How many jobs were REALLY created in August?

How many jobs were REALLY created in August?

Last week there were two very divergent estimates of the number of new jobs created in August.  The most widely reported number came from the Bureau of Labor Statistics that estimated 96,000new jobs.  ADP National Employment Report reported that 201,000 new jobs were created.  Quite a large discrepancy and which one should we believe?

Friday I talked with Joel Prakken, chairman of Macroeconomic Advisers that produces the data and analysis for the ADP report. (Listen to the interview here.)  

Mr. Prakken told me that the two reports come from different samples of businesses. The Bureau of Labor Statistics draws a sample of about a half a million businesses to receive its survey which is then filled out by someone (who knows who) in the businesses.  ADP surveys a similar number of its clients and actually uses a computerized count of names on the payrolls.

Mr. Prakken obviously believes that his numbers are more accurate but says that the two employment projections correlate up to 95% over time. 

Unfortunately the vastly different projections come at a time when the media and voters are paying close attention.  Mr. Prakken disagreed with my assertion that almost all the media primarily reports the Bureau of Labor Statistics numbers but the proof is in the headlines.  It is the 96,000 new jobs figure that is impacting the presidential election. 

My wish would be that the media and politicians look within the ADP report and talk about small businesses doing more than their fair share in creating new jobs—49% created by businesses with under 50 employees.  Since I and many others define a small business as one with less than 100 workers, it is clear that just like every other month this year over 50% of the new jobs created in August came from small business.

That was my prediction I made to Neil Cavuto when I appeared on his Fox Business News show just before 9 PM last Thursday night live from the Democratic National Convention. 

My prediction for September is that small businesses will again outperform every other category in creating new jobs.