Saturday, February 8, 2014

The Real Employment Numbers That Never See Headlines

When the employment report is issued each month, most people and, certainly the media, are only interested in two numbers: (1) the number of jobs created or lost in that month and (2) the resulting unemployment rate.  But, those two numbers are a result of some pretty heavy-handed massaging in what the Bureau of Labor Statistics calls "seasonal adjustments".  Seasonal adjustments have always come under fire, especially lately, from a lot of well-respected economists, because the "adjustments" seem to be very large and, thus, questionably accurate.

Take, for example, the latest jobs report.  The headline says that 113,000 jobs were created with a resulting drop in the unemployment rate from 6.7% to 6.6%.  Now, to any logical observer, this makes perfect sense in that a falling unemployment rate must mean that some number of jobs had to have been created to lower the rate. But, if you dig deeper into the January jobs report, you would see a completely different picture when it comes to the unadjusted numbers.

According to the raw data in Table A-2, whites, which make up 79% of the workforce,  saw their unemployment rate go up in January by 9%; from 5.7% to 6.2%.  Yet, after seasonal adjustment, whites  remained the same at 5.7% as in December.  The raw data also said that blacks also saw their rate go up by 9%; from 11.6% to 12.6%.  After adjustment, their final number was 12.1%. While there is no adjustment data available for Asians, their unemployment rate went up 17% from 4.1% to 4.8%.  All three groups added together represent 96% of the workforce and all saw substantial losses in employment.  Yet, the final employment number says jobs were created and the unemployment rate fell.

Lastly, I would be remiss if I didn't include an absolutely horrendous fact that our President wouldn't want you to know when he's out there touting the lowest unemployment rate during his presidency.  That fact is that teen unemployment among blacks now sits at 39% (raw) or 38% after adjustment.  In the city of Chicago, the President's hometown, black male teens are at a unbelievable 92% unemployment rate.  Maybe that's why gang membership has risen 40% since Obama became President. 


Has The Fed Been Fooled By Phony Jobs Numbers?:

Table A: January Employment Situation Report: Seasonally Adjusted Results:

Table A-2: January Employment Situation Report: Raw And Seasonally Adjusted Numbers by Race, Age, and Sex:

New Urban League study finds 92 percent of African American male teens are unemployed:

FBI: Gang Membership Up 40% Since 2009:

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