Misclassified Workers

The Bureau of Labor Statistics, which compiles and publishes the national employment report, has struggled to overcome data-collection issues. Millions of workers are estimated to have been misclassified as employed but absent from their jobs due to “other reasons” rather than being counted as unemployed on temporary layoff.

The BLS has since taken additional steps to help survey-takers classify workers correctly, but solving this problem may create another: If the unemployed are counted properly, it could very well result in an increase in the official rate from the previous month -- even if the reality is that joblessness fell in June.

There are several moving parts for the unemployment rate, said Lydia Boussour, senior U.S. economist at Oxford Economics. “We do think that this month we will see a bit of a stronger correction in that misclassification issue, so we are expecting to see a multi-million drop in the number of employed but not at work.”

“A sharp increase in the number of Americans going back to work in June would be a positive development, but the focus remains on the sustainability of the recovery and the risks to the medium-term outlook,” said Bloomberg economists Yelena Shulyatyeva, Andrew Husby and Eliza Winger.

While labor-market improvement in June could very well be real, American jobs face fresh threats in coming months.

The Paycheck Protection Program, a nearly $700 billion federal fund for companies to rehire workers and pay other expenses, was slated to close for applications on June 30, though lawmakers late Wednesday passed an extension through Aug. 8. Even so, many small firms are already mulling cuts to payrolls as their funds wind down, or wondering what happens when their cash runs out and sales are still down.

Rehiring, Cutting

One such owner is Lenore Estrada, co-founder of Three Babes Bakeshop in San Francisco. The caterer and seller of organic, seasonal pies rehired 11 of its 26 workers thanks to an initial infusion of PPP funds but anticipates needing to cut expenses without another lifeline by September.

“The economic model that you were basing your business on previously just doesn’t work anymore,” she said. “It’s going to be a long road to recovery.”