[Marxism] Are the September Jobs Numbers ‘Cooked’ Controversy
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Sat Oct 6 15:46:23 MDT 2012
Are the September Jobs Numbers ‘Cooked’ Controversy
October 5, 2012 by jackrasmus
With the release of today’s jobs report by the bureau of labor
statistics, a public controversy has erupted over the veracity of the
jobs numbers. Representatives on the extreme right claim the jobs
numbers are being ‘cooked’ by the labor department. One of the two jobs
report, the current population survey, reported some 870,000 new jobs
were created last month. In contrast, the current establishment survey,
the other labor department report, noted only 114,000 jobs were created.
The right wing explains this by alleging outright falsification of the
jobs report by the labor department. As is the tendency of the extreme
right, they are not big on rational analysis. This writer does not buy
the idea that outright falsification is the explanation. However, I do
think there’s something wrong with the jobs numbers and have repeatedly
been saying so on this and other public blogs for more than a year now.
I have been writing consistently about the problems in the jobs reports,
pointing out that for last three years in a row, from 2010 to 2012, we
see an interesting trend. Every fall and winter the jobs reports show
extraordinary job gains well beyond averages, while every spring-early
summer the jobs gains collapse. There is indeed something going on with
the jobs numbers, though it’s not falsification.
Last month’s 870,000 CPS (current population survey), which determines
the unemployment rate, included nearly 600,000 involuntary part time
jobs created. That indicates either of two things: employers are laying
off full time workers and hiring part timers; or hiring part timers
instead of full timers because they, employers, do not see sustained
economic recovery on the horizon and they are hiring more easily laid
off in the future part time workers. The problem with part time hires is
that the jobs reports considers them–for purposes of determining the
standard U-3 unemployment rate–as full time workers. They may be working
part time in fact but are considered fully employed when calculating
unemployment rates. Hiring that many part timers, or even several
hundred thousand less, represents a continuing very weak labor market
and not an improving one. This view is supported by the more stable
second labor department jobs survey, the establishment report, made up
of 400,000 employers reporting each month (and thus not a real ‘survey’
in fact), which showed last month a continuing bare growth in jobs. In
fact, 114,000 jobs growth is still well below what it takes to even
absorb new entrants into the work force.
However there may be an even more accurate explanation why the 873,000
number is a gross aberration (but not falsification) in the jobs
numbers. I’ve been warning about this for some months now. It has
something to do with the repeated exceptional jobs gains coming every
year the last three years in the fall-winter period, followed by a
repeated collapse in the jobs numbers in spring-early summer also for
the past three years. The explanation goes something like the following
(bear with me, it’s a bit wonkish):
The current population survey (the 873,000) represents a statistical
operation on raw jobs data that adjusts that raw (i.e. actual) jobs data
by means of several statistical operations–i.e. seasonality, etc.—to get
to the 873,000. But before the raw data is statistically adjusted,
another source of raw data is added to the initial data and only after
that is the statistical adjustment carried out. This second source is
jobs data estimated from assumptions about New Business Formation that
are lagged up to nine months.
Here’s how it works. The labor department assumes net new businesses are
formed nine months previous. That would be last November-December 2011.
These data on new business formation are very inexact. It’s not actual
new businesses but an assumed historical average of new businesses. So
the past years in which new business formation was high is substitute
for the more recent period when new business formation is in fact low,
or even negative. It’s really a shaky estimation process.
However, that shaky estimation, up to nine months old, ends up as
additional new jobs created data that is then added to the raw data for
new jobs created collected last month from the population survey. The
assumed jobs created from new businesses created nine months ago and the
raw data for new jobs from last month’s survey are then added together.
Only then are the statistical adjustments made on that combined raw data
to come up with the reported number of 870,000. That all sounds a bit
technical, and it is. But some economists are highly critical of this
process of adding raw data from historically averaged, assumed new
business formation nine months ago to raw data from the survey, and then
adjusting it and rolling it up into the publicly reported numbers. This
writer is one of many skeptics of the methodology.
For a further clarification of this, readers should read my various
reports on the jobs numbers in 2011 and early 2012 on my blog’s archive
(jackrasmus.com) and other public blogs.
So there is definitely something wrong with the numbers on jobs. I don’t
mean only last month’s jobs report. When there is so much divergence
between the two jobs reports (870,000 vs. 100,000) something clearly is
amiss. But more importantly, evidence of something out of the ordinary
happening is reflected in the three years running of inordinate jobs
growth in fall-winter followed by jobs collapse in spring-early summer.
One year such extreme aberration can be disregarded. But three years in
a row now is another thing. Something is wrong.
But this is not the same as saying the numbers are being ‘cooked’. The
irrational right wing should do its homework instead of relying on
emotional outbursts to explain the obvious anomaly in the jobs numbers.
Likewise, the liberal-Democratic Party center should stop trying to
apologize for the obvious terrible jobs creation record of Obama for the
past three years–notwithstanding last month’s extreme divergence in the
two jobs reports–and stop trying to paint a picture that the labor
market is now rapidly mending, which it definitely is not. There are
still 23 million jobless. That means after trillions of dollars in tax
cuts to investors and businesses since 2009, and trillions more in
subsidies and government spending, plus more than $10 trillion pumped
into the banks by the Federal Reserve—we got barely two million net jobs
created since June 2009. That’s a costly, and horrible, jobs creation
In the recent presidential debate last Wednesday it was abundantly clear
neither candidate has anything remotely representing a jobs program,
besides just giving more tax cuts for businesses (that just get hoarded
and not invested) and lying about how more free trade (with the
Transpacific Partnership free trade proposal) will create jobs instead
of destroying them. But that’s in a nutshell the same program for jobs
creation being offered by both candidates.
Dr. Jack Rasmus
Jack is the author of the book, “Obama’s Economy: Recovery for the Few”,
April 2012. His blog is jackrasmus.com and website:
www.kyklosproductions.com. He is the host of the radio show, ALTERNATIVE
VISIONS, on the progressive radio network, PRN.FM, in New York, every
wednesday at 2pm.
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