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Home > Liberal Moments(SM)
#24. Employment & Unemployment
by Bob Powell, 3/19/08
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The Liberal Moment(SM) is below, but first and overview and some preliminary comments.

Articles like this in the NY Times, Unemployed, and Skewing the Picture, note:

This month's jobs report is a great example of how misleading the unemployment rate can be. In February, the economy shed 63,000 jobs, which is a strong indication a recession may be at hand. But the unemployment rate actually fell, to 4.8 percent from 4.9 percent.

The reporter, David Leonhardt, wrote that:

I’m also not suggesting that the Bureau of Labor Statistics somehow cooks the books. Both Republican and Democratic economists praise the bureau as a model of professional nonpartisanship.

Floyd Norris wrote, "Amen to that."

Nonpartisan? Perhaps, but I doubt it. Biased? Absolutely! I'll "suggest" outright that both Republican and Democratic administrations have "cooked the books" by promulgating misleading statistics. No administration and no government wants to admit that the nation's real unemployment is on the order of 12%. But it is.

The 63,000 job loss is from reported employer-reported "payroll employment" and headlines the 

February 08 Employment Situation Summary


   Nonfarm payroll employment edged down in February (-63,000), and the unemployment rate was essentially unchanged at 4.8 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.  Employment fell in manufacturing, construction, and retail trade.  Job growth continued in health care and in food services.  Average hourly earnings rose by 5 cents, or 0.3 percent, over the month.

Unemployment (Household Survey Data)

   The number of unemployed persons (7.4 million) and the unemployment rate (4.8 percent) were essentially unchanged in February.  Over the month, the unemployment rates for adult men (4.3 percent), adult women (4.2 percent), teenagers (16.6 percent), whites (4.3 percent), and Hispanics (6.2 percent) showed little or no change.  The jobless rate for blacks fell to 8.3 percent, in line with the average rate for 2007.  The unemployment rate for Asians was 3.0 percent, not seasonally adjusted.  (See tables A-1, A-2, and A-3.)

Total Employment and the Labor Force (Household Survey Data)

   Both the civilian labor force, at 153.4 million, and the labor force participation rate, at 65.9 percent, declined in February.  Total employment (146.0 million) and the employment-population ratio (62.7 percent) were little changed over the month.  (See table A-1.) ...

But note: There are two types of jobs data:
  • Household data: http://www.bls.gov/cps/ CPS for "Current Population Survey." CPS is a monthly survey of households conducted by the Bureau of Census for the Bureau of Labor Statistics. It provides a comprehensive body of data on the labor force, employment, unemployment, and persons not in the labor force.
  • Establishment data http://www.bls.gov/ces/ ... CES for "Current Employment Statistics." The CES program surveys about 150,000 businesses and government agencies.

In fact, the real story is much worse than recognized in this NY Times article. According to the population "household survey," the economy lost 255,000 jobs in Feb 08 and 654,000 since Nov 07 ... see the first chart below.

The official unemployment rate (U3 from the population survey) fell for two reasons (find this data at this BLS site):

  1. Because, as shown in the second chart below, the official population over 16 DECLINED by 450,000 from Jan to Feb (... sure it did).
  2. Because the "labor force participation rate" fell from 66.1% in Jan to 65.9% in Feb. Don't you know? ... some people just stopped "looking." See how "looking" is defined below.

All these numbers go beyond misleading, they're phony as shown below.

Liberal Moment #24. Employment & Unemployment
(handout in pdf and doc formats) 

Understanding unemployment rates

Official definitions are on the BLS website. Briefly:

  • U-3. the official unemployment rate
  • U-4. Adds "discouraged" workers
  • U-5. Adds other "marginally attached" - available; had searched for a job sometime in the year preceding the survey, but not currently "looking"
  • U-6. Adds "part time for economic reasons" -- they want, but can't find, a full time job
  • U-6 + Want Job Now. Adds those government considers "Not in labor force, but Persons who currently want a job." Factors prevented their entry into the job market at the time they were being surveyed.
  • U-6 + Want Job Now + Needed to Keep Up w/Pop Growth. Adds the number of jobs that would be needed to keep up with population growth.

Unemployment rates: Statistics are derived from a population survey. They're not related to those collecting unemployment. BLS explanation.

Looking? You're not considered "looking" unless you've made a phone call or sent a letter. "Looking" in the newspaper or on the internet, and not finding a job for which to apply, does not count.

Underemployment: None of this considers those working at jobs for which they are overqualified.

Different measures of unemployment. It's more like 12% than 5%

Real unemployment is closer to 12% than to the official 4.5 to 5%.
For confirmation see Shadow Government Statistics at John Williams' Employment and Unemployment Reporting link.

Employment Lags Population Growth
US seasonally adjusted employment level: 654,000 drop since 11/07.

US Employment HAS NOT kept up with population growth and has begun to decline

Millions, 7.6 million, hold more than one job

The "free market for labor" myth

"Conservatives" maintain that unions and a minimum wage interfere in the "free market." But Federal Reserve policy rigs demand to assure there are always more people who want jobs than there are jobs.

Because there are more people than there are jobs, the added value of those extra people is zero … wages fall to between zero and subsistence level. See documentation of this policy and how the Fed promotes insecurity for those who work for a wage in excerpts from Fed meeting minutes at Response to a Conservative.

URL: http://www.exponentialimprovement.com/cms/empunemp.shtml

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