U.S. Jobs Reports Fail to Pick Up Small Business Employment Numbers

Given as well as the U.S. economy has done the past several years, the job growth numbers have been puzzling. Some people have wondered why the jobs numbers reported by the government seem out of line with other growth numbers.

Over at my BNET column “Selling to Small Business,” I picked up on one possible explanation, involving small businesses, posited by CNBC commentator Lawrence Kudlow on his blog, Kudlow Money Politic$ and also in a recent Washington Times article:

CNBC talk show host and financial commentator Lawrence Kudlow muses on a possible reason why the reports of new jobs in the U.S. economy seem underwhelming, yet other measurements of the U.S. economy are at impressively high levels.

The answer?

All the employment created by small businesses and entrepreneurial firms is not being factored into the traditional corporate payroll survey numbers. The household survey, on the other hand, is in fact picking up small business employment levels and reflects much stronger growth.

USA Today’s Small Business Connection Blog also picks up on the topic, weighing in with this take on the subject:

“Small businesses certainly create a lot of jobs, and no doubt many aren’t getting counted. But what Kudlow doesn’t mention is that many economists downplay the household figure because it’s based on what individuals volunteer to survey takers. Those economists say the corporate payroll numbers are more accurate because they’re based on official personnel records.”

It certainly appears as if we do not have a truly good way of tracking small business employment growth in the United States. Neither the corporate payroll survey nor the household survey are 100% accurate.

Read all the articles, and tell me, what is your take? Is the household survey a better indicator of jobs in the U.S. economy, because it does a better job of picking up small business employment? Or is it unreliable because it is self-reported? And what would be a good method of tracking small business employment growth?

Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.