The unemployment numbers are sent to my cellphone when released by the Bureau of Labor Statistics. Lat week, the early morning after President Obama’s DNC speech, I received the news: The nominal unemployment percentage had “edged down” to 8.1% from 8.3%. How was this accomplished? Some 96,000 new jobs were added.
Ah, but the previous months’ numbers were corrected — down — by about half this amount. Such corrections are not uncommon, but in this instance the magnitude of correction to results leaves one unimpressed. It left Mort Zuckerman of this WSJ Opinion piece unimpressed, certainly.
In order to keep pace with the population growth in the US, the jobs market needs to grow by a bit over 200,000 jobs per month. So how did a rise of less than half that produce a decrease in percentage? Well, not mentioned until you get to a table in the report is the fact that almost four times that many people were dropped from the list of unemployed, as they had given up looking for work and had not asked within the past four weeks.
Moreover, the total number of people who have given up and are no longer counted as “unemployed” is eighty times the month’s increase, or about eight million people.
The upshot is that the BLS numbers are very misleading unless completely understood. (A mirror image effect can take place: The job market can improve but the percentage can actually increase as hundreds of thousands of people who had given up start looking for work again. So far this year, that’s not an issue for President Obama, though it was briefly last year.
One more subtlety. Last month, the median wage rose for the workforce. That sounds good. But when split out into the under 25 crowd and 25-and-over crowd, it turns out that both groups lost earnings. How is that possible? Because the under-25 group makes less money on average, and so many of them gave up that the average wage of those that were left actually increased the total, despite the fact that both segments dropped. There are simply fewer under-25 workers now. And the employed-adults number has dropped below 6o%, a new low since this figure began being tracked.
===|==============/ Keith DeHavelle