Tweet
Employment Population Ratio, Participation and Unemployment Rates (calculatedriskblog.com)
This week has seen the final jobs reports that will be available to make a possibly measurable impact prior to November 6. Wednesday’s report from ADP had 162K new private sector jobs. Yesterday’s (Thursday, October 4) Jobless claims report had a slight increase to 367K new jobless claims and 4 week rolling average of 375K new claims. Finally, today’s (Friday, October 5) Bureau of Labor Statistics report has an increase of 114,000 jobs for September and the jobless rate falling to 7.8%.
It seems the fall in the overall unemployment rate has some folks on the right, led by Neutron Jack Welch, claiming the numbers have been cooked. David Dayen at FDL News puts it this way:
Because data is just fungible to the political leanings of whoever confronts it, we predictably saw a number of conservatives question today’s jobs report, suggesting that the Bureau of Labor Statistics fudged the data to help the President’s re-election campaign. Leading this charge was former GE CEO Jack Welch on Twitter. I think the government should make a deal with Welch – they’ll admit to massaging the data if he cleans up all the PCBs in the Hudson River personally.On a more serious note, this is really pretty outrageous, and Labor Secretary Hilda Solis, whose department includes the BLS, is right to be insulted. The BLS is a civil service agency that until recently was still run by a Bush appointee. It now has a career bureaucrat in charge. The political team plays no role whatsoever in the derivation of or announcement of the jobs data. And if, despite all this, BLS cooked the books, they’re terrible at it, because they shifted the data in the household survey without corresponding in the establishment survey.
My WAG on this is that the adjustment of the number of jobs for July and August probably had as much affect on the September jobless rate as the actual numbers for September. As far as I can see, this opinion piece from Jay Schalin at Fox News pretty much covers the basic point of the “unemployment” figures:
One thing the current economic slump has made painfully clear is that the unemployment rate is an imperfect tool for gauging the health of the economy. Washington should replace it with a more meaningful and useful benchmark: the labor-force participation rate.The widely publicized unemployment rate, eagerly awaited each month by pundits and policy wonks, has become little more than a shell game in which officials keep the public guessing about the real state of the economy.
Please do go and read the entire piece, he makes some excellent points.
One item that I find still glaringly obvious is that for the most part, most of the people in charge or talking about jobs and the economy have no more clue about what is happening than they do about what the surface of the moon feels like. Just the past few days, I have seen these headlines as I have surfed the toobz (links embedded in headlines):
“Fiscal cliff” fears may impede faster job growth (Reuters October 2)‘Discouraged’ workers face tough road back to employment (NBC News, October 4)
S&P 500 on verge of 5-year high day ahead of jobs data (Reuters October 4)
S&P 500 dips after four days of gains; earnings eyed (Reuters October 5)
I think the bottom line point here is any attempt to tie jobs reports, favorable or unfavorable, to the stock market is attempting so much witch craft. There IS no connection or the stock market would not be trading. As Reuters reported back in August, the market is up for the Obama administration by 74% since he took office January 2009:
At 1,400, the S&P 500 on Friday was closing in on a four-year high and was up 74 percent since January 20, 2009, the day Obama took office. Not since Dwight Eisenhower’s first term has a president had such a strong run for their first term.
As most folks reading this know, I am and have been among the long term un/underemployed. The reality for me and many millions of others is, we want to work in decent paying jobs, preferably in our chosen career fields. The dithering in DeeCee from both sides of the aisle, the constant calls for cuts to the budget, “Grand Bargains” to “save” Social Security, Medicare, and Medicaid (especially the non-existent “Bowles-Simpson” plan since there was no formal report and plan adopted by their namesake committee) personally drives me nuckin’ futz. As Mr Pierce often says, “Fck the deficit. People got no jobs. People got no money.”
It really is a simple concept. People want to work. We want to work at decent paying jobs with halfway decent benefits and contribute to the overall commonweal of the nation. Working two or three part time barely above minimum wage jobs does NOT fit this definition.
And because I can:
Cross posted from Just A Small Town Country Boy by Richard Taylor
22 Comments
Can we make a ballpark estimate that 162K new private sector jobs and 114K total jobs in today’s report means that there are somewhere on the order of 20k-30k jobs lost in the public sector?
And the growth in private sector jobs might mask losses of certain high-paying jobs and growth in part-time low-paying jobs.
I’m like you. It’s better, but put a brake on the euphoria.
The fundamental issue in employment and unemployment statistics is the general unwillingness of employers to provide the information. Lots of corporations treat their head count numbers a business proprietary information to hide from their competitors. That and an anti-government attitude towards labor statistics means that the BLS has to use other than direct measurements to get a fix on labor force participation. And then there are definitional issues of when someone is to be counted and when not. If there is a problem with the data it’s a matter of GIGO.
This is from Think Progress but it appears the unemployment rate would be well under 7% if there hadn’t been so many public sector job cuts.
This was the last one that had a chance to measurably impact early voting, but the next report due out on November 2 certainly could affect the polls on November 6.
It could but doubtful – it is hard to get much impact, especially in our polarized times, from news reports in that last weekend. Jobs and economic news are items that folks can and will ignore that last weekend and vast parts of the voting public will have already voted anyway, so the impact of those late reports I think will be negligible
You nailed it.
Obama has talked about improving the economy in general, yes. However, Obama has also talked specifically about a jobs’ bill, creating jobs (mostly so-called green jobs, I guess) and getting people back to work.
If you are out of work and not in the investor class, only job numbers seem of direct importance. And, if you are long term employed, only one job number is of vital importance. And that number is either 1 or 0, meaning do you have a job or not.
My very best wishes to you in that regard, and to everyone who needs a job.
Thank you for this, dakine. The link to the Fox article provides the best handle for me on this difficult topic. In arguing for a different metric, Jay Schalin writes:
“Median family income has dropped about 8 percent since the start of 2009; the percentage of recent college graduates who can’t find work in their fields has skyrocketed, with some estimates as high as 60 percent; even the birthrate has declined, as young people struggle to get established.”
Last night Charlie Rose interviewed Joseph Stieglitz. While most of what he said was very much what needed to be said, it did depress me that he saw our job prospects as at least for the immediate future being compressed into a ‘service economy.’ Somehow, we are expected to leave innovation and mindful achievement in industry to countries like Germany and Japan. I suppose it is a pragmatism which looks at our sad educational prospects and builds on that, but we must move to different models in all fields. It smacks too much of stagnation for ‘service economy’ to be in any way a forward looking economic plan.
These numbers do look inconsistent. If the unemployment fell 0.3% that is a number several times the 114K of new jobs. One number indicates stagnation, the other a roaring job market. As I look around, the stagnation argument seems to hold more water. And I would not put it past the administration to play with the numbers.
Well, the economy needs to create roughly 100K jobs per month just to break even to cover new people entering the job market so I don’t think 114K jobs is inconsistent with stagnation myself
Dr. Paul Krugman over at the NY Times has another look at the jobs situation. He likes looking at other measures of employment (or unemployment). Specificlly, he looks at constant-demography employment. He considers this a better view of the overall laborand employment situation than just looking at unemployment numbers. His latest post on the matter indicates there has in fact been modest improvement in employment/unemployment since the beginning of the year. For details see his post at this link:
http://krugman.blogs.nytimes.com/
As Dr K admits, its kind of a wonkish article but worth the read, and if you’re a realy statistics geek go to the links he includes.
Sloooowwww grooowwwth is the name of the game for much of the country. It takes somewhere in the neighborhood of 7-8 yrs to get out of a recessionary rut this deep. However, there are modest signs of growth for those who have the ability to move around the country and are at least semi-skilled. That is a real key but an ugly choice to have to make. Uprooting from your community no fun. I haven’t had a hourly wage or salary in 16 years but have taken at least a 15-20% hit in earnings. After years with no healthcare I’m within 6 months of finally purchasing some through my job. And, it didn’t have to be this way. The worst takeaway from all this may be what a 25ish mechanic with lots of student loans told me, ” whether it’s your boss or the gov’t or your college career counselor you just can’t trust anyone’s words to be true anymore. ” And, that’s the truth.
Book Salon up with David Cay Johnston’s The Fine Print: How Big Companies Use “Plain English” and Other Tricks to Rob You Blind hosted by Dean Baker
The BLS 114,000 new jobs number comes from a survey of employers (“establishments”), whereas the unemployment percent is calculated from the Household Survey.
The numbers aren’t cooked, but the problem is the Household Survey has been very erratic during the recovery. As an example, the July and August Surveys showed a DECREASE in employment by 195K and 119K jobs respectively, even as the BLS numbers showed a net INCREASE in jobs both months.
The huge September increase of 873K jobs from the Household Survey showed that exactly 2/3 of these were part-time jobs for “economic reasons”, that is, part-time jobs obtained by people who really wanted, but couldn’t find, full-time jobs.
This is also why the U-6 unemployment rate, which doesn’t count such part-time jobs, stayed stuck at 14.7%.
Hope this clarifies. For more, see:
http://www.zerohedge.com/news/2012-10-06/rosenberg-unemployment-rate-if-its-too-good-be-true-then-it-probably
The economy may be slowly improving, but it’s still dismal. It was dismal before the crash. We don’t have anywhere near enough of the jobs to match the talent and skills we have (that pay the wages that allow us to repay the debts we acquired to get those qualifications). It’s depressing and discouraging to even meet people with master’s degrees (not just bachelor’s degrees) who are taking jobs unrelated to what they studied that pay the wages/salary that would barely get a single person by even when they had no debt to repay. The tech industry isn’t even as strong as it once was.
Insult or not, I am suspicious of this jobs report because predictions were for it to be neutral at best, it’s barely moved .1% in months, yet right before the election, it drastically drops .3% to below the magic 8%. Haven’t most of the jobs reports for months now been revised a month later to actually be worse than they originally were?
There isn’t much we can do about all of this since the 2 parties are not going to change anything for the better. Just hang in there, work hard (or work hard finding work), try to make the most out of a shitty period. There may be better countries out there to live in at this point, but good luck finding a way in that doesn’t result in you being treated as a second class citizen with worse employment prospects (not being a native) than back in the US.
Unemployment is like a cancer. TPTB use it to control inflation like a buffer stock. The higher the unemployment, the lower inflation aka Nairu as per Uncle Miltie, the economist aka consigliere of the rich. Need not be. But what the hell if you are rich and want to protect your very high fixed income……..Why take the chance? So we suffer the disease.
“I don’t believe in conspiracy theories. But I don’t believe in the Household Survey, either. This notoriously volatile indicator has become even more so in recent months. It showed a 195k slide in July and a 119k decline in August, to only then reveal a massive 873k surge in September. So based on Household employment, the economy was in recession in July and August and then miraculously boomed at its strongest rate since January 1983 (is Obama really the new Reagan)?”
Nice post Dakine01. good points well stated. Let’s remember folks, a “modest improvement” (especially because it’s from an abysmal bottom),after 4 years of THROWING $$$$$ at the very same Banks that created this mess, is DEPLORABLE. It’s as deplorable as giving Obama another 4 years in office.
D. Completely OT….can you say a bit more about what all the censor-of-the-thread dust-up was about? Sort of what set it off….I certainly missed that one.
I discovered that the author of the diary that got “censored” was in fact running 3 sock puppet accounts (grounds for banning) that all had “commented” on the diary comment thread. I reported this up the chain then marked as a spammer. That action takes down the diary as well. Some folks that see conspiracy everywhere immediately jumped to the conclusion that the original diary had been ‘censored’ for content. I explained their error which set off more discussion
Firstly the Unemployment Rate is the wrong thing to focus on. What counts is the total employment number. The UE includes, or tries to, only those in the labor force who are working of looking for work. Of course as most know the UE number gets skewed by people supposedly giving up on looking for employment. It is all so silly really.
Here is the real number, total employment
http://data.bls.gov/timeseries/CES0000000001
Then there is the Seasonal Adjustment. A statistical exercise used in many economic reports which introduces error and perhaps manipulation.
Well let me link you to a site which contains a pay part and deals with things mostly financial. 99% of all such sites are reactionary to some extent or another but rest assured this one, at least its author is not. Which makes no difference really.
The good employment numbers last week were perfectly predictable because as the article will show, the previous Seasonal Adjustments were hopelessly bad. Besides by simply looking at the Treasuries tax withholding number which are reported daily, a number which is very very highly correlated to total employment was showing strong year over year increases in collections.
Read this and set aside all the typical chatter about employment. Note that the ‘good’ numbers are not very good. Also note that as the political economy is now structured really good numbers are not possible.
http://wallstreetexaminer.com/2012/10/05/the-real-deal-on-jobs-the-bls-is-just-catching-up-with-massive-undercounting-in-seasonally-adjusted-estimates/
I’m with bluedot on this; high unemployment is a means to a depressingly familiar end: a nervous workforce too disempowered to demand its share of skyrocketing profits. The .01 percent are no longer harried by the Servant Problem, and what could be better?
(If you will note, the Fox News columnist I link says pretty much the same thing)
What a mess….which thread was it?