Refining Revisionist History

Last week in this space Atlas noted the dramatic revisions to employment figures originally published by the Bureau of Labor Statistics (BLS).  Click here to revisit it.  In short, America created 30 percent fewer jobs than thought from April 2023 through March of this year.   Revisions of this magnitude have consequences beyond a headline.

When an economy has 818,000 fewer jobs than expected and an average hourly wage of $35.07 per the (BLS), that means aggregate incomes are $28.7 million less an hour than first estimated.  With an average workweek 34.2 hours, that is nearly $1 billion less a week than initially reported.  You might be thinking that $1 billion is a lot of money, and it is.  But when you compare it to the overall size of the labor market, it represents roughly 0.5 percent of the weekly income from private payrolls.  In sum, American private employers pay out $193.4 billion a week in wages alone.

Partly due to its size, America’s economy has inertia, and this inertia is supported by productivity.  A robust economy like ours can withstand revisions here and there, even to important indicators like employment.  The economy’s direction spends a majority of its time growing and only occasionally suffers through episodic contractions (recessions).  Over time, companies adapt to conditions, making investments in productivity-enhancing equipment and training.  Combined, these factors develop the know-how or special techniques needed to increase efficiency, all adding to American resilience even if data are revised now and again.

Last week’s revised data announcement was large, but the aggregate economy is much larger.  On its own, this year’s seems substantial, but against the backdrop of the US economy, it was merely a blip.  These revisions happen every year, so we’ll see the next one in the summer of 2025; don’t expect much fanfare.