Saturday, December 3, 2011

Bogus Unemployment Numbers

The mainstream media is once again in full pom-pom mode relentlessly cheerleading the latest unemployment rate released this week by the Bureau of Labor Statistics.

Here's one typical headline from Bloomberg Business Week:

Unemployment Rate Falls to Lowest Since March 2009

But few of the journalists writing these headlines are actually looking at the raw numbers they themselves report and ask "How can the unemployment rate REALLY be falling when the numbers do not add up that way?"

You do the math yourself.

Here are the official numbers from the November 2011 BLS unemployment report:
  • Unemployment rate falls to 8.6%, down 0.4% from 9% last month
  • The private sector added 140,000 new jobs in October 2011.
  • The public sector cut 20,000 jobs in October 2011.  (A net of 120,000 new jobs created.)
  • But 190,000 people LEFT THE LABOR FORCE IN OCTOBER because (a) their unemployment benefits had run out and they no longer can file claims for compensation; and (b) they gave up looking for work since no jobs in their area are available, so-called "discouraged workers."
So ask yourself this simple question using the U.S. Government's own numbers.

If 120,000 new workers joined the U.S. labor force in October but 190,000 workers also left the very same labor force in the same month because they could not find jobs, how can the unemployment rate go down?

How?  The BLS assumes you can be unemployed, not have a job of any kind, but still not be "officially unemployed" for their calculations.  This is not how I learned to do math.  This video explains how you REALLY calculate an unemployment rate.

The fact the government does not count unemployed workers who are so discouraged they can't find work as "not unemployed" is indicative of what is really going on here.  According to you, me, and common sense, someone who is "not unemployed" is employed.  According to the U.S. Department of Labor Statistics, your brother-in-law or your daughter who has exhausted their 99-weeks of unemployment and has given up trying to find a job is unemployed---but they aren't "officially" unemployed for government accounting purposes.  To be blunt, they and the millions like them just don't count.  Here is the BLS' official definition of discouraged workers.  You read it.  If you are not in the labor force, aren't you unemployed?  No, you are merely discouraged....

This is statistical madness.  Kafka and Orwell would be proud of such reasoning.  Some unemployed are more equal than others???

I do applaud some news outlets like the Christian Science Monitor that have run critical pieces on the BLS and how these phony numbers are calculated.

The real reason the BLS and all government agencies play games with official numbers like inflation, unemployment, GDP, and the rest is obvious.

For example, when President Nixon in 1971 was battling a wave of inflation that ultimately led him to initiate a disastrous policy of wage and price controls, his administration changed the way CPI adjustments were made to Social Security and the Medicare program.  The lower the CPI increase, the better the inflation picture looked from a political perspective.  Plus the government saved hundreds of billions by shortchanging beneficiaries on the real rate of inflation increases in the economy.

By the way, President Clinton changed the CPI numbers once again to make his administration look better too.  Both parties play these games.

The lamestream media is in full cheerleader mode on the economy since the actual economic numbers are grim and not radically improving.  With their candidate Mr. Obama languishing in the polls, someone in New York and Los Angeles needed to turn the economic lemons received from the BLS into lemonade.