Why policy makers should be listening to the ‘BLS truthers’ even if nobody else is–and what they should hear

Former General Electric CEO Jack Welch seems to have kicked off quite a firestorm when he apparently tweeted in response to a dissonant jobs report, “Unbelievable jobs numbers..these Chicago guys will do anything..can’t debate so change numbers.” While many jumped on a bandwagon, the authoritarian response was thunderous[1]:

Labor Secretary Hilda Solis criticized the conspiracy theories Friday.

“This is a methodology that’s been used for decades. And it is insulting when you hear people just cavalierly say that somehow we’re manipulating numbers,” Solis told CNN’s Richard Quest.

Welch wasn’t alone in raising questions about the jobs numbers.

Americans for Limited Government, a conservative group that has been a steady critic of the Obama administration, issued a statement that said the numbers the BLS “used to calculate the unemployment rate are wrong, or worse manipulated. Given that these numbers conveniently meet Obama’s campaign promises one month before the election, the conclusions are obvious. Anyone who takes this unemployment report serious is either naive or a paid Obama campaign adviser.”

Conn Carroll, a senior writer at the conservative Washington Examiner suggested a slightly less nefarious form of manipulation of the data.

“I don’t think BLS cooked numbers. I think a bunch of Dems lied about getting jobs. That would have same effect,” he tweeted. “Would love to see the partisan breakdown of the 873,000 Americans who say they got new jobs.”

BLS denied there was any manipulation of the data or anything out of the ordinary about the unemployment rate calculation.

“No political appointee is involved in the collecting, processing and analyzing of the data,” said Thomas Nardone, the associate commissioner for employment and unemployment statistics.[2]

Mr. Welch’s tweet has set off a firestorm of activity in the virtual realm. Conspiracy theorists jumped on board as if the Obama administration had hidden reports of UFOs landing in the Rose Garden.

“Jobs #s from Labor Secretary Hilda Solis are total pro-Obama propaganda—labor force participation rate at 30-yr low. Abysmal!” wrote conservative radio host Laura Ingraham in a tweet.

And Rep. Allen West (R) of Florida, a favorite of the tea party, tweeted, “I agree with former GE CEO Jack Welch, Chicago style politics is at work here….”

Democrats quickly tweeted right back.

“love ya jack but you’ve lost your mind,” wrote Austan Goolsbee on Twitter.[3]

There are several problems with Bureau of Labor Statistics unemployment reporting. One, as numerous stories noted, is that the BLS actually reports two sets of statistics:

The jobs report is based on two surveys, one of businesses and one of households, that can present different pictures.

While the survey of businesses showed mediocre growth, the household survey had a whopping increase of 873,000 people working in September. The household survey is much more volatile and prone to sampling error, but it captures aspects of the labor market that the business survey does not, like self-employment and household workers.[4]

The “survey of businesses,” otherwise known as the establishment survey, showed a mere 114,000 jobs had been added in September.[5] But the news media usually conflate the surveys, so a reported increase of 114,000 jobs might one month correlate with a 0.1 percent increase in the jobless rate and in another month, like September, correlate with a 0.3 percent decrease. To put it in public relations-speak, this messaging is awful; it practically screams at people that they’re being misled.

But there are other reasons why policy makers should take the “BLS truthers” more seriously. First, since I returned to school in 2003, and started learning just how corrupt our system of governance is, I have repeatedly come to believe I had a handle on just how bad it is, and just as repeatedly come to discover that I was wrong, that the corruption among the elite is both broader and deeper than I had previously imagined, even as I had come to accept that I was already fairly cynical. Just off the top of my head, I can point to the Gulf of Tonkin incident that was used as an excuse to deepen our involvement in Vietnam,[6] innumerable other incidents of mass murder and hypocrisy in U.S. foreign policy,[7] torture,[8] our food system,[9] our criminal justice system,[10] our education system,[11] . . . and on and on and on, even before I get to my critique of our entire system of socioeconomic organization. It seems that no matter how cynical I become, the truth is sickeningly worse. In such a context, it is hard for me to imagine that the BLS is simply, as Hilda Solis and other BLS defenders claim it to be, immune from political influence, that it is a purely professional organization composed of dedicated and saintly civil servants doing their jobs, that it is somehow isolated from all the nefarious doings that pervade our system of political and economic governance.

Labor Market Participation Rate, Historical
Fig. 1. Historical labor market participation rate, not seasonally adjusted
Second, the way in which the BLS handles unemployment data appears designed to minimize any relationship to reality. This is why I calculate my own unemployment data, with a clear methodology. Among other complaints, the BLS has not just one measure of unemployment, but six, which you can double because there are both seasonally unadjusted and seasonally adjusted figures, and the published distinctions between them require inside or expert-level knowledge to decipher. Most of the manipulations have to do with who is counted and who is not counted in the labor force, manipulations of which may be honest in bureaucratic terms, but are misleading in the way they discount discouraged workers and the long-term unemployed.[12] So while the labor market participation rate has hovered this year at the lowest level since the early 1980s (figure 1), the BLS claims a cheerfully (for political incumbents) lower unemployment rate.

Incumbent policy makers obviously don’t want to admit that their handling of the economy and the priority they assigned to rescuing the financial system has left a lot of people destitute. The hard cold fact of the matter is that conditions have been deteriorating for workers in the U.S. while the rich have benefited from neoliberal policies progressively instituted since the Carter presidency.[13] So it is unreasonable to argue that people need work at any less a rate than they ever have. That’s why in my calculations, I use the maximum labor force participation rate to date to calculate the number of unemployed. Accordingly, I figure 22,646,000 people are unemployed. Yes, that’s an improvement over August. But it isn’t an improvement over July.

  1. [1]Chris Isidore, “Jack Welch questions jobs numbers,” CNN, October 5, 2012, http://money.cnn.com/2012/10/05/news/economy/welch-unemployment-rate/index.html
  2. [2]Isidore, “Jack Welch questions jobs numbers.”
  3. [3]Ron Scherer, “Unemployment rate tampering? Why conspiracy theorists went wild,” Christian Science Monitor, October 5, 2012, http://www.csmonitor.com/USA/DC-Decoder/Decoder-Wire/2012/1005/Unemployment-rate-tampering-Why-conspiracy-theorists-went-wild
  4. [4]Shaila Dewan and Mark Landler, “Drop in Jobless Figure Gives Jolt to Race for President,” New York Times, October 5, 2012, http://www.nytimes.com/2012/10/06/business/economy/us-added-114000-jobs-in-september-rate-drops-to-7-8.html
  5. [5]Dewan and Landler, “Drop in Jobless Figure Gives Jolt to Race for President;” Scherer, “Unemployment rate tampering? Why conspiracy theorists went wild.”
  6. [6]David Halberstam, The Powers That Be (Urbana, IL: University of Illinois, 2000).
  7. [7]Edward S. Herman and Noam Chomsky, Manufacturing Consent: The Political Economy of the Mass Media (New York: Pantheon, 2002).
  8. [8]Almerindo E. Ojeda, ed., The Trauma of Psychological Torture (Westport, CT: Praeger, 2008); Philip Zimbardo, The Lucifer Effect: Understanding How Good People Turn Evil (New York: Random House, 2008).
  9. [9]Michael Pollan, The Omnivore’s Dilemma: A Natural History of Four Meals (New York: Penguin, 2007).
  10. [10]Angela Y. Davis, Abolition Democracy: Beyond Empire, Prisons, and Torture (New York: Seven Stories, 2005); Fielding Dawson, No Man’s Land (Sebastopol, CA: Times Change, 2000); Jeffrey Reiman, The Rich Get Richer and the Poor Get Prison, 7th ed. (Boston: Allyn and Bacon, 2004).
  11. [11]Jonathan Kozol, Savage Inequalities: Children in America’s Schools (New York: HarperPerennial, 1991); Donaldo Macedo, Literacies of Power: What Americans Are Not Allowed To Know (Boulder, CO: Westview, 2006).
  12. [12]David Benfell, “Unemployment calculations,” Parts-Unknown.org, June 2, 2012, https://parts-unknown.org/wiki/index.php/Employment_calculations
  13. [13]Jacob S. Hacker and Paul Pierson, Winner-Take-All Politics: How Washington made the Rich Richer—And Turned Its back on the Middle Class (New York: Simon and Schuster, 2010).

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