The disconnect between construction activity and construction employment is a source of great puzzlement â€“ to some. Janet Yellen, President of the San Francisco Federal Reserve Bank, questions the accuracy of the construction jobs data and the way it has depressed productivity growth. â€?Going forward, as the adjustment lags work themselves out, residential construction activity may post significant declines and productivity in that sector and the economy as a whole may rebound,â€? Yellen said in a July 5th speech.
Closer to the mark is Ray Stone of Stone and McCarthy Research Associates:
â€?We think that the BLS monthly payroll estimate is overstating the pulse of labor market conditions.â€?
â€?It may be that these payrolls are declining quickly, but the decline may be most pronounced among illegal immigrants that were not officially counted in the payroll data,'' Stone says in an interview with Bloomberg columnist John M. Berry.
Like most analysts, Stone normally regards the payroll figures as a more reliable guide to the state of the labor market than the data from the BLS household survey. At the moment, he's not sure that's true.
Ahem, ahem: Where have you been, Mr. Stone? We have long maintained that the payroll survey undercounts employment growth because employers are reluctant to fess up to the number of illegal aliens in their employ. When labor market conditions are bad â€“ as in the construction industry today â€“ the reverse is true: the payroll survey will overstate job growth â€“ or understate job losses â€“ by ignoring changes in the illegal alien workforce.
Hispanic employment, as reported in the Household Survey, provides the best picture of how things are going for illegal alien workers. In June household employment rose a whopping 197,000 positions, but only 2,000 of those jobs went to Hispanics. In May, it was even worse: 157,000 new household jobs, but a 95,000 reduction in Hispanic employment.
Construction jobs are the most heavily Hispanicized of all. That was a boon for illegals when the industry was booming. Now itâ€™s a negative.
Meanwhile, non-Hispanic workers are displacing their Hispanic counterparts.
Enjoy it while it lasts.