
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, June 4, 1993                   TAG: 9306040140
SECTION: BUSINESS                    PAGE: A-5   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

THOSE JOBS WEREN'T LOST, THEY WERE (BLUSH) IMAGINARY

The Labor Department has solved the mystery of the 640,000 jobs that suddenly disappeared from the American economy. Red-faced bureaucrats now say they were only imaginary jobs to begin with.

A year ago, the department said job losses during the last recession were much worse than originally reported - an announcement seized upon by Democrats to back candidate Bill Clinton's contention that the recession had been much more severe than the Bush administration was willing to admit.

It turns out the original numbers were much closer to right than the revision was.

The department's Bureau of Labor Statistics is scheduled to set the record straight today in its annual update on economic history.

Based on interviews with bureau officials and private economists who keep track of government statistics, Friday's revisions are expected to show that the last recession, which began June 1990 and ended March 1991, cost about 1.7 million jobs.

That was the figure the bureau was using before last year's revision, when it boosted the job loss to 2.3 million.

At the time, officials could not explain the sudden disappearance of 640,000 jobs in the first quarter of 1991. That loss caused them to boost their estimate of the toll taken by the recession.

But now they think the jobs did not suddenly disappear. They never existed.

Computer-processing programs used by some companies were counting checks instead of people. Thus, an employee who got a regular paycheck and a separate bonus check in one pay period would be counted twice.

That error, multiplied thousands of times, had gradually inflated the government's payroll survey of employment over five years. Unaware of the problem, the bureau introduced a new form to count employees in late 1990.

As companies adapted their computer programs to the new form, they took care of the overcounting problem, bureau officials said.

That produced the sudden, large drop in jobs in early 1991. However, the bureau misread the new data, believing it showed a sudden decline in real jobs rather than imaginary ones.

Officials said it took months to solve the mystery.

Michael Boskin, chairman of President Bush's Council of Economic Advisers, said he did not suspect any political motivation in the job-loss revision during last year's presidential campaign, even though it gave Clinton ammunition. He said growth was in fact sluggish and "perceptions lag behind reality."

None of these revisions will affect the unemployment rate, stuck at 7 percent for three months. The jobless rate is based on a separate survey of households rather than business payrolls.

by CNB