More Bad News
What The Jobless Numbers Mean
The bottom-line numbers: The economy created a meager 114,000 new jobs last month, but somehow the unemployment rate — a critical political indicator — dropped 0.3 from 8.1 to 7.8 percent.
Usually, such a reduction can be attributed to thousands of potential workers giving up the job search entirely, thereby constricting the work force — and the number used to calculate the jobless rate.
That was not the case this time, as the government reported a rather astounding uptick — 873,000 — in the number of folks employed. This accounts for the drop in the unemployment figure, despite the paltry number of jobs actually created.
To be sure, 48 hours after President Obama’s drubbing in the first presidential debate Wednesday night, these employment figures were heralded as upbeat, stay-the-course news by the White House.
Others around the country, citing the contradictory data, were not so sure. Former General Electric CEO Jack Welch went so far as to say, in a highly publicized tweet, “Unbelievable jobs numbers ... these Chicago guys will do anything ... can’t debate so change numbers.”
Labor Secretary Hilda Solis took umbrage with the notion that the books had been cooked, emphasizing her “highest regard for our professionals [at the Bureau of Labor Statistics] that do the calculations ... They are highly skilled economists.”
OK, so what’s the explanation for the different views? Two separate surveys account for such conflicting data. Economists working off the payrolls report — i.e., a survey of businesses — accurately pegged the number of jobs added last month. But the monthly canvass of households produced a bolt from the blue, namely the biggest increase in employment observed in 29 years.
Noting the more erratic nature of the household survey, some economists are calling the September results a statistical fluke. How so? The numbers run counter to continued sluggishness in the jobs market, not to mention the recent downward revision of GDP growth, from 1.7 percent to 1.3 percent, in this year’s second quarter. As the Heritage Foundation’s J.D. Foster explains:
“One time out of a hundred, the true figure will be much different than the reported figure. One time out of a hundred for a monthly survey means about once every eight years. What seems to have occurred with the September household survey is the one time in a hundred.”
Mr. Foster goes on to say that the last time the household survey recorded such a jump in employment was in 1983, when the Reagan recovery was in full flower.
Needless to say, what currently passes as “recovery” pales in comparison to that of the Reagan years. A better explanation, perhaps: The level of part-time employment jumped dramatically in September, to the tune of 582,000. This serves to explain why the crucial labor participation rate ticked up to 63.6 percent, but the equally significant U-6 unemployment rate — the number of unemployed and underemployed — remained static at 14.7 percent.
Thus what the relative optimists and profound skeptics argue about here amounts to economic table scraps. Any way you look at it, the economy is struggling — some 23.2 million Americans are either out of work or can only find part-time employment. The manufacturing sector shed 16,000 jobs in September and the construction trades added but 5,000 new workers. Said Republican presidential nominee Mitt Romney, “This is not what a real recovery looks like.”
He’s right. At this anemic rate of job growth, the economy would have to create at least 250,000 positions monthly for years simply to trim the jobless rate to its pre-recession level of roughly 6 percent.
Clearly, this is not happening. A sobering thought, as Election Day approaches.