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Old 02-01-2004, 02:01 AM   #1
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Self-Employment May Mask U.S. Job Growth

Self-Employment May Mask U.S. Job Growth

By Andrea Hopkins

WASHINGTON (Reuters) - According to the most widely accepted measure of U.S. employment, public-speaking coach and consultant LeeAundra Temescu was not among the 130 million Americans who had a job in 2003.


But don't try telling her that.


"Was I working?" the Los Angeles resident said. "In terms of speaking and writing and marketing and doing all that sort of stuff -- yeah, I was working."


Because she is one of more than 15 million self-employed workers in the United States, Temescu is on nobody's payroll -- and thus does not show up on the Labor Department (news - web sites)'s employer survey used each month to assess the strength of the job market.


The failure of the survey to count independent contractors has come under fire by President Bush (news - web sites)'s economic team and some analysts, who argue it underestimates job growth by ignoring one of the fastest-growing sectors of the economy.


"There is a big error factor in those numbers," Treasury Secretary John Snow said after Labor reported a scant 1,000 rise in December payrolls. "I think they may well have understated (job growth), and we will see a restatement in the future."


A rise in self-employed and other nonpayroll workers would bolster the argument of Bush supporters that the "jobless" nature of America's recovery has been exaggerated.


LIES, DAMN LIES AND STATISTICS


While outsourcing is not new, a rise in self-employed contractors could explain the slow rebound in employment as counted by the payrolls survey, which shows 2.3 million jobs have been lost since Bush took office in January 2001.


For the same period, a smaller study of households, based on the Current Population Survey, shows a 700,000 rise in employment -- a seemingly contradictory sign that has fueled Republican skepticism about the accuracy of the bleaker payrolls data.


According to the Current Population Survey, the number of self-employed Americans surged 3.9 percent in the last three years, far outstripping a 0.6 percent rise in overall employment.


But experts also take issue with the household survey, saying it is too small, too volatile and possibly overstates population growth. Moreover, it registers a worker as employed even if he or she works only one hour in the survey week.


Federal Reserve (news - web sites) Governor Ben Bernanke said the household survey's accuracy could also suffer if individuals misunderstand the questions "or for one reason or another misreport their own labor market status or that of other members of the household."


Self-employed consultant Temescu agrees. For much of 2003, she was one of 60,000 surveyed for the household report. Trying to categorize herself as "employed" or "unemployed" was tough in a week when she had no paying clients but was busy marketing. And she said the Census Bureau (news - web sites) questioners were just as confused about her employment status.


"There were a lot of times when I'd give an answer and they'd go 'Oh, I don't have a code for that'," she recalled. "It was kind disconcerting to ... have to give answers that I know weren't accurate because I was constrained by the nature of the questionnaire."


WAVE OF THE FUTURE


As president of SurePayroll, the fifth-largest U.S. payroll services provider, Michael Alter has seen a definite shift away from the traditional employer-employee relationships captured by the payroll survey.





Last year, payments by his small business clients to independent contractors surged 12 percent -- and Alter himself says he is using more contract workers.

"I personally believe there has been a structural change," he said. "You can get people who have very specialized skills for a very reasonable price, and you don't have to put them on staff full-time."

Economist Joel Naroff believes the outsourcing trend, which took off in the 1990s, is here to stay.

"Businesses have been looking to temporary help or outsourcing to lower their employment -- and therefore their health care and pension and other responsibilities," he said.

Government data show employment costs rose 3.8 percent in 2003. Outsourcing work to a self-employed contractor cuts those costs by up to a third -- because health care, pensions and other benefits make up 30 percent of total compensation.

"Clearly these kind of huge increases in health care costs encourage businesses to move toward temporary help, outsourcing, or setting people up as consultants," Naroff said. "It's clearly getting stronger."

Meanwhile, Temescu shrugs off the government's inability to accurately count her employment and says the benefits of her situation are worth the risks involved.

"The alternative of working as a salaried worker in an organization is even more unpalatable," Temescu said. "There is just something about working for myself -- I really, truly do love what I do."
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Old 02-01-2004, 02:08 AM   #2
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Re: Self-Employment May Mask U.S. Job Growth

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Originally posted by STING2
Businesses have been looking to temporary help or outsourcing to lower their employment -- and therefore their health care and pension and other responsibilities," he said.

Government data show employment costs rose 3.8 percent in 2003. Outsourcing work to a self-employed contractor cuts those costs by up to a third -- because health care, pensions and other benefits make up 30 percent of total compensation.

"Clearly these kind of huge increases in health care costs encourage businesses to move toward temporary help, outsourcing, or setting people up as consultants," Naroff said. "It's clearly getting stronger."
All the more reason for having national health care. Businesses have only one entity's interests in mind: its own, not yours.

I also think this entire article is generally a scapegoat. Let me tell you: as a banker, I still see plenty of unemployment checks, so, no, I would say that most people are really unemployed.

Melon
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Old 02-01-2004, 09:11 PM   #3
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Our company had lay-offs last year. In our office, all former employees with one exception, returned as consultants.
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Old 02-02-2004, 01:36 AM   #4
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I agree with Melon that this article would give a pro argument for national healthcare.

Although many probably won't admit it, I think we seem to be living in a time of uncertainty... Job employment is more transient than before (or so I read in a recent Time or Newsweek? magazine)... a new employee today would be lucky to work for one company for more than 5 years or more til retirement.

I'm guessing it might be hard for some who work for themselves to gather clients... If there's more self-employed entrepreuneurs, then the competition rises... And after one project's done, there's still more uncertainty for small businesses when everyone doesn't earn enough to keep the cash circulating in the economy...

If the economy could guarantee certainty, then I would have no argument with this article. Certainty that guarantees people--so they know where their money and food comes from tomorrow. Certainty that their wage and salary is worth their weight in competency and labor. Certainty that they're covered by health benefits among many things. Certainty that they could pay their kids way to college. Certainty that they could own home property, rather than be sinking in debt.

(It would be easier if we could trust big companies to guarantee some kind of job security, benefits, and salaries and wages that workers deserve. That way, most people don't have to more than 40 hours just to get by in life.)

I dunno. I've taken a bunch of small business and marketing classes from community college and continuing ed. institutes... and I had done rather well in them for initiating fictional businesses that has never been done before (I wrote 6 business and marketing plans over the past 2 years)... But I realize if I wanted to become an entrepreneur, it would take my whole life and energy to invest into building something moderately successful (I'm talking eat, drink, sleep business beyond a 40 hour work week), let alone keep the company afloat... and still, I'm not confident about becoming an entrepreneur.

Anyways, I'm rambling...

I don't know much about economics. But I'm learning little by little with the books I'm starting to read. And these are my feelings on the issues....

I don't know if I can argue my thoughts further. All I know is entrepreurship is tough, and not everyone's cut out for it. At least, I'm not.
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Old 02-02-2004, 01:43 AM   #5
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Let's put it this way. If we had a nation of entrepreneurs, then we'd have no workers...and the entire economy would collapse, because we'd have no one for the entrepreneur to employ.

We should value labor as a member of a team, rather than a group of idiots to spit upon as "expendable," and seen as a necessary evil that depletes a corporation's profits.

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Old 02-02-2004, 08:51 AM   #6
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Exactly what I was thinking Melon. Self-employment 1. should be measurabl (via self-reporting on surveys, etc) and 2. it's obviously not a very financiall secure place to be, at least once you've (IF you've) been successful. The fact remains that, according to the US Census, there is greater poverty in the US now than before. Tax cuts for the wealthy (eg, the dividend tax break) do not trickle down.

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