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Unemployment rises to 9.8%, only 39,000 jobs gained ? The Truth about Unemployment Statistics

by Mark L. Daniels

The unemployment rate edged closer to double digits in November according to the new release from the Bureau of Labor Statistics, moving up two tenths of a point to 9.8%.  The private sector showed disappointing results, gaining only 39,000 jobs after a report yesterday from ADP suggested much higher gains.  A drop in retail employment suggests an ominous trend for this holiday season:

The unemployment rate edged up to 9.8 percent in November, and non farm payroll employment was little changed (+39,000), the U.S. Bureau of Labor Statistics reported today. Temporary help services and health care continued to add jobs over the month, while employment fell in retail trade. Employment in most major industries changed little in November. …

Among the unemployed, the number of job losers and persons who completed temporary jobs rose by 390,000 to 9.5 million in November. The number of long-term unemployed (those jobless for 27 weeks and over) was little changed at 6.3 million and accounted for 41.9 percent of the unemployed. (See tables A-11 and A-12.)

The civilian labor force participation rate held at 64.5 percent in November, and theemployment-population ratio was essentially unchanged at 58.2 percent. (See table A-1.)

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed over the month at 9.0 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. (See table A-8.)

About 2.5 million persons were marginally attached to the labor force in November, up from 2.3 million a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)

Among the marginally attached, there were 1.3 million discouraged workers in November, an increase of 421,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.2 million persons marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities. (See table A-16.)

Department stores lost 9,000 jobs, and furniture and home furnishings stores lost 5,000.  The latter may be part of the fallout from poor performance in home sales as well as weakness in retail sales.  Manufacturing dropped 13,000 jobs.  Wage growth was also flat in November across the board.

The increase in the overall rate appears linked directly to job losses rather than a return to the workforce of discouraged workers.  Those numbers have actually increased slightly year on year.  When they begin entering the workforce again, the overall rate will rise even higher, even if the overall job creation numbers improve.  That isn’t what happened in November.

UpdateReuters reports that the numbers were, well ….

U.S. employment increased far less than expected in November and the jobless rate jumped to a seven-month high of 9.8 percent, dampening hopes for a self-sustaining economic recovery.

Non farm payrolls rose 39,000, with private hiring gaining only 50,000, the Labor Department said. However, overall employment for September and October was revised to show 38,000 more jobs than previously estimated.

Economists had expected payrolls to increase 140,000 last month and the unemployment rate to be unchanged at 9.6 percent.

To be fair, I also expected similar numbers after seeing the ADP report yesterday; I was thinking closer to +150K and 9.6%.  Also, I changed the headline for accuracy, as overall employment increased by 39,000 jobs, but the private sector added 50,000; the difference came in reductions in government jobs.

Of course, we should be wary of any employment numbers reported by the U.S. Department of Labor.  The government crunches numbers whereby 2+2 does not always equal 4!

According to a July 16, 2010 report in Daily Finance entitled “The Jobless Effect:  Is the Real Unemployment Rate…16.5%, 22% or ?”:

Raghavan Mayur, president at TechnoMetrica Market Intelligence, follows unemployment date closely.  So, when his survey for May revealed that 28% of the 1,000-odd households surveyed reported that at least one member was looking for a full-time job, he was flummoxed.

“Our numbers are always very accurate, so I was surprised at the discrepancy with he government’s numbers,” says Mayur, whose firm owns the TIPP polling unit, a polling partner for Investor’ Business Daily and Christian Science Monitor.  After all, the headline number shows the U.S. unemployment rate today is 9.5% with a total of 14.6 million jobless people.

However, Mayur’s polls continued to find much worse figures. The June poll turned up 27.8% of households with a t least one member who’s unemployed and looking for a job, while the latest poll conducted in the second week of July showed 28.6% in that situation.  That translates to an unemployment rate of over 22%, says Mayur, who has started questioning the accuracy of the Labor Departments’ jobless numbers.

Even Austan Goolsbee Has Been Skeptical

Mayur isn’t alone in harboring such doubts, nor is he the first to wonder about inaccuracies. For years, many economists have pointed to evidence that the government data under counts the unemployed.  Economist Helen Ginsbug, co-founder of advocacy group National Jobs for All Coalition, and John Williams of the newsletter Shadow Government Statistics have been questioning these numbers for years.

In fact, Austan Goolsbee, who is now part of the White House Council of Economic Advisers, wrote in a 2003 New York Times piece titled “The Unemployed Myth,” that the government had “cooked the books” by not correctly counting all the people it should, thereby keeping the unemployment rate artificially low.  At the time, Goolsbee was a professor at the University of Chicago. when asked whether Goolsbee still believes the government under counts unemployment, a White House spokeswoman said Goolsbee wasn’t available to comment.

Such under counting of unemployment can be an onerously dangerous exercise today.  It could lead to some lawmakers underestimating the gravity of the labor market’s problems and base their policy making on a far-less-grim picture than actually exists.  Economically, and socially, that would make a bad situation much worse for America.

“The implications of such under counting is that policymakers aren’t going to be thinking as big as they should be,” says Ginsbug, also a professor emeritus of economics at Brooklyn College.  “It also means that [consumer] demand is not going to be there, because the income from people who are employed isn’t going tot be there.”

Indeed, it will add additional stress to an already strained economy.  Businesses that might start ramping up after seeing the jobless number drop could set themselves up for disappointment when customers don’t appear or orders don’t flow in (Read Full Report).

“If you tell a big enough lie and tell it frequently enough, it will be believed.”
— Adolf Hitler

“Everything the State says is a lie, and everything it has it has stolen.”
— Friedrich Nietzsche

“If you tell the truth, you don’t have to remember anything.”
— Mark Twain

“I’m not upset that you lied to me, I’m upset that from now on I can’t believe you.”
— Friedrich Nietzsche

“History is a set of lies agreed upon.”

— Napoleon Bonaparte

“It is better to offer no excuse than a bad one.”
— George Washington

“I have a higher and grander standard of principle than George Washington. He could not lie; I can, but I won’t.”
— Mark Twain

“When it comes to controlling human beings there is no better instrument than lies. Because, you see, humans live by beliefs. And beliefs can be manipulated. The power to manipulate beliefs is the only thing that counts.”
— Michael Ende (The Neverending Story)

“The men the American people admire most extravagantly are the most daring liars; the men they detest most violently are those who try to tell them the truth.”-H. L. Mencken

“They made us many promises, more than I can remember. They only kept but one. They promised they would take our land, and they took it.” —-Red Cloud

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