Is the BLS Undercounting Manufacturing Employment?

The Bureau of Labor Statistics keeps track of employment numbers in dozens of sectors, making it easier to spot trends and take advantage of new business opportunities. Although the BLS is a valuable resource, some experts say the agency has been undercounting the number of manufacturing jobs in the United States due to an outdated definition of manufacturing. If you plan to use the BLS data for forecasting purposes, make sure you account for this discrepancy.

Jerry Jasinowski, National Association of Manufacturers president, says the BLS has a very narrow definition of a manufacturing job. He cites a report from Teresa Fort and Andrew Bernard of Dartmouth University's Tuck School of Business, which says the BLS does not count some manufacturing companies as manufacturers. This is because the companies do not manage or own the manufacturing plants that produce their goods. Fort and Bernard say a company can be a manufacturer as long as it coordinates the production process for its goods.

Because the BLS does not count these companies in its manufacturing statistics, the number of manufacturing jobs reported may be way off. Fort and Bernard estimate there would have been about 400,000 to two million more workers included in the statistics in 2007 had the BLS adjusted its definition of a manufacturing company. Employees who work for companies that control manufacturing activities without owning or managing their own manufacturing facilities are counted in the statistics for wholesale firms, so the numbers for the wholesale industry may actually be inflated.

This is not the first time experts have taken issue with the way the BLS counts jobs. In 2012, Matthew Yglesias of "Slate" suggested the agency was undercounting the jobs available with new small businesses. It typically takes the BLS two months to finalize data estimates, so initial figures may not be very accurate. Yglesias said the margin of error for the initial job counts from the BLS is sometimes as much as 100,000 jobs, so it's important to look at the final estimates when using the data to make business decisions. You should also use data from several sources instead of relying solely on the BLS data. This can help you avoid making decisions based on inaccurate estimates that undercount the number of jobs available in the manufacturing industry.

If the BLS is undercounting the number of manufacturing workers in the United States, this has serious implications for the economy. Every manufacturing job supports jobs in other sectors, so it is important to have a clear picture of the health of this industry. Many people have been worried about the "death of manufacturing" for several years, but it could be that manufacturing is flourishing while the BLS continues to miscount the number of workers in this vital business sector.

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