Sense on Cents

Can’t we come up with an easy, honest way to count unemployment? Show of hands, or something. Really. Why is this so complicated?

Not seasonally adjusted 1 month change in government wage and salary workers, highest since 1948

Seasonally adjusted very high but not quite at record

Two month moving average a chart buster

Clear choice in a simple sign…

Heartland Institute Economic Experts
React to October Jobs Report

The unemployment rate dropped below 8 percent for the first time since the first month of the Obama presidency, falling from 8.1 percent in August to 7.8 percent in September. The U.S. Labor Department said the economy added 114,000 jobs last month, and it revised upward the number of Americans who found work in the previous three months.

The following statements from economics experts at The Heartland Institute – a free-market think tank – may be used for attribution.

“The news reports regarding today’s unemployment rate are highly misleading. There are two different sources of job data – payrolls and surveys. The payroll numbers show private payrolls growing at the same 1 percent annual rate as in recent months. This is down from 2 percent increases in private payrolls in 2010 and 2011. Hence, the sluggish job growth continues.

“The job survey numbers are a different story. They show a gain of over 800,000 jobs in September. These are the numbers that go into the unemployment rate of 7.8 percent. The survey numbers are highly volatile. They show a decline of over 300,000 jobs in the previous two months. Over the past six months the survey job numbers show about the same 1 percent annual increase in jobs as the payroll numbers. Hence, there has been no improvement in the job market. It remains weaker than it was in 2010 and 2011.”

Robert Genetski
Policy Advisor, Budget and Tax Policy
The Heartland Institute

“Yeah, the unemployment rate is 7.8 percent … in Venezuela. When was it decided that would be the rate this month? In February, at the Obama campaign? This unemployment report reflects not the state of unemployment today, but corruption.

“So many millions have left the work force over the past several months? Based on what exactly? What Labor Department American Federation of Government Employees career bureaucrats say? That justifies only an investigation into corruption at the Labor Department employment statistics office, with more than just firings at stake, but criminal liability as well.

“This will not work to Obama’s political advantage, but just the opposite. The corruption of our federal government it represents will only further outrage voters. This is the equivalent of an attempted coup d’etat.”

Peter Ferrara
Senior Fellow for Entitlement and Budget Policy
The Heartland Institute

“The big disparity between the household and payroll surveys makes me skeptical that this is a beginning of a huge employment surge. The moderate stock market gains since the numbers were announced confirm that investors are only cautiously optimistic about this report. And it does not erase my belief that abysmal public policies have contributed to the slowest recovery in more than 70 years.”

Richard Vedder
Professor of Economics, Ohio University
Policy Advisor, Economics
The Heartland Institute

“It’s good that more people had jobs, but it’s a long way from where the country needs to be. For jobs growth to keep up with the growth in the population, the nation needs to add more than 200,000 jobs a month, each and every month. And there are still 3.4 million fewer jobs than there were just four years ago.”

Steve Stanek
Research Fellow, Budget and Tax Policy
The Heartland Institute
Managing Editor
Budget & Tax News

“The employer survey was consistent with previous trends, but the household survey, the one showing 873,000 newly employed, is nearly eight times as high as the employer report. Who is employing these people if not employers? This casts serious doubt on this good news.”

S.T. Karnick
Director of Research
The Heartland Institute

“The unemployment numbers released by the Labor Department today are highly suspect, and may well be the result of a statistical anomaly given the disparity between the number of new jobs reported and the decrease in the unemployment rate. Even if the unemployment rate is accurate, it is hardly a sign of robust economic recovery; any optimism felt is the result of lowered expectations after nearly four years of unemployment rates over 8 percent.

“When policies are introduced that eliminate the uncertainty over looming tax increases, and the country’s job creators are confident in the direction the country is heading, we will see true recovery driven by the private sector.”

Jonathan Steitz
Policy Advisor, Budgets and Taxes
The Heartland Institute

The Heartland Institute is a 28-year-old national nonprofit organization headquartered in Chicago, Illinois. Its mission is to discover, develop, and promote free-market solutions to social and economic problems.

Some of the mysterious drop in the unemployment rate in September–which fell from 8.1% to 7.8%–can be explained by 101,000 new government jobs over the past three months.

Some of it can be explained by slow growth in the private sector–though not nearly as much as the Obama administration is falsely claiming.

But most of it is accounted for by statistical revisions and a sudden increase of 600,000 part-time jobs. That increase has surprised everyone, but should not have: it is the predicted result of the end of unemployment benefits.

Conventional wisdom is that slow job growth–such as the below-average 114,000 jobs added in September–should be associated with a rising unemployment rate, as more people come back into the labor force.

That is why economists predicted an increase of 111,000 to 113,000 jobs, combined with a slight uptick in the unemployment rate from 8.1 to 8.2 percent. On several occasions in the past few years, we have seen low job growth combined with lower unemployment rates, because millions of people have left the labor force instead.

What happened in September was counterintuitive: the U.S. Bureau of Labor Statistics reported that while job growth was slow, the labor force actually grew substantially–and the unemployment rate fell anyway. That is partly because the government’s household survey reported an additional 873,000 people were employed–a statistical anomaly, mostly accounted for by the astonishing increase in 580,000 part-time jobs (roughly 7.5%).

Those increases would not be expected in an economy crawling toward recession at a growth rate of 1.3%.

The only possible explanation lies outside the economy itself: the expiration of federal unemployment benefits.

LD,

One cannot challenge the data collection methodology of the BLS or the statistics involved in the computation, but what one might question is why there is such a large anomoly in the employment numbers that conveniently reduces the unemployment rate below 8% the month before the election.

Look no further than the massive amounts of expiring long term unemployment benefits or the HHA mortgage assistance program being administered by uncle Timmy over in Treasury.

You have bills to pay and no more unemployment check so what do you do? FIND A PART TIME JOB or in order to continue to qualify for the HHA mortgage assistance program for up to $15,000 and to $25,000 in disaster areas you must be a) currently unemployed but seeking employment (subject to verification by potential employers) or b) self employed or part time employed with income not to exceed.

So ask yourself 1) what do you say when BLS comes calling? 2)Has anything really changed other than the democratic unemployment rate soundbite?