Phony September Jobs Numbers

Don’t you just love October surprises?  They’re as predictable as the falling leaves.  Just like magic, and just in time for tonight’s vice presidential debate, the Bureau of Labor Statistics report stated that the unemployment rate declined to 7.8 percent due to a surprise spurt of 873,000 jobs, as reported by the separate Household Survey of families across the nation.

According to Forbes magazine, the BLS “also reported on Friday that the number of full time jobs declined by 216,000 last month, as Lott also noted. The unemployment rate declined to 7.8% only because of a reported surprise September spurt of 873,000 jobs in the separate Household Survey of families across the nation. That reported increase is anomalous for the reasons discussed below.”

There’s a big “but” with these numbers:  the working age population.  Last month, 206,000 new workers entered the work force. With two-thirds of those working as would be expected during a normal recovery, 138,000 new jobs would have been necessary in September just to keep pace with population growth.

Move up tMove down

“The right message is that on Friday, we saw great economic news,” Brian Moran, the chairman of the Virginia Democratic Party, told The New York Times. “Things are moving in the right direction.”

Only if you think declining job growth is “the right direction” can you interpret the recent job report as “great economic news.” The reality is that according to employer survey, the economy has been creating just 106k jobs a month over the last six months. That’s compared to the 194k job a month clip from the six months before and it is just barely above the 100k jobs a month the Atlanta Federal Reserve says we need to keep up with population growth.

But what about the 873,000 Americans who said they got new jobs last month?  Doesn’t that prove the economy is getting better?  No. No, it doesn’t.  That 873,000 number comes from the Current Population Survey, which is conducted by the Census Bureau for the Labor Department’s Bureau of Labor and Statistics. The CPS is famously volatile and far less reliable an indicator of economic conditions than the employer survey (called the Current Employment Statistics survey).

But even considering the usually unstable nature of the CPS, this September’s CPS report is particularly unreflective of reality. Wells Fargo called the September household survey “a black swan outlier” and noted that the 873,000 job gain “was more than four times the size of the average change over the past 12 months.” Gallup‘s Chief Economist Dennis Jacobe said the CPS 873,000 job gain “seems to lack face-validity.”

2.  There was no surge in part-time jobs

Hours after the September jobs report was released, Washington Post blogger Ezra Klein said the household survey’s 873,000 job growth was backed up by the “internals” since 582,000 Americans said they got part time jobs.  And it is true: the number of Americans telling the BLS that they worked “part time for economic reasons” (e.g., inability to find full time work) did grow by 582,000.

But while “part time for non-economic reasons” (e.g., illness, family obligations) did fall 260k, Table A9 of the household survey showed that the total number of part time workers actually fell 26k. But 582,000 – 260,000 does not equal -26,000.  So what gives?  Turns out the household survey derives the two numbers from two entirely separate questions.

When deriving the “part time for economic reasons” number, BLS asks respondents how many hours they worked in a specific week.  If they worked anywhere in between 1 and 35 hours in that week, then they are deemed “part time.” This question produced the 582,000 spike in September. In a separate question, BLS asks respondents if they usually work full or part time. This is where the -26,000 total decline in part time work came from.

So if a respondent normally works full time as a contractor, but for the specific week BLS is studying, that person worked less than 35 hours because he couldn’t find enough work, that person would be counted as both full time for one part of the survey and “part time for economic reasons” for another part of the survey.

3.  Government employment is growing You won’t hear President Obama tout this fact on the campaign trail, but one of the strongest sectors of job growth in the September household survey was from government jobs. Of the 838,000 full time jobs the household survey claims were added in September, almost one-quarter, 187,000, came from the government. Even the employer survey showed some government job growth, albeit a twentieth the size (just 10,000).

If this is what the experts think, and if the likes of Steve Forbes and Jack Welch (former CEO of General Electric) are telling us that the numbers are phony, we need to let our friends know before tonight’s debate, for certainly these numbers were pumped up for the express purpose of Joe Biden using them to sound victory for Obama’s economic policies.  It’s the ammunition he needs.

During World War II, German bombs were often made by slave labor.  The slaves were not above sabotaging the bombs (so that they didn’t explode on impact) in order to thwart their evil masters.  If Paul Ryan can defuse this October surprise bomb and expose the numbers contained within as a dud, he’ll stand a better chance of winning the debate.

Undoubtedly, being the economics expert that he is, Ryan knows the truth about the numbers.  The Americans (who bother) watching tonight may not.  Those who rely on news accounts of the debate the next day certainly will not.  Forbes Magazine, Jack Welch, Rush Limbaugh, Mr. Carroll, and young Mr. Durden here and others have been indispensable in providing us the facts, which we might not otherwise have.  Our task is to further dispense that information to our family and friends for tonight’s vice presidential debate.

Many pundits have declared that the numbers were too good to be true, historically unlikely, and their publication just before a major vice presidential debate suspect.  Now we have the facts and the explanation.

The math has been done and the real numbers don’t lie.  Time for us to start spreading the truth, Tea Partiers.




Published in: on October 11, 2012 at 11:42 am  Leave a Comment  

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