Former Bureau of Labor Statistics Commissioner Erica Groshen defended the agency’s recent payroll revision that shaved 910,000 jobs off its March estimate, describing it as “unusually big” but well within the bounds of standard practices at the bureau.
Payroll Revisions ‘Not The Highest We’ve Seen’
Speaking with Nobel Prize-winning economist Paul Krugman on his newsletter on Saturday, Groshen acknowledged that while this revision would be “the biggest” in absolute terms, “it’s actually not the highest we’ve seen,” as a percentage of employment, she says.
Groshen, who served as BLS Commissioner from 2013 to 2017, says the revised figure amounted to just a 0.6% adjustment in total employment, which, despite being small, had a significant impact on the perceived strength of the U.S. labor markets. “It says we’ve had about half as much job growth as we thought there was over that year.”
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She points to misreporting by employers and a decline in response rates as two major contributors. “There was a strong pattern of companies reporting more that they had more jobs than they reported to the state,” she says. “The companies that didn’t respond grew more slowly than the ones that did.”
In the face of growing public criticism of the agency, especially from the White House, Groshen continues to stand by its integrity, saying that it was all “normal procedure.”
BLS Faces Credibility Crisis
The previous commissioner of BLS, Erika McEntarfer, was fired by President Donald Trump last month, following the sharp downward revisions in U.S. jobs data of prior months, which Trump said were “rigged.”
Billionaire hedge fund manager Ray Dalio agreed with Trump’s position on the matter, saying that he, too, “would have fired the head of the Bureau of Labor Statistics.”
Investor David O. Sacks, who currently chairs the President’s Council of Advisors on Science and Technology, said, “No hedge fund manager, or even associate, would keep their job if they routinely produced errors (“revisions”) as large as BLS.”
Last week, the 910,000-job downward revision from the BLS prompted Trump to once again slam the Federal Reserve and Chair Jerome Powell for not cutting rates fast enough. He said, “If the Fed had followed what we published, they would have raised rates in early 2021,” in a Truth Social post.
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