Asymmetrical Information links to Random Jottings, who quotes an anonymous economist on the possibility that the payroll employment survey double-counts jobs whenever the labor market gets so tight that workers take new jobs before their old employers can even update their headcounts. This might have been an important phenomenon in 1998 and 1999.
If the story is true, then during the late Clinton years employment growth was overstated and productivity growth was understated. Conversely, the spectacular productivity growth of the early Bush years was overstated, but job growth was better than the official statistics show.
UPDATE: Another way to look at the state of the labor market is to measure the ratio of employment to population. Randall Parker pointed me to Angry Bear:
If the natural EP ratio is 64%, then the 62.2% EP ratio as of August 2003 suggests we should have had 141.764 million employed. This estimate suggests unemployment was 4.071 million. The 62.4% EP ratio last month suggests we should have had 143.153 million employed. This estimate suggests unemployment has fallen to 3.472 million, that is, a 15% reduction over the last year.
For Discussion. Does the peculiar pattern of productivity data reinforce suspicions about the payroll employment survey?