Democrats & Liberals Archives

Latest BLS Numbers Sure To Draw Cries Of Manipulation

Every month BLS puts out numbers and every month if it’s not bad news then many on the right claim the numbers are manipulated. See, there’s a Democrat in the White House so the only outcome they see is economic meltdown. If the data doesn’t support it then the data is surely manipulated.

The November numbers are decent but not outstanding. The economy added 120,000 jobs and October and September numbers were revised upward to 210,000 and 100,000. This brings the average monthly creation this year to 132,000. We have now seen 21 straight months of private sector job growth worth 2.947 million jobs. Unfortunately the number of long term unemployed was still a brutal 5.7 million.

So those numbers aren't much to talk about one way or another except to say we're still headed in the right direction. The trouble comes from the fact that unemployment fell from 9.0% top 8.6%. This is not just because of job creation but also due to shrinking of the workforce. When the whole workforce shrinks it takes with it some people who used to be counted as unemployed. The workforce shrank by 315,000. The number of unemployed shrank by 594,000. The number of employed grew by 278,000. About half the 0.4% drop is on account of change in workforce.

So why did the workforce shrink? Did Obama call down to BLS and have them manipulate the numbers and lie to the American public? You'll hear some talk of that today I'm sure from folks like Limbaugh and other talkers. I'm sure some readers of Watchblog are thinking the same thing.

It's true though that the participation rate has been in decline over the last few years. This is a key argument for the manipulation as if the rate should have continued it's trend or else it's bogus. But this change in the rate is not new and has been predicted for some time. BLS points this out in their report Labor force projections to 2018 released in 2009:

As the baby-boom generation ages, the share of workers in the 55-years-and-older age group will increase dramatically; the participation rates of older workers in the labor force are expected to increase, but will remain significantly lower than those for the prime age group, and, as a result, the participation rate and overall labor force growth rate will decline

It's not just the baby-boomers though. BLS outlines several reasons the participation rate is in decline. From the report:

  • Age: As the baby-boom generation has aged and moved from the prime age group to the older age group, the overall labor force participation rate has declined and will continue to do so in the future.
  • Women: The labor force participation of women seems to have peaked in 1999 and has been decreasing in the past 2 years. It is not expected to rebound to higher rates in the near future.
  • Men: The labor force participation rate of men has been steadily declining since its peak at the end of the 1940s. The increased availability of disability and Social Security benefits has been one factor. In addition, the structure of benefits and defined-benefit pension plans has been responsible for the early retirement of men in the past two decades. The downward trend of the men's participation rate is projected to continue in the future.
  • Youth: The labor force participation rate of youths decreases in recessions and has declined considerably since the 2001 recession. With increasing school enrollments, more young people than ever are continuing their education in hopes of pursuing better paying careers and becoming more marketable. As a result, the participation rate of youths is not projected to increase in the coming years.

We are right on the edge of the decline and it will only speed up as we head deeper into this decade. Surely these tough times could force these trends to accelerate over the short term. We already know more people are staying in college longer or going back to school right now instead of entering the workforce. The same could very well be true in the case of women's participation in the workforce and the other areas of decline.

There are several key reasons for a shrinking workforce. Data manipulation should not be on that list.

Posted by Adam Ducker at December 2, 2011 9:00 AM
Comments
Comment #332598

Adam,
Good article. Today’s big drop in the unemployment rate is a classic example of why that number should be viewed with caution.

One other factor involved in the low participation rate: the black market. Some people do not want to declare their wages in order to avoid taxation. Much of the drug culture operates off the charts. Naturally, the federal government does not want to advertise this.

Posted by: phx8 at December 2, 2011 12:41 PM
Comment #332603

Phx8:

Thank you. On a related note: Apparently it’s illegal not to declare taxes for profits gained by illegal means. So every time you profit by breaking the law you’re breaking at least 2 laws I suppose.

Posted by: Adam Ducker at December 2, 2011 3:10 PM
Comment #332611

It is not date manipulation. It just needs to be explained. The big drop is an artifact of statistics.

I understand that some will think it is a manipulation to help Obama, but it will hurt him. As the economy improves, more people will move into the labor force, so this might be a low point for unemployment for a while. The artifact of statistics will create the impression that things are not improving, even if they do.

Unemployment will not go much lower before the election and we will be able to test the idea if a president can get elected with an unemployment rate significantly higher than when he was elected.

This is not really fair to Obama, given the nature of the statistics, but I plan to use the argument anyway and I am sure that others will too. Clinton unfairly used the “jobless recovery” against Bush and Kennedy used the mythical missile gap against Kennedy, why break with tradition?

Adam

The gangster Dutch Schultz defended himself from tax evasion charges by saying that his money was gained through illegal means and therefore exempt.

Posted by: C&J at December 2, 2011 5:42 PM
Comment #332613

C&J: “…and we will be able to test the idea if a president can get elected with an unemployment rate significantly higher than when he was elected.”

What makes you think it won’t go much lower? If we do see the increase that will signal a more positive job outlook as folks return to the workforce then we’ll likely see more rapid decline following that anyway.

And what in your mind amounts to significantly higher? It went from 9.8% in November 2010 to 8.6% in November 2011. It was 7.8% when Obama took office. He’s got 12 more months to see how low it can go. If the US avoids being pulled into Europe’s recession then I think the next 12 months are going to be very positive economically.

For now it’s mostly good news, not bad. Steady job growth. Small businesses are optimistic about the holidays and are hiring. Manufacturing expanded in November. Car sales are up. Gas prices are down. Consumer confidence is up. Dow is positive for the year. Twelve months could be a lifetime for any conservatives hoping Obama is a dead duck over the economy.

By the way, how’d that turn out for Schultz? I just found the section in question which deals with “other income” such as illegal activity:

Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.

Funny, and sad.

Posted by: Adam Ducker at December 2, 2011 6:13 PM
Comment #332614

Why would anyone want to think the numbers are manipulated?

Anyway, we will see how the numbers are revised next week. The numbers are always revised the next week and it sems no press covers the revisions.

But I am curious what part 315,000 US workers, who have just dropped out of the job market, played in the unemployment numbers. I have a tendency to believe numbers are manipulated to some extent.

Posted by: Mike at December 2, 2011 6:19 PM
Comment #332619

Mike: “Anyway, we will see how the numbers are revised next week. The numbers are always revised the next week and it sems no press covers the revisions.”

You say this every month and every month you fail to show where you find revised numbers the week after. Honestly, it gets no press coverage because it doesn’t happen.

“But I am curious what part 315,000 US workers, who have just dropped out of the job market, played in the unemployment numbers.”

It’s hard to say what those 315,000 amount to. Were they employed or unemployed when they dropped out? That’s what makes guessing tricky. It’s almost 50/50 change in workforce versus increase in jobs. Employed grew by 278,000.

Posted by: Adam Ducker at December 2, 2011 6:38 PM
Comment #332621

Adam

I guess I didn’t explain well. There are lots of “discouraged workers” right now. Unemployment has been dropping despite the lack of sufficient job creation. I don’t buy the idea that the labor for has really shrunk. It is just sleeping. As the economy improves, more people will be drawn back into the market, keeping the rate high.

This is why I say it is unfair to Obama. Essentially, if the rate of job creation increases, the rate of unemployment will stay the same of actually increase because of more people rejoining the job hunt.

I am fairly sure that Obama will be unpopular in November next year. My only fear is that his big money will manage to paint a Republican challenger as worse.

IMO Romney will be the nominee. He will run a campaign based on ideas to make the economy better. It will include things like allowing more gas exploration, which the Obama team claims to support but stops at every turn costing thousands of jobs. Obama will take the low road, using surrogates to attack and trash Romney. Obama will NOT want to run on his record. He will at first attempt to blame Bush, but that won’t work long except with people who would support him anyway.

After Romney is elected, he will free up energy exploration. Abundant American natural gas will be the catalyst - the REAL stimulus to bring the economy back. By 2013 unemployment will be back below 6% and the deficit will be declining because of increased tax revenues. All those who now predict a “new normal” of lower growth will claim that they predicted the resurgence. Meanwhile, leftists will complain that there are still poor people and they will call the 5.8% unemployment rate “unacceptably high”.

Re Dutch Schultz - he was gunned down by fellow mobsters while he was peeing in a restaurant bathroom. It probably was not the way he would have chosen to go.


Posted by: C&J at December 2, 2011 6:50 PM
Comment #332622

Sorry - by the END of 2013. IMO Romney will “inherit” an unemployment rate of around 8.5%.

Make note of my predictions. If I am wrong you can use them against me.

I would add that if Obama is reelected unemployment will still come down, but slower and it will be done by more government debt. at the end of 2013 with an Obama presidency we will have unemployment over 7% and deficits not improving.

Posted by: C&J at December 2, 2011 6:54 PM
Comment #332626

Good post Adam. I think these numbers will cut both ways, though. Many on the right will try to tear them apart to use against the President and Democrats in general. At the same time, many on the left will try to use them to claim that the drop in unemployment is due to the President’s policies. Both contentions are wrong.

As you point out, the BLS numbers can’t just be taken as is and one must consider the size of the workforce as well. Of the drop from 9.0% to 8.6%, approximately half is due to the drop in workers. So, while those workers still left the workforce and the rate is still 8.6%, it can be slightly misleading in terms of actual job creation.

The other thing that we need to consider is the fact that the holidays are coming up and of the 120,000 jobs added in October, about 50,000 of them were retail (as were a pretty big portion of the September figures). I haven’t seen the numbers in terms of how many of those jobs are classified as seasonal, but one could assume that a large majority of the retail jobs that were added are. This isn’t to say that those jobs will disappear come January, but I also wouldn’t hold my breath quite yet.

The good news is that the numbers are going in the right direction. The bad news is that the rate of job growth is barely enough to keep up with population growth, let alone bring the numbers down to more reasonable levels. I, like most, hope they keep improving. I, unlike some, don’t care if they improve before the election. I realize that this helps some people that I don’t plan to vote for, but jobs and the economy are more important than partisan politics.

Posted by: Kevin Nye at December 2, 2011 9:19 PM
Comment #332630

C&J: “Essentially, if the rate of job creation increases, the rate of unemployment will stay the same of actually increase because of more people rejoining the job hunt.”

I’m doubtful the rate will even increase at this point so it may not be an issue.

“Abundant American natural gas will be the catalyst - the REAL stimulus to bring the economy back.”

By the end of 2013 would natural gas even have an impact on the economy yet? That’s my question.

Posted by: Adam Ducker at December 2, 2011 10:36 PM
Comment #332632

Kevin: The website Calculated Risk has an interesting chart of seasoning hiring. We’re on track to have the best hiring season since before the recession. Even though these are related to the season it can still be a positive sign.

Posted by: Adam Ducker at December 2, 2011 10:47 PM
Comment #332633


C&J, what would be considered a significantly higher %?

Jan. 2001 Bush enters office, unemployment at 4.2%

Jan. 2005 Bush begins second term, unemployment at 5.3%

an increase of 1.1%

Eight years of Bush, unemployment began at 4.2% and ended at 7.8%.

Jan. 2009 Obama enters office, unemployment at 7.8%

Jan. 2013 unemployment at 8.5%? an increase of 0.7%

If Obama wins reelection an the unemployment rate in Jan. 2017 is below even the 7.8% mark, he will have beaten Bush both for unemployment and job creation hands down.

Bush inherited some tough economic times in his first term, primarily because of dot com and 911. Obama has faced some much tougher economic times, primarily because of what happened during the Bush Administration.

“My only fear is that his big money will manage to paint a Republican challenger as worse.”

History has already done that, not painted, but proven that Democratic presidents are better for the country than Republican presidents. Pick your statistic, economic growth (Democrats higher), inflation( Dems. lower), unemployment rates(Dems. lower), total federal spending (Dems. lower), total non-defence spending(Dems. lower), national debt(Dems. lower), hiring of non-defence government workers(Dems. lower), etc, Democratic presidents are proven better performers.

If performance in those categories is important to you, you should should be betting on and voting for Obama next year.

Of the thirteen presidents from Hoover to G.W. Bush, in job production, the top 6 are Democrats and the bottom 7 are Republicans.

Posted by: jlw at December 2, 2011 10:50 PM
Comment #332635

jlw,
Wow. I knew the economy performed much better when the President was a Democrat, but I didn’t realize the record of statistical superiority was so broad and clear cut. Thanks for the info.

C&J,
I’ve said more than once that I’m bullish on the economy. Retail sales on Black Friday were great, and I think the season will be a very good one for retail.

I think unemployment will be under 8% by next November. Let’s go with 7.8%. However, I still think Obama can be defeated, even with an improving economy.

Right now, Romney looks like a lock for the nomination, but I don’t think he can beat Obama, and I suspect a lot of other people have seen enough to come to the same conclusion. Among the other contenders, only Huntsman would worry me. He could beat Obama. Although he’s definitely a conservative, he is too sane for GOP primary voters, and Romney’s huge money machine eclipses him. The only other way I could see Obama losing is if the GOP drafts someone like Petraeus.

It’s not that Obama is that good. It’s that the GOP candidates are that bad.

Posted by: phx8 at December 2, 2011 11:57 PM
Comment #332638

jlw

Bush would not have been reelected in 2008, so your numbers there make no difference.

There is also a difference between unemployment at 5.3% and that of 8+. 5.3 is not much above full employment. People really are not unhappy with that. Bush also won because security concerns trumped economics. I didn’t trust Kerry to carry on the fight against terrorism. Today that is not the key issue. Today “It’s the economy, stupid” and Obama has failed there.

re Democrats and Republicans - it is interesting the way you put that. Bush inherited a problem because of dot.com; Obama because of Bush. Didn’t Bush inherit problems from Clinton in the same way Obama inherited from Bush? Didn’t the economy begin to decline in March 2000, almost a year before Bush took office.

Economics has time lags. You seem to understand that for Obama but not for Clinton or Bush.

Beyond that, Presidents cannot fine tune the economy. Many of the trends take years. It takes several years for a plan to become a plant. Much of the prosperity of the 1990s came from restructuring of the 1980s, for example.


The luckiest man in the world was Bill Clinton. He took office just as the economy was on the upswing, but before most people noticed and left office just as it was swinging down, but before most people saw it.

I have mentioned and admitted my cynicism. I don’t think this economy is really Obama’s fault, but he made promises and took credit, so now we can hold him responsible for it. Obama thought the natural economic growth would be working in his favor by now and he planned to take credit, so we should be sure he get the blame when it doesn’t.

Phx8

I don’t think unemployment will be below 8% for the reasons I mentioned above. It will be interesting to see how our liberal media spins this.

Posted by: C&J at December 3, 2011 12:36 AM
Comment #332640

Phx8:

I don’t agree that Romney is a lock. Gingrich leads polling in Iowa and is way ahead in South Carolina. He is gaining in New Hampshire with about 5 weeks to go.

One thing I’m looking at is the fact that Huckabee got a bump in New Hampshire due to winning Iowa in 2008. Obama got a huge bump in New Hampshire as well after winning Iowa. It didn’t matter for Huckabee because he was too far behind already but Obama who tailed by 10% in December 2007 nearly won New Hampshire.

Romney was ahead by almost 25% just a few weeks ago and now that gap is down to near 10% with Gingrich gaining fast. If Cain drops out today it’s possible that the 5% to 10% or so still supporting him in New Hampshire polls could move partially over Gingrich to help him close the gap to about 5% or so. Then imagine Gingrich wins Iowa and gets a bump. If Gingrich even comes close in New Hampshire it makes Romney look weak.

This is a long shot though somehow. Gingrich’s campaign is a joke. He talked big but didn’t put the ground work in. Now that he’s leading polls in some states he’s scrambling to set up campaign offices last minute. Ridiculous.

But anyway…I think Romney is the favorite still due to a stronger campaign but I see a clear road for Gingrich to overcome that if his campaign doesn’t implode in the next 4 weeks.

Posted by: Adam Ducker at December 3, 2011 8:34 AM
Comment #332642

C&J: Just looking at the average change in workforce and unemployed persons this year it’s not hard to see a path to 8.0% for Obama in the next 12 months. Pardon the expression, but slow and steady growth may help him win the race.

There are a few possible outcomes in my opinion in no particular order:

1. US enters recession, unemployment increases dramatically, destroying our fragile economy and with it Obama’s chances

2. Job growth accelerates and so does the workforce growth keeping employment the same.

3. Job growth stays steady like it did this year, workforce grows at a meager pace (or shrinks slightly) like it did this year as well, employment slowly lowers to 8.0% range.

I think 3 is the most likely. We had 10 straight months of almost no change in unemployment this year at a time when the workforce grew at a slightly lower than predicted 92,000 per month average. Unemployment declined on average -2,000 or almost zero. It would take exactly those kinds of numbers to maintain the current level for the next 12 months and I just don’t see that happening.

It will take a workforce growth of a predicted 105,000 per month and a decrease in unemployment by 70,000 for the rate to go from 8.6% to 8.0% in the next 12 months. That growth isn’t enough to trigger rapid expansion and spike in confidence but it is enough to slowly improve the outlook by the election.

This is all speculation based on looking at this year’s numbers, of course, but I see a path to 8.0% easily without an uptick like would happen if folks rushed back into the workforce.

Posted by: Adam Ducker at December 3, 2011 9:00 AM
Comment #332644

The path to 8% is to have more people quit looking as they did with this down turn in unemployed %. The real numbers for unemployed is something like 10.5% if we count in those who stopped looking but are still unemployed.

Posted by: KAP at December 3, 2011 9:50 AM
Comment #332646

KAP:

BLS has U-5 that measures unemployed plus the marginally attached workers. This was in fact 10.5% last month but declined to 10.2% this month. Marginally attached workers only grew by 36,000 between October and November and was not a major factor in the change in overall unemployment.

Posted by: Adam Ducker at December 3, 2011 10:38 AM
Comment #332647

That’s a fine way to make the picture seem rosey but the fact remains unemploment is 10.2%. When you figure everything in we are still in deep crap no matter how you spin it.

Posted by: KAP at December 3, 2011 10:42 AM
Comment #332649

KAP: There was no attempt to make anything rosy. I was just stating the facts. Unemployment did not decline simply because people quit looking for work.

Posted by: Adam Ducker at December 3, 2011 11:14 AM
Comment #332651

Adam

We have had 21 months of job growth. Good news. But it has been 21 month of sub-par growth. This is actually a technical, not a political question, which will be resolved in ten months. I suspect that your #2 will take place. Job growth will remain slow, but fast enough to encourage more people to enter the job market, keeping unemployment high.

You think that most of these discouraged workers will stay out of the employment market and the rates will decline. The interesting thing about this is that after Obama neither you (a supporter) nor I (an opponent) see robust growth. We have written off Obama and understand that his salvation depends on people being too beat down and discouraged to try to find work. That is sort of pathetic, don’t you think?

Posted by: C&J at December 3, 2011 12:12 PM
Comment #332653

Between quiting to look for work and the holiday part time hiring temporarily brought the figures down. We will see what the figures are come mid January when those temporary hires get the axe.

Posted by: KAP at December 3, 2011 12:28 PM
Comment #332654

Adam,

Thanks for the link. I must admit that I’m starting to question the data a little. I noticed last night that the BLS numbers didn’t quite add up. The workforce is about 154 million and the unemployment rate dropped 0.4%, which is about 615,000 people. We know that 120,000 net jobs were created and that 315,000 people left the workforce. That’s 435,000. Where are the other 180,000? I must be missing something.

I also agree that Romney isn’t a lock. Romney’s problem is that while he may be tolerable, most conservatives don’t want him. That’s why he hasn’t been able to break 25%, even after effectively campaigning for the last six years. Many others in the field had their rises (and falls) in the polls, yet Romney stayed consistent. This is not a good thing, rather, it shows that people are looking for an alternative to Romney. Dana Perino put it best: Romney’s a “safety date”.

I disagree on Gingrich however, in that while most politicos have been saying exactly what you did, his campaign is different. He’s running a campaign on issues and ideas, and he’s been getting that message out effectively through the debates and other media appearances. While I would agree that you need to have some infrastructure, Gingrich appears to be showing us that you can run a successful, issue based campaign without spending $10 million on 150 campaign offices. His lack of campaign offices has been by design, not from lack of planning.

I think we’re going to see Gingrich win in Iowa, come in a close second in New Hampshire, then go on to win South Carolina and Florida. From there, he’ll pretty much run the table through Super Tuesday and Romney will be a bridesmaid once again.

Posted by: Kevin Nye at December 3, 2011 12:45 PM
Comment #332655

KAP: “We will see what the figures are come mid January when those temporary hires get the axe.”

Seasonal hiring are relevant to job creation numbers but are not that relevant to current unemployment rates. Besides that, the headline job growth number is seasonally adjusted.

Posted by: Adam Ducker at December 3, 2011 12:54 PM
Comment #332656

Kevin Nye: “We know that 120,000 net jobs were created and that 315,000 people left the workforce. That’s 435,000. Where are the other 180,000? I must be missing something.”

Workforce figures come from the Household Survey and are used to calculate the unemployment rate. The job growth numbers come from the Establishment Survey. It’s two different sets of data. That’s why from a certain point of view the only number that matters yesterday is the 120,000 net jobs which was not good enough. That unemployment declined is just related to changes in demographics and other factors and doesn’t say much one way or another about the direction of the economy.

“His lack of campaign offices has been by design, not from lack of planning.”

I suppose that could be true but it comes off more like sloppy work than expert design. If it works it works though.

Posted by: Adam Ducker at December 3, 2011 1:12 PM
Comment #332679

Thanks Adam. I need to start reading up more on the BLS data. I understand what you’re saying about two different data sets, but it still just doesn’t seem right. Thanks again for the info.

Posted by: Kevin Nye at December 4, 2011 3:25 AM
Comment #332681

Kevin Nye: “I understand what you’re saying about two different data sets, but it still just doesn’t seem right.”

It is kind of confusing but as I read and write about this stuff I’m constantly learning more about how BLS works. This part of the monthly report may help clear up some of your questions about the two surveys.

Posted by: Adam Ducker at December 4, 2011 9:42 AM
Comment #332688

Thanks for the link Adam. That makes sense (sort of!).

Posted by: Kevin Nye at December 4, 2011 1:45 PM
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