The Labor Department released its January employment report, and Barack Obama is hailing it as a success. The numbers indicate an unemployment rate of 8.3% and that 243,000 jobs were created for the month. However, digging deeper into the report shows that those numbers are nothing more that PR gimmicks.
Here’s how the press release from the Bureau of Labor Statistics begins:
Total nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment changed little over the month.
As John Crudele points out in the New York Post, “those 243,000 jobs are the total after seasonal adjustments.”
Seasonal adjustments are intended to smooth out holiday bumps like that. But because of the depth and unusual nature of the nation’s Great Recession, those seasonal adjustments are being skewed.
Here’s how it works: In January 2010, as I said, there was an actual, unadjusted job loss of 2,858,000 jobs.
To make it simple, the government computers were expecting a bigger unadjusted loss than the 2,689,000 jobs because last January’s decline was 2,858,000.
Crudele gives a simple example to explain what’s going on:
Let’s say there are rumors in your company that 300 people are going to be laid off. Instead, management decides to fire just 200.
Two hundred people, of course, have lost their jobs. But, adjusting it for expectations, 100 people didn’t get fired. Using this analogy, the government would say that, on an expectation-adjusted basis, 100 jobs were created.
The numbers are really quite interesting. Check out this paragraph from the Labor Department’s report:
In January, 2.8 million persons were marginally attached to the labor force, essentially unchanged from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.
Interesting phrase… “marginally attached to the labor force.” So, it’s known that these people are not working, that they want to work, and have looked for work. Yet they are not counted in the statistics?
Florida Rep. Allen West thinks the “numbers might have been cooked,” and he’s just not talking about the so-called seasonal adjustment. As noted in The Hill, West said, “Can someone tell me how employment in the black community has improved at a rate three times the national average in just a few months?”
“With numbers like today, urban communities should be well on their way to economic recovery then! There is something suspicious about the job numbers released today and it has me very concerned,” West wondered Friday. “Is this dramatic supposed decrease in black unemployment a result of job creation or is someone playing around with the census numbers??”
The Hill reports that economists reached for comment could not explain what was going on. One professor, William Darity, at Duke University described the decline in black unemployment as an “unbelievably dramatic drop.”
So there’s a look at labor statistics from a different perspective. It’s kind of like when politicians talk about cutting the budget, but what they really mean is that it’s not increasing as much as originally expected. It’s not a cut… it’s still getting bigger. I guess that’s how unemployment figures work as well.