Chicago teachers strike could hit jobs report

About 26,000 teachers and support staff are striking in Chicago for the second week in a row. The strike could impact the government's monthly jobs report for September.

NEW YORK (CNNMoney) -- As it drags on for a second week, the Chicago teachers' strike is so large it could distort national economic statistics, including the Labor Department's key monthly jobs report.

About 26,000 teachers and support staff are striking in Chicago, demanding higher pay, better job security and changes to a new evaluation system.

The strike's timing is key, in that it coincides with the period in which the government collects data for the national jobs report.

Last month, that report showed the economy added only 96,000 jobs. The number was seen as weak, posing a challenge for President Obama as he faces re-election.

September's report could look far worse if the strike continues.

Related: Intrade: Fed helped Obama's re-election odds

Every month, the Labor Department surveys 141,000 employers throughout the country, during the week that includes the 12th.

Those employers respond to simple questions. For example, how many employees were on their payroll during the current pay period? How many hours did they work? What wages did they earn?

In the case of Chicago Public Schools -- the third largest school district in the country -- teachers are paid on a biweekly schedule. The current pay period started September 9 and runs through this Saturday, September 22.

If the teachers don't go back to work by the end of the week, they will be recorded as out of work for the entire pay period, and that could subtract roughly 26,000 jobs from the national figures.

"The effect it has on the national number has yet to be seen, but the strike is big enough to swing things," said Labor Department Economist John Coughlan.

At this point, it's unclear whether Chicago Public Schools participates in the survey. The Labor Department doesn't release the names of the companies that are included in the report, and a Chicago Public Schools spokeswoman wouldn't confirm whether or not the district fills out the survey.

It's not unusual for strikes to impact the jobs report. When 45,000 Verizon workers went on strike last year, it distorted the August 2011 jobs report so drastically, the Labor Department initially reported exactly zero jobs were created that month.

The effect was only temporary. Later, the number was revised upward and the following month's report showed Verizon employees went back to work in September.

Similarly, as long as the Chicago teachers strike is resolved soon, any impact would only be temporary.

For that reason, economists aren't too worried about the strike's impact.

"These type of events are usually built into consensus estimates and are discounted by the market well in advance so we are not very concerned about the temporary impact," said Brett Ryan, U.S. economist at Deutsche Bank.

Meanwhile, the strike is unlikely to have any effect on the unemployment rate. That number is calculated from a separate survey of households, and only includes people who lost a job through no fault of their own.

When workers strike, they are not counted as unemployed.

The Labor Department plans to issue its monthly strike report on Sept. 28, which is expected to give more clarity about how the Chicago teacher dispute could impact the monthly jobs numbers.

The September jobs report will be released on October 5.

First Published: September 17, 2012: 11:08 AM ET

17 Sep, 2012

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Source: http://rss.cnn.com/~r/rss/money_topstories/~3/u15-KDjZzjQ/index.html
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