Why would a non-governmental agency say job losses are much worse than the Bureau of Labor Statistics reports?

TrimTabs: Here's Why The Real Jobs Loss Number Was 5x Worse Than What The BLS Reported

TrimTabs employment analysis, which uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth, estimated that the U.S. economy shed 104,000 jobs in January.  Meanwhile, the Bureau of Labor Statistics (BLS) reported the U.S. economy lost 20,000 jobs.

…The BLS has seriously underreported job losses for the past two years due to their flawed methodology.  TrimTabs has identified the following four problems:

1.      The BLS employment estimate is based on a survey, and not on an actual count of employees…TrimTabs believes that rapid changes in an employment cycle cannot be captured by surveys.

2.      Several times a year, the BLS applies enormous seasonal adjustments to their survey results to account for seasonal fluctuations in the job market.  For example, this January, the BLS added 1.92 million jobs to their survey results to report a job loss of 20,000 to account for the layoff of retail holiday workers.  In our opinion, the sheer magnitude of the seasonal adjustment which dwarfs the monthly result renders this month’s job loss estimate meaningless.

3.      At the time of the first release, only 40% to 60% of the BLS survey is complete and is subject to large revisions over the next two months.

4.      The BLS applies a mysterious “birth/death” adjustment to their survey results to account for business openings and closings.  While the payroll data was adjusted substantially, the “birth/death” adjustments were left unchanged.  In 2008 and 2009, the BLS’ “birth/death” adjustment added 904,000 and 882,000 jobs, respectively, for a total of 1.79 million.  By way of comparison, in 2006 and 2007, the BLS’ “birth/death” adjustment added 964,000 and 1.13 million jobs, respectively.   We find it highly unlikely that in 2008 and 2009, during the worst recession since the 1930’s, more businesses opened than closed netting 1.79 million jobs.

In our opinion, flawed BLS survey results, month-after-month, do the public a huge disservice.  While its results point to a slowly recovering economy, TrimTabs’ results point to a dangerously weak economy.

TrimTabs via The Business Insider