Simple Math Proves Jobs Report a Lie

UPDATE DEC 12, 2011 - Reince Priebus, the head of the Republican National Committee (RNC), was on CNN's Piers Morgan Tonight yesterday and said there were more people unemployed this month than there were last month -- because a bunch of people just threw their arms up in the air and said "I'm not even going to file a paper with the Department of Labor."

File a paper with the Department of Labor? Nobody that I know that's unemployed has ever done that.

It seems that nobody, besides those who work at the Bureau of Labor Statistics (and 27 million unemployed Americans) know that the head of the RNC has no clue at all as to what he's talking about.

The Department of Labor's Bureau of Labor Statistics GUESSES how many people stopped looking for work based on a household survey (CPS) conducted by the Bureau of Census.

The only thing unemployed people can file is a claim for unemployment benefits from their State every week -- until they no longer qualify, and then run out of unemployment benefits. After that, they can't file anything, with anyone, at the Department of Labor -- even though they're still out of work. END UPDATE

The jobless numbers are much worse than they say. A conservative estimate is 17% unemployed, but it could be as high as 19%.

"This in not class warfare, it's math." No mister President, it's worse than class warfare when our government doesn't even acknowledge 8.4 million unemployed Americans; when they don't count them in the unemployment rate and doesn't honestly report the statistics to the general public. We want honest math, not sugar-coated convoluted numbers.

A New York Times article that came out yesterday is the subject of my post today. The writer says, "The number of long-term unemployed workers is starting to fall." He, like most in the media, takes the government (the Bureau of Labor Statistics) at their word. I don't, and rarely have, especially when I know politics is involved. It is our U.S. Labor Department's "Lies, damned lies, and Statistics". So I did my own research and math.

First, there are many more than 13.3 million unemployed (8.6%) It's also interesting to note that 16-year-olds who are still in high school and living at home are also counted in the CPA " household survey" as among those who are employed.

Today in December 2011 there are actually over 27 million working age Americans (18 to 65*) with no job at all (and who are not on Social Security, and so therefore, are not counted). So we have a REAL unemployment rate of well over 17% (based on a workforce of 154 million in 2008).

*According to the 2010 Census, there were 40.3 million people 65 and older (13% of population), and 33.5 million are retired and collecting Social Security. Out of a total U.S. population of 308.7 million, 63% are between the ages of 18 and 65 (194.5 million) and 24.0% are under 18 years old.

It is possible to be neither employed nor unemployed by ILO definitions, i.e., to be outside of the "labor force." These are people who have no job and are "not looking for work". Many of these are going to school or are retired. Family responsibilities keep others out of the labor force. Still others have a physical or mental disability which prevents them from participating in labor force activities.

Typically, employment and the labor force include only work done for monetary gain. Hence, a homemaker is neither part of the labor force nor unemployed. Nor are full-time students nor prisoners considered to be part of the labor force or unemployment. As of 2005, roughly 0.7% of the US population is incarcerated (or 1.5% of the available working population at that time).

But disregarding those people, and with only 141.1 million income tax filers last year for 2010 (out of 194.5 million between the ages of 18 and 65), and if we called this our "new reduced work force", based on the government's own numbers, the actual unemployment rate could really be an astounding 19.1%...higher than many years during the Great Depression, and many more people too.

Let's just go back two years to the present...

Over two years ago in October 2009 (at the supposed "peak" of unemployment) the Bureau of Labor Statistics reported that the national unemployment rate was at 10.2% with 15.7 million Americans out of work. So we can safely assume that, even if every single person received the maximum of 99 weeks in unemployment benefits, they would have all expired two months ago (and 15.7 million jobs have not been created in the last 26 months).

Since October 2009 Obama says that according the Bureau of Labor Statistics 3 million jobs were created. During the past 2 years during that same period of time 6 million Americans also graduated from high school and college.

15.7 million unemployed + 6 million new people entering the labor force = 21.7 million MINUS 3 million new jobs created = 18.7 million. Today the Bureau of Labor Statistics reports 13.3 million unemployed + 2.6 million marginally attached (and not counted in the media-reported U-3 rate) = a total of 15.9 million unemployed.

So right away we see a difference of 2.6 million (15.9 MINUS 13.3 million = 2.6 million) being reported of ALL people who are without any work at all. Add to those 2.6 million "missing workers" all the additional layoffs there were since October 2009.

Job cuts announced in 2011 are up, already more than 2010's full-year total. The Bureau of Labor Statistics reported 1.2 million separations in 2010 alone, with many more on the way (the media is only reporting half this figure). Now add those 2.6 million "missing workers" + approximately another 2.4 million laid off worker in the last 2 years = 5 million.

The banks have already announced thousands of planned layoffs. Bank of America confirmed it will slash 30,000 jobs over the next few years and HSBC previously said it will also slash 30,000 jobs by 2013. (The Bureau of Labor Statistics' next Mass Layoffs news release for November is scheduled to be released on Thursday, December 22, 2011, at 10:00 a.m. EST)

And today the Bureau of Labor Statistics also reports that 7 million people are CURRENTLY receiving unemployment benefits. Remember, over 2 years ago 15.7 million were unemployed and as late of May 2010 when unemployment was reported lower as 9.7% 10 million of those were receiving unemployment benefits (that have since expired), so we know that at any one time over the last 2 years, at least 17 million were receiving some form of unemployment benefits.

So, not even counting those that didn't qualify for unemployment benefits, 17 million who received benefits MINUS the reported 13.3 million unemployed today = 3.7 million MINUS 3 million new jobs created during that time = 700,000. Now add all the layoffs since October 2009 over the last 26 months. (700,000 + approximately another 2.4 million laid off in last 2 years = 3.1 million + 2.6 million "missing workers" = 5.7 million).

Today the Bureau of Labor Statistics also reports that, just last month alone, 315,000 Americans were reported as "no longer looking for work" and they were no longer counted in the media-reported unemployment rate of 8.6%. How many more are no longer being counted over that last 2 years, or since the "peak" in October 2009? Since keeping track over the last 2 years, I'm estimating about 2.7 million more, for at total of 8.4 million not counted at all, in ANY measure by the Bureau of Labor Statistics (either as unemployed, marginally attached, or discourage...in either the U-3 rate or the higher U-6 rate.)

And most of the 3 million job gains were nothing to brag about either, as most were part-time (or temp) low-paying jobs (like the holiday help that is now being hired).

According to one study, just 7% of those who lost jobs after the financial crisis in 2008 have returned to or exceeded their previous financial position and maintained their lifestyles. About 15 percent say the reduction in their incomes has been drastic and will probably be permanent. Even among those who found work, many made much less than before the downturn. More than two years after the "recovery" officially began, American employers have reinstated less than 25% of the jobs lost during the downturn.

Even among the college-educated, there is one cohort that is still feeling more pain: older workers. More than half of all unemployed workers 45 to 54 years old have been out of work for six months or more.

Some domestic manufacturing may be picking up a little, but employers are not hiring...workers in the United States are increasing their "productivity" (working harder). But these manufacturers could face strains overseas in important export markets, especially if Europe’s debt crisis worsens and leads to another recession. China, the world’s second-largest economy, is also slowing. Manufacturing in China contracted in November for the first time in nearly three years.

One article in the New York Times gleefully reports that the number of long-term unemployed workers (or the number of unemployed) is starting to fall...but they're NOT! They're just no longer being counted in the U-6 rate and described by the Bureau of Labor Statistics as "no longer looking for work" (whether or not they are).

Already, millions of people have exhausted their benefits (10 to 17 million). Failing to renew the federal benefit extensions will cause 5 million additional people (by eliminating federal extensions) to lose benefits next year. Unemployment benefits are believed to have one of the most stimulative effects on the economy, because recipients are likely to spend all of the money they receive quickly and pump more spending through the
economy.

This blogger estimates that of those who already exhausted all their benefits and are no longer counted in Bureau of Labor Statistics' U-3 unemployed rate (media-reported), "marginally attached", or as "discouraged workers" (the U-6 rate) to be approximately 8.4 million (also known as UI "exhaustees", of which about 3 million are "99ers".)

8.4 million (reported as "not looking for work) + 13.3 million reported by the Bureau of Labor Statistics U-3 rate + 2.6 million reported as marginally attached = 24.3 million + 6 million kids graduated from high school and college = 30.3 million MINUS 3 million jobs were created = over 27 million with no job at all and a REAL unemployment rate of over 17%.

According to the IRS, for 2009 142.2 million individual federal tax returns were files with the IRS. In 2010 it was only 141.1 million, a difference of 1.1 million less. For 2008 there were 154.3 million tax returns filed (what the total work force used to be). That's a difference of 13.2 million less federal tax returns that were filed for 2008 and this year for 2010 (Note: That's about what the Bureau of Labor Statistics reports as unemployed. Also note: Even people who received unemployment benefits are required to pay federal taxes and file a federal income tax return).

Today the joke is: 8.6% are unemployed, but 17% are without a job.

And expect more layoffs as companies like American Airlines go through bankruptcy in hopes to be able to rewrite its labor contracts, shed obligations and debt and perhaps reduce the pension commitments. (I recently heard Richard Branson of Virgin Airlines say that these companies shouldn't be bailed out or allowed to go bankrupt, they should stand or fall on their own viability.)

And according to this article, even if the unemployment rate ever does significantly drop, it would be mostly for low-paying jobs, because more and more jobs will continue to go overseas for cheaper labor. Read: Workers of the Western World. In the past 10 years alone we've already lost 56,000 factories and 8.2 million jobs.

One hedge fund manager had said at a recent dinner speech in New York, “The low-skilled American worker is the most overpaid worker in the world.”

China's largest employer is Foxconn, a Taiwanese-owned company which has nearly 1 million employees making products for American companies. (READ "America's Race to the Bottom). The worker's average pay: about $149.24 a month. But for Foxconn, even that is too much for payroll, so now they want to automate jobs such as such as spraying, welding and assembling. Foxconn's CEO unveiled a plan to hire 1 million robots by 2013 (because robots are easier to manage and don't commit suicide).

So I guess low-paying jobs and high unemployment in America is here to stay.

A Better Way to Count the Unemployed If the Social Security Administration and the Internal Revenue Service and all 50 states' Employment and Security Division had computerized records of EXACTLY when everybody worked, what they earned, where they were employed, how much tax they paid (or owed), and when they were no longer showing earnings on a W-4 form, can't all this information be easily cross referenced and shared (in part or completely) with the Department of Labor's Bureau of Labor Statistics? It seems it would be fairly easy to do. You would have an EXACT count, at any given time, of how many people are working and how many aren't. You could also say for certain how many people had exhausted all their unemployment benefits and still remain unemployed. You could also determine EXACTLY what percent of high school and college graduates find jobs after completing school. The Bureau of Labor Statistics CPA "household survey" is extremely obsolete and flawed in this day and age of technology.