Sunday, August 7, 2011

Mike Gimbel on BLS stats: the truth about unemployment figures



Sent: Friday, August 05, 2011 4:41 PM
Subject: Screwy unemployment figures

Hi All,
I've been struggling all day with the BLS data reported earlier today. I've been using the seasonally adjusted data all along, but I may have to re-do everything and try work with the non-seasonally adjusted data because the BLS reports are being reported in a manner that is very misleading.
The corporate media is reporting an INCREASE in employment in July of 117,000. Nothing of the sort occurred! This is, once again, three-card monte with the data. Once again, instead of taking the data from the BLS household report from whence the official unemployment rate is gotten, they have gone to a different report (the Establishment data) and announced that the employment went up by 117,000 when the Household data, upon which the unemployment rate is based, showed a DECREASE in employment of 38,000!
My data shows that:
The REAL unemployment rate held steady at 18.32% in July, the exact same percentage as in June, 2011.
The REAL unemployement + underemployment rate did slide from 23.33% in June to 23.24% in July, 2011.
The problem is that I can't fully justify the 18.32% unemployment figure because there is something screwy in the data released this month by the BLS! The unemployment rate that I worked out should have increased, but didn't. How was that possible?
Why do I say that?
The total number of employed, as reported by the BLS, shrunk from 139,334,000 in June to 139,296,000 in July. That's a drop in overall employment of 38,000 yet the BLS also reports a decrease in unemployment of 156,000!!! The two don't add up! How do you have fewer workers actually employed and also report that fewer workers are unemployed? If fewer workers are employed, shouldn't that indicate that more workers are unemployed? If you add in the natural increase in population, shouldn't the number of unemployed have skyrocketed by more than an additional 100,000 on top of the 38,000?
Into the "Not in the labor Force" category the BLS dumped an extra 374,000 into this category in July. That's an extraordinary increase and indicates a large number of unemployed being hidden there by the BLS. But even that doesn't tell the whole story because the workforce is not a stationary amount of workers.
What has been continuously changing over the decades? The change is based upon fewer and fewer people living on farms and extremely rural areas as time goes by, as well as an increase in women in the work force over time. In other words, the percentage of the total population living outside of the farm areas has been growing enormously year-by-year and the number of women seeking work has grown enormously.
In 1946 the civilian labor force, as a percentage of the U.S. population was just 33.5%. By 1955 it had increased to 35.3%.By 1969 it increased to 38.2%. By 1979 it reached 44.4%. By 1995 it reached 49.1% In April, 2000 (which was the lowest unemployment rate in recent decades @3.91%), it reached 50.1%. It peaked in January, 2007 at 51.046% of the U.S. population. Since that January, 2007 peak, the size of the civilian labor force, as reported by the BLS, has dropped to 49.076%! That's a drop of about 2% when it should have continued to climb as a percentage. The BLS is clearly not counting millions of workers!
Have large numbers of workers abandoned the cities and suburbs in order to re-establish small farms all across the U.S.? Of course not! In fact, just the opposite! The small farms are continuing to be gobbled up by giant corporate farms. Large numbers of people continue to abandon farming for life in the cities and suburbs as civilian workers. In the four years since the 51.046% peak was reached, there must have been a further increase of about another half percent that is not being accounted for in the raw data from the BLS. The civilian labor force should now be around 51.5% of the total U.S. population, not the 49.076% that they report.
My problem is that I really don't know how to accurately figure out what's going on here. There are just too many ways "to skin this cat"!
My simplistic solution, so as to somewhat get a real picture from the current July BLS report, is simply to count the official unemployed for July, 2011 (13,931,000) + the most conservative figure for the hidden total of unemployed in the "Not in the Labor Force" category (10,716,000) and divide that figure by 51.046% of the current estimate of the U.S. population.
What is the result?:
The result, while creating a more conservative unemployment rate of 15.46% vs. 18.32%, clearly shows that July, 2011 was a bad economic month that is continuing the slide from the "2nd recovery" period. Here are the unemployment rates I got with this alternate method:
March, 2007: 7.92%
December, 2007: 8.93%
August, 2008: 9.84%
December, 2008: 11.54%
July, 2009: 13.9%
December, 2009: 15.62% (The Peak)
April, 2010: 14.62% (The so-called recovery)
November, 2010: 15.50% (The 2nd Peak)
March, 2011: 14.88% (the 2nd so-called recovery)
April, 2011: 15.04%
May, 2011: 15.03%
June, 2011: 15.38%
July, 2011: 15.46%
This makes more sense in terms of the July, 2011 Household data. July, with a drop in employment should show an increase in the unemployment rate. This does show the correct direction of unemployment, even if I speculate that the figures are possibly too conservative.
July, 2011, with this method, is almost as high in unemployment as the very worst month of the crisis in December, 2009!
There is not a scintilla of evidence from the BLS household data for claiming an INCREASE in employment of 117,000 in July. The corporate media is just sending out "political spin" in order to prevent the mass of people from learning the truth.
With the rip-off "Debt Deal" portending huge impending cuts in worker rights, isn't it about time for mass militant action in response?
--Mike Gimbel
The stupidities and absurdities by which mathematicians have rather excused than explained their mode of procedure, which remarkably enough always lead to correct results, exceed the worst and real fantasies of the Hegelian philosophy of nature.
--Frederick Engels

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