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Analysis: Instant Transparency into the Government’s Jobs Report

May 5th, 2012

05.05.2012

Notice the orange line in the chart above (right graph). The unemployment and labor participation rate has been on a general decline suggesting fewer and fewer people are in the work force. Graphic Credit: Stephen Culp/ Reuters.

Notice the orange line in the chart above (right graph). The unemployment and labor participation rate has been on a general decline suggesting fewer and fewer people are in the work force. Graphic Credit: Stephen Culp/ Reuters.

Analysis: Instant Transparency into the Government’s Jobs Report

original article written by Net Advisor

Washington DC. Another disappointing jobs report released May 4th by the Bureau of Labor Statistics showed tepid job growth of 115,000 for the month of April (BLS.gov April Jobs Report Summary PDF, highlight added).

Some Wall Street analysts even lowered their expectations for job growth this week, but the numbers came in even lower than revised expectations (Source: CNBC, PDF). The Dow Jones Industrial Average fell -168.32 to 13,038.27 on the jobs news. The tech heavy NASDAQ fell -67.96 to below 3,000 again to 2,956.34. NASDAQ is still down -41.44% since its March 6, 2000 high of 5,048.62.

If one just looked at job growth as ‘positive verse negative,’ this might sound good: Positive numbers are better than negative numbers. However, there are some issues here.

1. The U.S. economy needs a minimum of 125,000 net new jobs just to keep up with new people entering the workforce (Source: Brookings Institute PDF). This same Brookings March 2012 report suggests that at the current rate it may take “until 2020 to close the jobs gap.”

2. According to the former Secretary of Labor under President Bill Clinton, Robert Reich stated the U.S. economy needs “over 250,000” net new monthly jobs for economic expansion (Source: CS Monitor).

Roughly 79% of Jobs Created in April Are Low Paying Jobs
3. We also noticed that many of the job increases are lower pay jobs such as in the service sector, food and hospitality. For example, temporary jobs were up 21,000 in April, retail jobs up 29,000, general merchandise up 21,000, food services and “drinking places” up 20,000. Thus 91,000 out of the 115,000 new jobs or 79% are low paying jobs. It also appears that people are eating and drinking more? (Source: BLS.gov Report.)

Photograph by (UK) Press Association. Photo credit: David Jones/PA Wire

“Since February 2010, food services and drinking places has added 576,000 jobs.”

— Source: U.S. Bureau of Labor Statistics (Report PDF)

It is a bit surprising the Administration wants to boast this statistic that Americans are eating and drinking more, while at the same time the government is also trying to tell us how to eat (Food Police Report).

On the “bright side,” manufacturing jobs were up 16,000 in April with a total gain of 489,000 jobs since January 2010. This may sound like a lot, but it averages just 18,111 jobs per month. Remember, the economy needs “over 250,000″ net new jobs every month to show growth. Durable goods are items that last longer than a single-use consumption such as cars, refrigerators, toys, bricks, jewelry and mobile phones.

Obama Administration Manipulating the Jobs Numbers – Again?
It is evident that the Obama Administration continues to factor out unemployed persons in order to get the unemployment rate lower. We have documented this trend since January 2010 in the following reports including this one:

U.S. Non-Farm Payrolls Under Obama. Graphic Credit: Stephen Culp/ Reuters.

U.S. Non-Farm Payrolls Under Obama. Graphic Credit: Stephen Culp/ Reuters.

 How the April 2012 Jobs Number Are Misleading:

The Obama Administration is NOT COUNTING 2.4 million persons in the unemployment rate. These people are called “marginally attached to the labor force”  (Page 1, Parr 8, Report PDF). This number was “only” 409,000 people who were NOT COUNTED compared to the February 5, 2010 BLS.gov jobs report.

Comparing just the February 2010 and April 2012 jobs reports, the number of people who the government is NOT COUNTING as unemployed has increased by 187%.

[Math: 2.6 million people not counted (April 2012) – 409,000 people not counted (Feb. 2010) =  2,191,000 people (not counted) as unemployed. Then take 409,000 divided by 2,191,000 = 186.67% (rounded to nearest whole number) is the percent increase of people not counted as unemployed.]

The “Underemployed”
Next, there is a group of 7.9 million Americans who want full-time work, but can only get part-time work. The government officially calls these people “involuntary part-time workers” or the underemployed.

When one factors the total number of unemployed persons (12.5 million) including the underemployed (7.9 million), based on the government’s own math, this equals 20.4 Million.

If we add back in the 2.4 million unemployed persons who are not counted as unemployed and classified as “marginally attached to the labor force,” we have 22.8 million unemployed or underemployed persons in the USA. The government’s official unemployment number is currently 12.5 million (Source: BLS.gov Report PDF).

Labor Force Participation Rate at 30 Year Lows
Another major area of concern is the labor participation rate (please see chart at the top of this page). The BLS.gov’s April 2012 Jobs Report suggests that unemployment is down to 8.1%, from 8.2% last month. If the unemployment rate is really falling, how come the labor force participation rate is at its lowest level in 30 years?

For the month of April, the US Department of Labor says that the unemployment rate in America has declined to 8.1 percent, down one-tenth of a percent from a month earlier. Also on the decline, though, is the labor force participation rate, which last month clocked in at 63.6 percent — the lowest it’s been since 1981.

— Sources: RT.com (PDF) and U.S. Senate Report (PDF)

More Unemployed Not Counted
One other note to the jobs report that is not well discussed. If your unemployment benefits run out, and you still don’t have a job, the government deems you as ‘no longer unemployed.’

“On May 12 (2012) the Federal government will no longer admit to the existence of 193,000 citizens who are out of work. At that point, since they will no longer be receiving unemployment checks the Feds will no longer consider them part of the work force, meaning the unemployment rate goes down as the number of unemployed go up.”

— Source: CA Political News

The government simply no longer counts anyone whose unemployment benefits are up, and who are still unemployed. The result of this will show that the national unemployment rate will appear to go down, when more people are still out of work. The way to track this is to watch the labor participation rate (LPR). If the LPR goes down, that means fewer people are working.

Right now, we have the lowest labor participation rate in 30 years [Source: U.S. Senate Report (PDF)]. What this means is, we have the lowest number of people working in the USA since 1981. Yet the Obama government tells us that the unemployment rate is somehow improving?

Politicking
The Obama Administration is clearly doing whatever they can to manufacture government data to suit a re-election attempt. The Administration could just come out from the beginning and say the numbers are what they are and we are doing what we can. Although it appears that the jobs numbers are an improvement since 2009, the problem is the actual numbers are worse than the Administration is willing to admit.

It’s one thing to post misleading jobs data. It’s another thing to think that the government’s own misleading numbers are actually a good sign for the economy? After Friday’s jobs numbers came out, the White House apparently said, “latest numbers are further evidence the economy is continuing to heal” (Source: ABC News).

The Chairman of Obama’s Council of Economic Advisers Alan Krueger said, “It is critical that we continue the economic policies that are helping us dig our way out of the deep hole that was caused by the severe recession that began at the end of 2007” (Source: ABC News).

For now, the Obama Administration seems to be running a campaign of painting the tape, creating economic numbers that are not entirely accurate, then misleading the American public about them. The stock market has been on a high from artificial stimulus from Obama and the FED for three years. Now that the stimulus is gone, making up numbers seems to be the new stimulus.

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