equal.
ReplyDeleteBut don't worry--in January the 2% payroll tax cut will end. We'll see how the economy responds as all the working stiffs take a pay cut (on top of increasing health care premiums.)
"the confidence interval for the monthly change in...employment from the establishment survey is on the order of plus or minus 100,000"
ReplyDeletehttp://bls.gov/news.release/empsit.tn.htm
...For 2011 only, the employee Social Security is reduced to 4.2% instead of 6.2%, legislated as part of the Tax Relief Act of 2010. Starting 2012, the employee-portion will revert back to the full 6.2%.
ReplyDeleteThis is the change game that is not any real change. One year it is down 2%, next year it is up 2%. Everyone waits with bated breath at these changes that mean absolutely nothing to help America get back her jobs, so the job numbers do not change much because no fundamental changes have occurred, just views of smoke and mirrors.