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A Project of The Annenberg Public Policy Center

Optimistic Job Stats

Christina Romer, chair of the White House Council of Economic Advisers, talked jobs with NBC "Meet the Press" host David Gregory on Sunday. The interview came a few days after the release of encouraging numbers — employment rose by 162,000 in March, the biggest one-month increase in three years. A few of Romer’s optimistic comments, though, could use some context.

Even though the number of Americans with jobs went up, the unemployment rate — 9.7 percent — stayed constant for the third month. Romer said that was "unacceptable," but added that "behind that there’s just been a tremendous increase in the labor force. For the last three months, or over the last three months, we’ve added more than a million people to the labor force. And that’s actually–that’s a great sign."

The "labor force," for many viewers who may not have picked up on Romer’s terminology, is the total number of employed and unemployed persons. And the unemployed do not include what the Bureau of Labor Statistics calls "discouraged workers" — persons who want to get jobs but aren’t currently looking because they don’t think there are jobs out there, or at least not jobs for which they would qualify. So this "great sign" doesn’t mean there’s a large increase in the number of people with jobs, but instead a big boost in the number of those who are encouraged enough by the economy to start looking for work.

She also cited stimulus bill job-creation numbers that are, as we’ve said before, difficult to verify. Gregory pushed Romer to "concede that [the stimulus] didn’t do as much as you thought it would have done to spark recovery." But Romer disputed that, saying: "What we had said it would do would to, to save or create some three and a half million jobs. It’s absolutely on track to do that."

Is it? As we wrote in January, there’s some heavy-duty guesswork involved in counting "saved" jobs, as well as jobs that wouldn’t have been created were it not for the stimulus bill. Initially, the administration ran into controversy when it asked recipients of stimulus funds to report job numbers and wound up with a database fraught with errors. Remember those fake congressional districts? Then, the White House said recipients should just count any job paid for with stimulus funds, without trying to determine whether or not it would have existed in a parallel universe without the stimulus money.

Romer’s and others’ economic models are perhaps a much better method for estimating the job effects, but they, too, are shaky estimates. Several economists agreed the stimulus could save or create 3.5 million jobs back when the bill was passed, but they all said there was plenty of uncertainty surrounding such projections. In December, the nonpartisan Congressional Budget Office also gave less-than-firm support to the administration estimates, saying that for the third quarter of 2009, the stimulus was responsible for an additional 600,000 to 1.6 million jobs, a wide range that "reflect[ed] the uncertainty involved in such estimates."

The "Meet the Press" interview also touched on health care and what it would mean for businesses. Romer asked Gregory "to read the Congressional Budget Office’s own report where they say for both small and large businesses it will lower their health insurance premiums." Actually, the CBO estimates show premium costs for both the small and large group market won’t change significantly. Premium costs would see no change at all or up to a 3 percent drop in price, compared with where premiums were expected to be without the new health care law. For the small group market, the change would be between a 1 percent increase and a 2 percent decrease.