Jobs Report – Cooked or Correct? – NYTimes.com
I posted the other day about the backlash of the Republican punditry about the September Jobs report from the BLS (Bureau of Labor Statistics), and simply put I was frustrated in hearing what I thought to be a hypocritical if not paranoid attack on the Bureau of Labor Statistics. I said that I don’t like the Republican pundits and talking heads willingness to use the numbers when they are convenient and to through the Bureau under the bus when it’s not conveniently telling them what they want to hear. Now, I recognize that people have potential to be corrupt, and I don’t even mind asking questions about the BLS, but this is the first attack of it’s kind on a very old and well respected bureau of our government (and I know that it sounds funny to some of you that I would use respect and government in the same sentence). Well anyway, I enjoyed this article, and I thought that I should pass it along to anyone who is interested in this muddying of the waters over the Jobs Numbers. Enjoy
Jobs Report: Cooked or Correct?
By JOE NOCERA
Published: October 5, 2012
“Unbelievable job numbers,” tweeted Jack Welch, the iconic former boss of General Electric on Friday morning, moments after the Bureau of Labor Statistics released its September jobs figures. “These Chicago guys will do anything,” he continued. “Can’t debate so change numbers.”
The jobs numbers, unquestionably,gave a boost to the Obama campaign, still reeling from the president’s poor debate performance. While the bureau’s survey of businesses showed a ho-hum rise of 114,000 in nonfarm employment, the unemployment rate had somehow dropped from 8.1 percent in August to 7.8 percent, far exceeding expectations. Thus, a month before the election, and for the first time in Obama’s presidency, unemployment was under 8 percent.
Welch smelled conspiracy. And he wasn’t alone. “Total data manipulation,” tweeted a writer at Zerohedge, a financial news blog. “Such a farce.” Fox News spent much of Friday morning piling on.
It’s worth pointing out that the last time anyone accused the Bureau of Labor Statistics of being politically motivated was when Richard Nixon did so in 1971. Upset that the bureau was releasing figures showing higher unemployment during his re-election campaign, he asked his hatchet man, Charles Colson, to investigate the bureau’s top officials, including its chief, Geoffrey Moore.
So Point No. 1: the idea that a handful of career bureaucrats, their jobs secure no matter who is in the White House, would manipulate the unemployment data to help President Obama, is ludicrous. Jack Welch knows it, too; when I called him Friday afternoon, he quickly backpedaled. “I’m not accusing anybody of anything,” he protested. But he went on to add that everything he’s seen suggests that the economy remains in the doldrums, and it just didn’t seem possible that the unemployment rate could have dropped so drastically, and so quickly.
Hence, Point No. 2: there is, indeed, something a little strange about the way the country derives its employment statistics. It turns out that the statistics the bureau releases each month are generated by two different reports. One, called the establishment report, is a survey of businesses. That’s where the 114,000 additional jobs comes from.
The second is a survey of 55,000 households, where people are asked about their employment status. Extrapolating from the survey, the bureau concluded that an additional 873,000 people had found work in September. It is that number that brought the unemployment rate from 8.1 percent to 7.8 percent.
When I asked a bureau spokeswoman why there was such divergence between the two numbers, she said she had no idea. “The reports are totally separate,” she said.
When I put the same question to economists, they shrugged. Maybe it was because an additional 582,000 Americans were working part time, which doesn’t show up in payroll statistics. Maybe it was because of increased government employment. For some unexplained reason, there is always an uptick in September. (“Maybe it has something to do with going back to school,” said Mark Zandi of Moody’s Analytics, who quickly added, “I’m just guessing here.”) In any case, it wasn’t anything economists hadn’t seen before. Sometimes the two surveys delink, though over the long term they tend to reinforce each other. In the short term, however, the household survey is considered the more volatile — and less reliable — of the two numbers.
Which leads to Point No. 3: there is something truly absurd about having the presidential race hinge on the unemployment rate. Even putting aside the reliability of the short-term numbers, the harsh reality is that no president has much control over the economy. That is especially true of President Obama, whose every effort to boost the economy these past two years has been stymied by Republicans. Again and again, they have shown that they would rather see the country suffer than do anything that might help Obama’s re-election.
There is rough justice in the way things are playing out. Having spent the last year wrongly blaming the president for high unemployment, Republicans can only stand by helplessly as the unemployment rate goes down at the worst possible moment for them. Fox News scoured the data Friday, looking for signs that the economy wasn’t improving. They found some: high unemployment for African-Americans, for instance, and fewer manufacturing jobs.
But the data were largely overwhelmed by positive signals. In its revised figures for July and August, for instance, the bureau said that more jobs had been created than it originally estimated. People with only high school degrees were finding jobs. The number of people who had been out of work for six months or more was at its lowest point in three years.
Whether the Republicans like it or not, the economy is slowly getting better.
Awful, isn’t it?
This article has been revised to reflect the following correction:
Correction: October 8, 2012
An earlier version of this column misidentified the commissioner of the Bureau of Labor Statistics in 1971. It was Geoffrey Moore, not Julius Shiskin.