Tuesday, January 10, 2012

The Jobless Numbers: A Prologue to Farce and Tragedy

I am a big fan and great admirer of Robert Reich. After reading his latest article at the Huffington Post about the unemployment numbers, I felt compelled to comment. (It's worth mentioning he was the Secretary of Labor under President Bill Clinton from 1993 to 1997).

He stated in his article that "the Bureau of Labor Statistics, which measures the unemployment rate every month, counts people as unemployed only if they're looking for work. If they're too discouraged even to enter the job market, they're not counted."

Now examine that statement very carefully. What part (or parts) of that sentence just doesn't ring true?

First of all, after someone's unemployment benefits expire, where do they sign in, or who do they report to, to let somebody know that they're still looking for work after their UI benefits expire? How could the Bureau of Labor Statistics possibly know if they are looking for work or not? (Please don't tell me a CPS household survey.)

Secondly, how does someone "re-enter" the work force if they want to be counted? Does this only happen when they get re-hired for work again? This whole notion of the Bureau of Labor Statistics determining this is just plain silly and doesn't hold any credibility.

I wrote to the Bureau of Labor Statistics to ask them about this:

"If the Social Security Administration and the Internal Revenue Service and all 50 states' Employment and Security Division had computerized records of EXACTLY when we worked, what we earned, where we were employed, how much tax we paid (or owed), and when we 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 this would be fairly easy to do. The Bureau of Labor Statistics would have an EXACT count, at any given time, of how many people are working and how many aren't. They could also say for certain how many people had exhausted all their unemployment benefits but still remain unemployed. And they could also determine EXACTLY what percent of high school and college graduates find jobs after completing school.

Also, I believe the CPA household survey is extremely obsolete and flawed in this day and age of technology.

The Bureau of Labor Statistics wrote me back:

"The QCEW program at BLS does part of what you suggest. They aggregate all the wage and salary data collected by the UI system. The methodology that you suggest for enumerating final exhaustions is a good one but you would also need to account for the high volume of churn in the UI system. Any claimants have been through the EUC 2008 system, as an example, two and even three times. To enumerate the final exhaustees, as you indicated, you would want those people who had received at least some UI during a specified time period, and then do not now show up on wage records and are not currently receiving UI. This has been proposed to some research consortiums. The primary issue is that the UI data (both wage, salary and benefit) is governed by some aggressive confidentiality laws so it’s not the case that anyone can simply get direct access to these systems."

Confidentiality laws? But, I digress...a little over two years ago (113 weeks ago) we had 15.7 million people unemployed in October of 2009 when the unemployment rate was at 10.2%. But as Robert Reich indicated, 10 million jobs were lost since the recession began, and because at one time, there were indeed 10 million people who were receiving either state or federal unemployment benefits. And by now they have all exhausted their jobless benefits (99 weeks was the max).

The Bureau of Labor Statistics says they "cannot determine the duration of unemployment for persons who had been unemployed for longer than 2 years for data prior to January 2011." Why can't they? Hmmmm?

They also say (as of December 2011) "The number of long-term unemployed (those jobless for 6 months or longer) was 5.6 million and accounted for 42.5 percent of the unemployed." Wow! Talk about under-reporting the jobless numbers! Two years ago we had 15.7 million, remember? And 10 million were once receiving UI benefits. How many net new jobs were created since October 2009?

NOTE: Per the current report from the Bureau of Labor Statistics...
  • The BLS concludes that only 13.1 million (8.5%) are unemployed in a work force with a "participation rate" of 64%.
  • 13.1 million is 8.5% of a workforce totaling 154.1 million people (154.1 million is 64% of 240.8 million if we had a "participation rate" of 100% for full employment).
  • 240.8 million MINUS 154.1 million in 64% work force = 86.7 million Americans of working age that doesn't have a job. (Subtract those that are retired, on disability, etc.)

Barely 3 million net new jobs were created since October of 2009, so at the very least, 12.7 million Americans must have been out of work for over 2 years or more - - - yet the media is parroting the Bureau of Labor Statistics by saying "1.9 million have been out of work for 99 weeks or more". That is numerically impossible.

And we also had many more layoffs since October of 2009. Add to that, we also had another 6 million high school and college graduates since that time as well. They ALL didn't just "drop out" of the labor force and move in to their parent's basement...they're just not counted. They've all just been swept under the statistical rug by the Department of Labor.

A few may have retired with reduced Social Security benefits if they were 62 or older, and some applied for Social Security Disability. Some might have left the country, and some could have started their own business. And some are being supported by others, as some passed away....but what about everybody else? Where did everybody else go?

According to www.shadowstats.com, the broadest official government measure of unemployment (U-6) is now at 15.2%. This includes "discouraged" workers -- if they've been "discouraged" for less than one year. The SGS unemployment figure of 22.4% includes the long-term unemployed and "discouraged." (I had earlier calculated almost 20% with 27 million now unemployed. That's 1 out every 5 working age adults.)

An update from the U.S. Department of Labor:

"Effective with the release of The Employment Situation for January 2012 scheduled for February 3, 2012, population controls that reflect the results of Census 2010 [rather than 2000] will be used in the monthly household survey estimation process. Historical data will not be revised to incorporate the new controls; consequently, household survey data for January 2012 will not be directly comparable with that for December 2011 or earlier periods."

Re-adjusted seasonal adjustments and revised census data should make for some ghastly unemployment reports in the near future.

Both major political parties skew the statistics for political purposes. But the Occupy Wall Street movement isn't a figment of your imagination, they're protesting for a reason...the numbers prove it.

And if you've read this far, you'll appreciate this jewel from James Madison in 1882:

"A popular Government, without popular information, or the means of acquiring it, is but a Prologue to a Farce or a Tragedy; or, perhaps both. Knowledge will forever govern ignorance: And a people who mean to be their own Governors, must arm themselves with the power which knowledge gives."

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  1. CNN - Mark Berry works for the New Hampshire state unemployment office so he knows all about the economy's affect on real people. At his office, that can mean bad news. The unemployment office itself laid off 70 workers at the end of the year.

    "If they're laying us off then that means they need fewer people processing forms and all that," he said. "It could also be a reflection of the state's budget but you can tell that some people are getting hired, though it's hired in part time jobs."


  2. Hello, trk387 (youtube) advocate for the unemployed as a (whole) and I am a 99'er.

    The bottom line is these FALSE numbers the gov, labor board, media, spits out is to make Obama look good, and for the dems to re-take the house in 2012.

    That % 22.8 is so dead on if not higher. But they couldn't dare publish that figure because the markets would crash! The sad thing about these lies is it HURTS the unemployed. With every drop in the % the unemployed lose a tier by state standards.

    I am DYING to see the numbers for Feb...

    What REALLY pisses me off is these senators and house reps can spend 650B to police American citizens but the measly 19B to fund HR 589 its always the same BS (how are we gonna pay for it, and where will get the money)? Oh excuse me for that to happen the damn bill would be on the floor, and it has not even reached that!