The changing economic development landscape

There is a mildly partisan op-ed piece in yesterday's USA Today about how jobs are and are not being counted in the U.S. Whichever side of the political fence you happen to be on, it's well worth a read. It does a nice job of summarizing the differences between the Payroll Survey (the traditional measure of jobs growth) and the Household Survey.

Briefly, the growing problem with the Payroll Survey is that it measures Manufacturing Economy growth (or lack of it). It measures only payroll changes. But in the Knowledge Economy, more and more workers are self-employed, and have little or no payroll. Many of these self-employed, if they expand, hire other self-employed workers on a project by project basis. This means that while they are providing employment for others, they are not adding to the Payroll Survey.

The Household Survey tries to take these other employment measures into account. Contrast the results of the two surveys in July of this year. The Payroll Survey reported an anemic 62,000 jobs added to the economy. The Household Survey reported a stunning 629,000 jobs added to the economy.

For communities, it is critical to understand the difference between the two and to adjust your economic development strategies appropriately. These numbers are nonpartisan statistics gathered by the Department of Labor. If you are measuring the success of your economic development program by the local growth of payroll jobs, you are missing (potentially) some 90% of the new jobs being created, based on the July numbers.

Are your economic developers shifting course and reallocating resources to better foster growth locally of self-employed workers, microenterprise businesses, and small business? If not, your region is at a major disadvantage--just look at the numbers.

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