Jobs Data and Bush Strategy

Today's job report is being reported as very negative for President Bush, but--as Sun Tzu teaches--it is not the trends themselves, but how they are leveraged that matters. Given that we expect the President to campaign on a strong ownership theme, this job report may actually be strategic for the president making his case about private ownership.
Today's report showed only 32,000 new jobs in the establishment payroll survey. However, the household survey showed an amazing increase in people working for themselves, almost twenty times that of the establishment survey, dropping the unemployment rate to 5.5%. The economy created 629,000 jobs in the household survey. Of course, you will never hear this 629,000 number in the media, which is invested in reported the meager 32,000 jobs in the payroll survey as a disaster. However, what seems to be happening is that larger organizations (those in the payroll survey) are adding jobs more slowly than expected while people are starting their own businesses or going to work with very small businesses at an incredible rate.
This spread between the two forms of hiring has been going on for a long time now and may reflect a long-term structural change in the US economy rather than just the typical hiring cycle where new business creation precedes payroll hiring. Theses changes in employment are driven by changes in technology, psychology, and economics which make it easier and more practical to work with people as independent contractors rather than hiring employees.
In our publishing company, we are part of this trend. Our sales this year will be up like 150%-200%, but we are not hiring. Instead of using in-house editors and proof-readers, we use freelance editors and proof-readers. We also use freelancers for book design, PR, warehousing, and everything else. We are even moving from larger companies (those on the payroll survey) to people working more or less for themselves. We were using a larger proof-reading company and a larger PR firm, but when we wanted to have more control over these functions, we didn't bring them function in-house. Instead we found private individuals who could work for themselves in these areas.
This wouldn't have been possible even a few years ago, but with today's computer networks, we don't need people actually working in-house to work with them closely. Economically, having others do this work in a their own business is better both for them and for our company in the long-run. I notice a lot of other businesses operating the same way. Even one of our doctors just started his own business, splitting off from the larger company he was working with.
Again, this was made possible largely because of shared computer technology, which allowed him to easily take all his patient files with him. This trend is both broad and deep, creating the type of Ownership Society that President Bush is going to be talking about in the Republican convention next month. If he can propose programs, such as health insurance, that work for people who are working for themselves, he is going to appeal to the heart of the people that are generating the current economic boom.