It pays to be skeptical of numbers one doesn’t know much about. In economics, early numbers are often based on assumptions subject to substantial later correction. People appreciate the timeliness of early jobs numbers — which often regrettably prove to have been erroneous.
About halfway through every month, New York State’s labor department publishes a jobs report by place of work for the previous month. The jobs data for June just came out. The July one is scheduled for release August 15. About a week later every month more detailed data is published about changes in the labor force.
It doesn’t take long for the media to publish the new numbers as though they were the gospel truth. June’s jobs data was released by a Department of Labor email last Thursday, July 18 at 12:36 p.m. The Daily Freeman, a Kingston newspaper, placed the data on its website under the category “Breaking News” at 1:37 p.m. that day. Page 3 in the print edition the next morning featured a story headlined “Ulster tops in private-sector growth.” Attributed to “Freeman staff,” the article proclaimed that the non-farm labor force in Ulster County had risen in June by 1600 potential workers to 65,700 over the previous June, which it correctly described as “a healthy 2.5 percent gain.” Regrettably for the optimists, these numbers might well be overstated. Or they may yet turn out to be understated.
Anybody who has looked at the monthly New York data over a prolonged period of time can tell that these numbers have been, well, cooked. Except for changes caused by big new job opportunities — the casino and resort in Sullivan County, for example — current employment statistics (CES) for geographic sub-markets almost always move each month the same proportion in the same direction — as a well-trained chorus line is trained to do. Already dubious numbers are largely allocated on a geographical basis. It’s not the stuff that should be dutifully regurgitated by the media every month, recycled every month, and then forgotten until the next time like in the movie Groundhog Day.
The New York Federal Reserve Bank admits the accuracy of the monthly CES survey, supposedly based on a sample of about a third of the nation’s non-farm employers, “can vary, particularly for smaller geographic areas.” The data is subject to revisions “which can sometimes be quite substantial.” So the New York Fed now dilutes its releases through the addition of data from the most recent Quarterly Census of Employment and Wages (QCEW), a different federal employment series based on unemployment insurance records that capture nearly a full count of jobs. This ‘early benchmark’ revises the CES employment data. Every March, that revision is itself revised in a final benchmark. Got it: Estimate, early benchmark, final benchmark.
The early-benchmark data based on the QCEW is available for estimates of total employment in various sub-markets of the New York Fed’s geographic district. Since the early benchmark estimates more closely track the final benchmark than do the initial monthly releases, The Fed has concluded, they provide better, more reliable data.
How has the systemic addition of more reliable information been useful in telling us about the real world of the changing economy? Let’s look at the effect of early benchmarking on the data on Ulster County economy in the past two and a half years.
In 2017 and the first half of 2018 the revised benchmark data tracked reasonably closely with the Department of Labor monthly employment data. But then the two diverged. The early-benchmark data lagged markedly behind the monthly data. Not good news.
By the end of the first half of the year last month, according to Fed figures (which vary slightly from state figures), Ulster County total non-farm employment had increased roughly to 64,400 according to the monthly data and about 63,600 — 800 fewer — when the early-benchmark data was added. If the early-benchmark figures are confirmed in the final benchmarks, Ulster County will have created not 1600 new jobs this June over last June but 800. For the alert headline-writer, that’s quite a difference.
Of the 1600 jobs reportedly created in Ulster County in the entire past year, moreover, 1300 were in the low-paying tourism-based leisure and hospitality industries. Everything else was virtually stagnant. The final benchmark figures will show how many of these tourism jobs were illusory or whether there might have been a decline in other kinds of jobs.
According to the state, Ulster County residents held 65,700 jobs in the latest count — many outside the county. That was the highest Ulster County June number in 16 years, tying June 2003. It has taken Ulster County 16 years to clamber back to the numbers it had then.
An economic development strategy is based on a data-driven alertness to economic opportunity. In my opinion, Ulster County hasn’t had the data, hasn’t had the alertness, and doesn’t have a coherent economic development strategy. I’m sayin’ it may be time for a new approach and fresh thinking.
In June 2019, employment in New York State had climbed to 9,885,300, an increase of 1,298,000 in the past decade. More than 86 percent of that employment growth was in downstate (New York City or Long Island and Westchester, Rockland and Orange counties). Other than a very few economic hot spots, upstate job growth was sparse. Though 160,000 more jobs in the past decade may sound like a lot, spread over all of upstate it doesn’t amount to much. There are too many economically stagnant communities. The trick is not to be one of them.
The New York City connection is the main resource for the Hudson Valley economic future, just as the Silicon Valley and San Francisco connections are to Marin County’s future, or the Washington DC connection to northern Virginia’s future, or the presence of the Boston metropolitan area to all eastern Massachusetts. The remarkable agglomeration of knowledge workers of all description in a huge metropolis creates a variety of opportunities. Though exurban tourism will be one important driver in the Hudson Valley, it shouldn’t be the only one.
Again in my opinion, job quality in the Hudson Valley is key. Good jobs, better-paying jobs, more interesting jobs create a higher quality of life. Ordinary ones don’t. It’s worth it to seek better. Thoughtful local efforts toward economic development should be focused in that direction.
Just sayin’.
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