BUSINESSWEEK ONLINE : JANUARY 22, 2001 ISSUE
ECONOMIC TRENDS What the Payroll Data May Hide The ''plug factor'' skews job figures Payroll employment, contends economist Ed Hyman of ISI Group, investment advisers, is probably a lot weaker than reported. That's because the Labor Dept. adds a ''plug factor''--an estimate of those hired by new businesses that aren't yet in its data base--to the job numbers derived from its survey of employers. Since this estimate is based on past history (in this case the hefty final readings for last year), it tends to exaggerate job gains when the economy enters a slowdown. To buttress his claim, Hyman points out that employment based on the Labor Dept.'s other survey, its canvass of households, has hardly changed since April, while unemployment insurance claims have surged higher. The plug factor has added an average 162,000 jobs to the monthly payroll count since April, converting what would have been an average decline of 70,000 in private sector jobs into an average reported monthly gain of 92,000. By comparison, private sector payrolls over the prior eight months posted an average monthly increase of 238,000. By GENE KORETZ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS What the Payroll Data May Hide CHART: Illusory Job Gains? INTERACT E-Mail to Business Week Online

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