Friday, January 30, 2009
The Reporting On Job Losses Is Very Misleading
Pointing to a Dow Jones piece adding up the announced job losses this month, a popular approach that is actually very misleading. During the same period, the US economy created about 2 million new jobs, or about 100,000 for each business day. There are no headlines about this, because they are small increments in existing companies or new companies. The problem is the media focus on GROSS losses rather than NET losses. It is an incessant pounding that contributes to the negative feedback loop. Using actual state unemployment data from the last recession to analyze 2001, the net job loss for the year was about 3 million. The gross job loss was about 33 million. New job creation was 30 million. By taking the Dow Jones "add 'em up" approach, we make the problem seem ten times worse than it actually is. And please do not misunderstand. The job situation is bleak, as there is nothing good about monthly net losses exceeding 500K. It is also perfectly normal for media to report on layoff announcements. However, normal reporting tendencies exacerbate negativity.