Wednesday October 10, 2012, 10:19 am
Imagine a country where challenging the ruling authorities—questioning, say, a piece of data released by central headquarters—would result in mobs of administration sympathizers claiming you should feel "embarrassed" and labeling you a fool, or worse.
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Editorial board member Steve Moore on the good and bad of the jobs report and whether it will help President Obama's campaign.

Soviet Russia perhaps? Communist China? Nope, that would be the United States right now, when a person (like me, for instance) suggests that a certain government datum (like the September unemployment rate of 7.8%) doesn't make sense.

Unfortunately for those who would like me to pipe down, the 7.8% unemployment figure released by the Bureau of Labor Statistics (BLS) last week is downright implausible. And that's why I made a stink about it.

Before I explain why the number is questionable, though, a few words about where I'm coming from. Contrary to some of the sound-and-fury last week, I do not work for the Mitt Romney campaign. I am definitely not a surrogate. My wife, Suzy, is not associated with the campaign, either. She worked at Bain Consulting (not Bain Capital) right after business school, in 1988 and 1989, and had no contact with Mr. Romney.

The Obama campaign and its supporters, including bigwigs like David Axelrod and Robert Gibbs, along with several cable TV anchors, would like you to believe that BLS data are handled like the gold in Fort Knox, with gun-carrying guards watching their every move, and highly trained, white-gloved super-agents counting and recounting hourly.

Let's get real. The unemployment data reported each month are gathered over a one-week period by census workers, by phone in 70% of the cases, and the rest through home visits. In sum, they try to contact 60,000 households, asking a list of questions and recording the responses.
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Some questions allow for unambiguous answers, but others less so. For instance, the range for part-time work falls between one hour and 34 hours a week. So, if an out-of-work accountant tells a census worker, "I got one baby-sitting job this week just to cover my kid's bus fare, but I haven't been able to find anything else," that could be recorded as being employed part-time.

The possibility of subjectivity creeping into the process is so pervasive that the BLS's own "Handbook of Methods" has a full page explaining the limitations of its data, including how non-sampling errors get made, from "misinterpretation of the questions" to "errors made in the estimations of missing data."

Bottom line: To suggest that the input to the BLS data-collection system is precise and bias-free is—well, let's just say, overstated.

Even if the BLS had a perfect process, the context surrounding the 7.8% figure still bears serious skepticism. Consider the following:

In August, the labor-force participation rate in the U.S. dropped to 63.5%, the lowest since September 1981. By definition, fewer people in the workforce leads to better unemployment numbers. That's why the unemployment rate dropped to 8.1% in August from 8.3% in July.

Meanwhile, we're told in the BLS report that in the months of August and September, federal, state and local governments added 602,000 workers to their payrolls, the largest two-month increase in more than 20 years. And the BLS tells us that, overall, 873,000 workers were added in September, the largest one-month increase since 1983, during the booming Reagan recovery.

These three statistics—the labor-force participation rate, the growth in government workers, and overall job growth, all multidecade records achieved over the past two months—have to raise some eyebrows. There were no economists, liberal or conservative, predicting that unemployment in September would drop below 8%.

I know I'm not the only person hearing these numbers and saying, "Really? If all that's true, why are so many people I know still having such a hard time finding work? Why do I keep hearing about local, state and federal cutbacks?"

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I sat through business reviews of a dozen companies last week as part of my work in the private sector, and not one reported better results in the third quarter compared with the second quarter. Several stayed about the same, the rest were down slightly.

The economy is not in a free-fall. Oil and gas are strong, automotive is doing well and we seem to be seeing the beginning of a housing comeback. But I doubt many of us know any businessperson who believes the economy is growing at breakneck speed, as it would have to be for unemployment to drop to 7.8% from 8.3% over the course of two months.

The reality is the economy is experiencing a weak recovery. Everything points to that, particularly the overall employment level, which is 143 million people today, compared with 146 million people in 2007.

Now, I realize my tweets about this matter have been somewhat incendiary. In my first tweet, sent the night before the unemployment figure was released, I wrote: "Tomorrow unemployment numbers for Sept. with all the assumptions Labor Department can make..wonder about participation assumption??" The response was a big yawn.

My next tweet, on Oct. 5, the one that got the attention of the Obama campaign and its supporters, read: "Unbelievable jobs numbers..these Chicago guys will do anything..can't debate so change numbers."

As I said that same evening in an interview on CNN, if I could write that tweet again, I would have added a few question marks at the end, as with my earlier tweet, to make it clear I was raising a question.

But I'm not sorry for the heated debate that ensued. I'm not the first person to question government numbers, and hopefully I won't be the last. Take, for example, one of my chief critics in this go-round, Austan Goolsbee, former chairman of the Obama administration's Council of Economic Advisers. Back in 2003, Mr. Goolsbee himself, commenting on a Bush-era unemployment figure, wrote in a New York Times op-ed: "the government has cooked the books."

The good news is that the current debate has resulted in people giving the whole issue of unemployment data more thought. Moreover, it led to some of the campaign's biggest supporters admitting that the number merited a closer look—and even expressing skepticism. The New York Times in a Sunday editorial, for instance, acknowledged the 7.8% figure is "partly due to a statistical fluke."

The coming election is too important to be decided on a number. Especially when that number seems so wrong.

http://online.wsj.com/article/SB10000872396390444897304578046260406091012.html?mod=WSJ_Opinion_LEADTop

Wednesday October 10, 2012, 10:36 am
Just wondering, if anyone is thinking that MANY of the people, who don't want to underemploy themselves, or work for less than they think they deserve, until better comes along, have opted to work as CONTRACT LABOR???? Those figures wouldn't be counted, of course...I'm just saying........

Wednesday October 10, 2012, 11:42 am
That is not how the jobs report in EITHER of our countries works Laura. There is NO WAY those figures changed that dramatically in just one month. Did not happena and now it is slowly coming out that those results were indeed way out of wack. It is called propaganda and you folks have been fed truckloads of this from the Chicago machine.

Wednesday October 10, 2012, 12:01 pm
Thanks for posting the article. It is instructive to compare the optimistic treatment by the mainstream media of the current economic figures with their portrayal of slightly better economic indicators as an absolute disaster back in 2004 when George W. Bush was running for re-election.

Wednesday October 10, 2012, 12:29 pm

Google: Completely wrong.

Wednesday October 10, 2012, 1:03 pm
The truth is FINALLY starting to trickle out now!! Truth will always win out over LIES!! It's what people do with that truth that makes them educated or not! Either believe it or bury their heads in the sand! If it looks or sounds too good to be true......it usually is!!

Wednesday October 10, 2012, 3:17 pm
Not that any of the right wingers here care about facts, but here they are:

"The Bureau of Labor Statistics reported on Friday that the official unemployment rate for September was 7.8%, down from 8.1% in August. There were also 114,000 net jobs added during the month of September. This is the first time that the official unemployment rate has been lower than 8% since Barack Obama became President, and with the 2012 presidential election one month from today, it is worth mentioning that no president since Franklin Roosevelt has been re-elected with an official unemployment rate higher than 8%.

“This morning, we found out that the unemployment rate has fallen to its lowest level since I took office. More Americans entered the workforce, more people are getting jobs. Every month reminds us that we've still got too many of our friends and neighbors who are looking for work, and there are too many middle-class families struggling to pay the bills. But today's news certainly is not an excuse to try to talk down the economy to score a few political points. It's a reminder that this country has come too far to turn back now,” said President Obama of the new unemployment statistics during a rally at George Mason University.

“There were fewer jobs created this month than last month. The reason it's come down this year is primarily due to the fact that more and more people have stopped looking for work. It looks like unemployment is getting better, but the truth is, if the same share of people were participating in the workforce today as on the day that President Obama got elected, why, our unemployment rate would be around 11 percent.That's the real reality of what is happening out there. This can't go on. ...When I'm president of the United States, that unemployment rate is going to come down not because people are giving up and dropping out of the workforce, but because we are creating more jobs. I will create more jobs and get America working again,” Republican nominee Mitt Romney said while campaigning in Arlington, VA.

Libertarian nominee Gary Johnson and Green nominee Jill Stein have yet to make statements concerning the report.

The BLS keeps track of six unemployment rates, which are defined as follows and given without seasonal adjustments:

U1: Persons unemployed 15 weeks or longer, as a percent of the civilian labor force. This rate is 4.2% for September 2012, down from 4.3% in August.
U2: Job losers and persons who completed temporary jobs, as a percent of the civilian labor force. This rate is 4.0% for September 2012, down from 4.4% in August.
U3: Total unemployed, as a percent of the civilian labor force (official unemployment rate). This rate is 7.6% for September 2012, down from 8.2% in August.
U4: U3 plus discouraged workers, as a percent of the civilian labor force plus discouraged workers. “Discouraged workers” are those who have stopped looking for work because current economic conditions make them believe that no jobs are available. This rate is 8.0% for September 2012, down from 8.7% in August.
U5: U4 plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force. “Marginally attached” workers are those who would like and are able to work, but have not looked for a job recently. This rate is 9.0% for September 2012, down from 9.7% in August.
U6: U5 plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force. This rate is 14.2% for September 2012, down from 14.7% in August.

As people who are employed part-time typically work about half as much as people who work full-time, it may be useful to consider a “U5.5,” defined as the arithmetic mean of the U5 and U6 numbers. This measure would thus count people who work part-time but wish to work full-time as “half-employed.” This rate is 11.6% for September 2012, down from 12.2% in August.

The BLS revised the Current Population Survey, which gathers the data needed to determine these rates, in 1994. Among the changes made, the U3 rate was named the new “official” unemployment rate, instead of the U5 rate.

The use of the U3 as the official definition exposes some holes in the BLS's thinking, because according to them, the following are true:

A person who loses a full-time job but spends one hour each week mowing a lawn for pay is considered employed.
A person who simply expresses interest in having a job is classified as unemployed.
“Discouraged workers” are not classified as unemployed or even as part of the labor force.
A sharp decrease in a worker's wages when forced to change jobs is not accounted for.

What this means is that the official unemployment rate can fluctuate in a recovering economy, as discouraged workers (who are not considered to be part of the labor force in the U3 measurement) who re-enter the labor force and do not find jobs will cause the U3 rate to spike. It also means that the U3 rate will go down when people give up looking for jobs, although this was not the case in September, as 211,000 people re-entered the labor force."


"Economic News Release

Employment Situation Summary
Transmission of material in this release is embargoed USDL-12-1981
until 8:30 a.m. (EDT) Friday, October 5, 2012

Technical information:
Household data: (202) 691-6378 * cpsinfo@bls.gov * www.bls.gov/cps
Establishment data: (202) 691-6555 * cesinfo@bls.gov * www.bls.gov/ces

Media contact: (202) 691-5902 * PressOffice@bls.gov


THE EMPLOYMENT SITUATION -- SEPTEMBER 2012


The unemployment rate decreased to 7.8 percent in September, and total nonfarm
payroll employment rose by 114,000, the U.S. Bureau of Labor Statistics reported
today. Employment increased in health care and in transportation and warehousing
but changed little in most other major industries.

Household Survey Data

The unemployment rate declined by 0.3 percentage point to 7.8 percent in September.
For the first 8 months of the year, the rate held within a narrow range of 8.1
and 8.3 percent. The number of unemployed persons, at 12.1 million, decreased by
456,000 in September. (See table A-1.)

Among the major worker groups, the unemployment rates for adult men (7.3 percent),
adult women (7.0 percent), and whites (7.0 percent) declined over the month.
The unemployment rates for teenagers (23.7 percent), blacks (13.4 percent), and
Hispanics (9.9 percent) were little changed. The jobless rate for Asians, at
4.8 percent (not seasonally adjusted), fell over the year. (See tables A-1, A-2,
and A-3.)

In September, the number of job losers and persons who completed temporary jobs
decreased by 468,000 to 6.5 million. (See table A-11.)

The number of persons unemployed for less than 5 weeks declined by 302,000 over
the month to 2.5 million. The number of long-term unemployed (those jobless for
27 weeks or more) was little changed at 4.8 million and accounted for 40.1
percent of the unemployed. (See table A-12.)

Total employment rose by 873,000 in September, following 3 months of little
change. The employment-population ratio increased by 0.4 percentage point to
58.7 percent, after edging down in the prior 2 months. The overall trend in
the employment-population ratio for this year has been flat. The civilian labor
force rose by 418,000 to 155.1 million in September, while the labor force
participation rate was little changed at 63.6 percent. (See table A-1.)

The number of persons employed part time for economic reasons (sometimes
referred to as involuntary part-time workers) rose from 8.0 million in August
to 8.6 million in September. These individuals were working part time because
their hours had been cut back or because they were unable to find a full-time
job. (See table A-8.)

In September, 2.5 million persons were marginally attached to the labor force,
essentially unchanged from a year earlier. (These 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. (See table A-16.)

Among the marginally attached, there were 802,000 discouraged workers in
September, a decline of 235,000 from a year earlier. (These data are not
seasonally adjusted.) Discouraged workers are persons not currently looking
for work because they believe no jobs are available for them. The remaining
1.7 million persons marginally attached to the labor force in September had
not searched for work in the 4 weeks preceding the survey for reasons such
as school attendance or family responsibilities. (See table A-16.)

Establishment Survey Data

Total nonfarm payroll employment increased by 114,000 in September. In 2012,
employment growth has averaged 146,000 per month, compared with an average
monthly gain of 153,000 in 2011. In September, employment rose in health care
and in transportation and warehousing. (See table B-1.)

Health care added 44,000 jobs in September. Job gains continued in ambulatory
health care services (+30,000) and hospitals (+8,000). Over the past year,
employment in health care has risen by 295,000.

In September, employment increased by 17,000 in transportation and warehousing.
Within the industry, there were job gains in transit and ground passenger
transportation (+9,000) and in warehousing and storage (+4,000).

Employment in financial activities edged up in September (+13,000), reflecting
modest job growth in credit intermediation (+6,000) and real estate (+7,000).

Manufacturing employment edged down in September (-16,000). On net, manufacturing
employment has been unchanged since April. In September, job losses occurred
in computer and electronic products (-6,000) and in printing and related
activities (-3,000).

Employment in other major industries, including mining and logging, construction,
wholesale trade, retail trade, information, professional and business services,
leisure and hospitality, and government, showed little change over the month.

The average workweek for all employees on private nonfarm payrolls edged up by
0.1 hour to 34.5 hours in September. The manufacturing workweek edged up by
0.1 hour to 40.6 hours, and factory overtime was unchanged at 3.2 hours.
The average workweek for production and nonsupervisory employees on private
nonfarm payrolls was unchanged at 33.7 hours. (See tables B-2 and B-7.)

In September, average hourly earnings for all employees on private nonfarm
payrolls rose by 7 cents to $23.58. Over the past 12 months, average hourly
earnings have risen by 1.8 percent. In September, average hourly earnings of
private-sector production and nonsupervisory employees increased by 5 cents
to $19.81. (See tables B-3 and B-8.)

The change in total nonfarm payroll employment for July was revised from
+141,000 to +181,000, and the change for August was revised from +96,000 to
+142,000."

Thursday October 11, 2012, 7:54 am
Jack Welch is freaking out because all of his ilk are losing their ill-gotten power over us. He sounded insane because he is.

Thursday October 11, 2012, 9:41 am
Thank you Cam ~

Thursday October 11, 2012, 1:22 pm
I used to work for GE-the going joke was the best way to tell when ole Jackie boy was lying-his lips were moving.

Thursday October 11, 2012, 1:28 pm
To quote Paul Krugman, from his op-ed in the NYT published Oct. 7 of this year, ". . . you shouldn’t put too much emphasis on one month’s number. The more important point is that unemployment has been on a sustained downward trend."

And again, on Mr. Welch: ". . . under whose leadership G.E. reported remarkably smooth earnings growth, with none of the short-term fluctuations you might have expected (fluctuations that reappeared under his successor) . . ."

Thursday October 11, 2012, 1:44 pm
I assume your graphic refers to your post, Cam....

Thursday October 11, 2012, 2:18 pm
Jack Welch is a squeeky-voiced, doddering, old fool who can't stand that he's on the way out! and no longer top dog...Chris Matthews put him to shame on Hardball!

Thursday October 11, 2012, 2:54 pm
Thank you for the facts, Carrie. When Corporate 1%-ers start whining and complaining, I always seek out the facts. Sorry I'm unable to send you another green star yet.

Thursday October 11, 2012, 3:21 pm
Practically every President for the last 50 years has fudged the unemployment numbers just prior to election.

Thursday October 11, 2012, 3:29 pm
I HOPE his Democratic opponent WINS come Nov 6th!!!

Thursday October 11, 2012, 3:40 pm
You cannot currently send a star to Carrie because you have done so within the last week.
Cam V. must be very desperate, because he post's lot's of articles prior to the elections, the content is always the same: against Obama.

Thursday October 11, 2012, 4:38 pm
Thanks for the share!

Thursday October 11, 2012, 5:10 pm
Such a sad, whinny old fart ~ him & his big time money buddies are eating sour crow pie & he can't swallow.

Thursday October 11, 2012, 5:24 pm
Who cares what Jack Welch has to say? He is a blow-hard who has no facts about anything. I will be so happy when this election is over and Obama kicks Romney's ass, sweet justice will be served.

Thursday October 11, 2012, 7:46 pm
FLORIDA: R 51% 0 44% .... latest polls and it has Romney up with hispanic voters.

Friday October 12, 2012, 6:00 am
Janet, you are right. The Republicans really ought to be embarrassed by who represents their ideologies, like Jack Welch, Donald Trump, Rush Limbaugh, Hannity, Romney, Ryan, etc. etc.......seriously, they need to go find their own crazy colony.
They are terrible examples of what humanity can drop to, a bunch of liars and sociopaths. Not one bright idea, just might makes right.
Hate to tell the GOPs, that power is not force. And TRUTH is wayyyy more powerful than all the lies they all contrive, constantly.

Monday October 15, 2012, 12:58 pm
Thanks Cam for being such a warrior and getting the "truth" out... Even so many rather keep their head in the sand when it comes to obama..

Tuesday October 16, 2012, 1:46 pm
Ideology and common sense seem to be at war with each other in America Scarlette. There was huge unemployment numbers from California that were not reported so this jobs report should be updated.