Just How Stupid Do They Think We Are?

The Bureau of Labor Statistics (BLS) announced that the "official" U-3 unemployment rate for September 2012 was 7.8 percent. That figure was reported by, among others in the MSM, The New York Times, The Washington Post, National Public Radio (NPR), CNBC, CBS, and Reuters. Somehow all these sources, except for a brief reference from NPR and a very brief reference by CNBC, overlooked the U-6 unemployment rate of 14.7 percent, unchanged from August 2012. But The Wall Street Journal found room for a U-6 rate analysis.

The Wall Street Journal's U-6 rate analysis is quite telling, providing a much more realistic unemployment picture than the U-3 rate alone. The U-6 unemployment rate considers the U-3 rate as well as marginally attached workers:

"those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that's all they could find.

In September, the number of part-time workers who would like full-time jobs surged by 582,000. That represents about two-thirds of the increase in employment last month and is larger than the drop in the number of unemployed. That's why the U-6 stayed at 14.7% in September."

Further, the various unemployment rates and the number of jobs added to the economy are derived from two separate reports! The Household Survey estimates the unemployment rate from a monthly sampling of about 50,000 households (reduced from 60,000 under Clinton). The Payroll Survey estimates the number of nonfarm jobs in the US economy. And, under Clinton, surveying in the inner cities was ended (causing a drop in minority unemployment). The sampling error for the Household Survey is ± 280,000 jobs, while the sampling error for the Payroll Survey is ± 100,000 jobs.

The Obama administration announced that 114,000 new jobs were created last month, and that the unemployment rate fell to 7.8 percent. My question is, "How does Obama and the BLS know? Could either (or both) figures be the result of sampling error? Or could the new jobs created be for some other reason? Yet the in-the-tank MSM published both figures as if they were somehow reliable.

The $64,000 question (yes, I'm showing my age) is, "How was the figure of 7.8 percent achieved?" There are (at least) two reasons, the first one demonstrable fact; the second convenient coincidence and, therefore, open to question and interpretation.

First, the U-3 unemployment rate is based upon the size of the labor force, (or workforce) which the BLS says grew by 418,000 in September 2012. For perspective, the labor force (the percent of the civilian population 16 or over, not in the military, prison, or an institution) in January 2009, was 65.7 percent, or about 160 million people. The current unemployment rate is based on a labor force of 63.6 percent, or about 155 million. So, Mitt Romney was correct when he said, "... if the same share of people were participating in the workforce today as on the day the president got elected, our unemployment rate would be around 11 percent."

For further perspective, BLS table A-16 illustrates what is currently happening to the US labor force. Notice the "Persons who currently want a job" category, and how, in the last year, it has gone from 5.93 million people to 6.43 million people. If the BLS keeps working, it can get the unemployment rate down to 0 percent. Again, these figures are BLS guesstimates.

So, all the BLS BS makes you wonder how the BLS, when using figures they publish, arrived at the 7.8 percent unemployment rate. The BLS must think we are really stupid.

Second, as SNL's "Church Lady" used to say, "How Conveeeeeeeeeeeeeeenient!" The Labor Department (of which the BLS is a part) raised its job-creation figures by a total of 86,000 jobs for July and August. The July figure was revised from 141,000 to 181,000, and the August figure from 96,000 to 142,000. And guess what! The MSM reported those numbers - just in time for Obama to campaign upon. How convenient. Does anyone suspect the timing?

As Daniel Horowitz at RedState.com says, "Today's [Friday's] report of September employment is so bizarre that it's hard to comprehend, much less give over." The BLS is doing such a misleading data manipulation job that even retired General Electric CEO Jack Welch has publicly announced his skepticism. And, Rick Santelli, on CNBC's "Squawk Box," said, "I told you they'd get it under 8 percent - they did!"

And this little nugget of information has come forth. Have you ever heard of Harley Frazis or Stephen Phillips? They have (at least) two things in common: (1) they are both economists at the BLS, and (2) they are both Obama contributors. I'm not saying that they in any way influenced the current unemployment figure, but "something is rotten in Denmark" in light of the BLS figures and procedures.

As this graph from Shadow Government Statistics shows, the unemployment rate, if discouraged workers were included, would be close to 24 percent. John Williams, Shadow Government Statistics author, provides some very interesting reading on how the BLS arrives at its unemployment and jobs figures.

The problem is, of course, that a vast number of the voting population will never do any research, will believe without question what the MSM reports, and will vote accordingly.
But that's just my opinion.

Dr. Beatty earned a Ph.D. in quantitative management and statistics from Florida State University. He was a (very conservative) professor of quantitative management specializing in using statistics to assist/support decision making. He has been a consultant to many small businesses and is now retired. Dr. Beatty is a veteran who served in the U.S. Army for 22 years. He blogs at: rwno.limewebs.com.

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