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Government Labor Statistics: Lies and Damned Lies

For months, the various government departments dealing with things economic–Treasury, Commerce, Labor and of course the Council of Economic Advisers and the Federal Reserve, have been issuing soothing words that the nation’s economy is headed back up from the Great Recession that allegedly began in December 2007.

But now comes word from the Department of Labor that, whoops, we “minsunderestimated,” as former President George W. Bush would say, the number of jobs lost.  The Department of Labor’s Bureau of Labor Statistics is reporting that because of a “modeling error,” it misstated the number of jobs lost between March 2008 and March 2009 by 17 percent. In hard numbers, that is to say, the BLS was reporting that a record 4.8 million jobs were lost during those 12 months of economic collapse, when in fact the job loss total was actually 5.6 million.

They missed 824,000 lost jobs! Just to give you an idea of how many people that is, we’re talking about 10 percent of the population of the city of New York, and more people than the entire population of San Francisco.

And it gets worse.  The same broken model was used for the next year, so that while we’ve been getting all those soothing words about how job losses are slowing, and about how the economy is going to start coming back, in fact, the number of jobs supposedly created or added during the past nine months has actually been overstated by almost one million! That would be the entire population of the cities of Seattle and Miami combined.

Technically, what happened is that the BLS was relying on an assumption that new businesses were forming all during these two periods, and that these new businesses were hiring people. That’s what happens during normal years, of course. But of course, any dunce without out an economics PhD could have told the BLS that over the past two years, which were hardly normal in any sense of the word, not many new businesses were being formed.

As Dean Baker, an economist with a PhD who is co-director of the Center for Economic Policy and Research, and a guy who, as a left-leaning economist outside of the mainstream consensus does exercise common sense, puts it, when all those rosy numbers about job creation or slowing job losses were coming out, “the idea that we had a significant number of businesses being created didn’t make sense.”

Ah, but that begs the question: if the government numbers are that grotesquely wrong, what does that say about the government’s policy with regard to joblessness, about it’s policy towards economic stimulus, about the government’s policy towards alleviating the suffering of the struggling citizenry? After all, policies are supposed to be designed around a solid set of facts.

It would seem that a major reappraisal of economic policy would be in order, no?

But not a word are we hearing about such a reappraisal.

In fact, I suspect that after this little moment of embarrassment, the whole thing will be forgotten, and we’ll go on with our laissez faire approach to dealing with this recession, pretending that things will all get better on their own.

This shouldn’t surprise anyone. After all, we’re still hearing, day in, day out, on the news that the unemployment rate is only 10 percent, when the economists all know that this is a fiction. Thanks to political pressures dating back to the Reagan administration, and continued through the Clinton and Bush years, that figure has carefully excluded people who have been jobless for over a year, people who say to Labor Department pollsters that they have “given up” looking for work, and people who are working at a part-time job because they can no longer find full-time employment.

By any fair standard, all these people are unemployed too, but we just erase them from the books. If we counted all these people, as the Labor Department used to do back in the 1970s and earlier, the real unemployment rate would be over 18 percent today in America.

The bogus figure of 10 percent unemployment gives the false impression that unemployment in the US is not all that bad. It also gives the impression that it’s not any worse here than in Europe, where the rate is also about 10 percent, except that Europe, the long-term unemployed are counted, as are those who are only working part-time involuntarily.

The lesson here is not to trust the government. When it comes to the nation’s true economic condition, as the old saying goes: “Who are you going to believe: the numbers or your own lying eyes?”

Dave Lindorff is a Philadelphia-based journalist. He is author of Killing Time: An Investigation into the Death Penalty Case of Mumia Abu-Jamal (Common Courage Press, 2003) and The Case for Impeachment (St. Martin’s Press, 2006). His work is available at thiscantbehappening.net

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9 Responses for “Government Labor Statistics: Lies and Damned Lies”

  1. Social comments and analytics for this post…

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  2. Jesse Hemingway says:

    Wow, the government does what it does best lies and orchestrates deception. God dam it we know that they would never cross the line at 9/11 right?

  3. Robert Francis says:

    “The lesson here is not to trust the government.”

    Do YOU understand? Don’t Trust The Government! And don’t vote for the candidates they are heavily pushing like they are selling soap. They go and Sell You Out! Vote third party or not at all.

    If the government people say “good morning” get up and go over to the window facing East and look for the sun!

  4. This blog is very cool!
    Thank for this issued posted. It’s a great help and very informative article. But still giving up my tryst to the government is not the best remedy for this failure.

  5. But still I am not giving up my trust to our government. I just pray for the best remedy.

  6. Great article, except you forgot to mention the people who lost their jobs and never qualified for unemployment benefits in the first place, which the BLS is ALSO conveniently leaving out of their count of unemployment. If you worked at a job that was off-the-books, or you worked at a job for less than 8 months before you got laid off, or your former employer refuses to contribute their portion towards your benefits for any reason, then you don’t qualify to receive any benefits at all.

    Also, the way of defining ‘unemployment’ that the govt. currently uses didn’t come into practice until 1994 when the Repulsivecans took control of congress and changed what constituted being “unemployed”. So comparing the current official statistics with the downturns of the 1930′s or even the early 1980′s and ’90′s is entirely false. Economist John Williams, who runs the website Shadow Stats, uses the method that was used in all the previous recessions/depressions, and by that measurement, unemployment is currently OVER 20%. (Hovering at around 22%, last I heard).

    Looking at it that way, we are not so very far off from the Great Depression unemployment rates of 25%–30%.

  7. Llyodblankfeinsucks says:

    Laura,

    Excellent commentary. Outside of the overt manipulations covered in the article, and the demographics you mention being excluded, there are yet more statistical manipulations at play. To name but a couple: they play with seasonality, and the birth death rate.

    To the point in your last paragraph about Depression area unemployment, if you carefully read through their “propoganda fueled BS”, and do a bit of your own simple analysis, you can easily see we have blown past Depression era levels.

    Its simple: Ok so the pundits stipulate 8M=nearly 10% (U3), uh huh and then add another 7M for the total of 15M, which makes up the officical but less often quoted (U6) for around 17-18%. BUT notice the illustrious folks at the BLS have let slip that the real number of unemployed and underemployed is around 26M, but they wont put a % on that because the general populace would go apeshit because yes indeed that puts the real figure at 30% +. If 8M=10% —- right what does 26M=? Bingo, over 30%.

  8. DrObserver says:

    The government learned a long time ago that changing the numbers is easier than changing the facts, and changing the numbers is more profitable. Look what they did to COLA? Back in the ’80′s they changed the “formula” and cut COLA by about 50% without legislation or debate . . . and not even a whisper from AARP; amazing lack of interest. Apathy stems from ignorance or greed, take your pick.

  9. Zachary sandlin says:

    The bureau of labor has put released that life and health Insurance agents are the fastest growing new jobs. They estimate a 90+ thousand new agents will be liscenced by 2020. This is a totally false figure. As of president obama’s reelection and the end of any chance (at least for the next four years ) for repealing the worst piece of legislation ever to come on of congress. The Affordable Care Act will destroy the life and health industry. Roughly 400,000 thousand agents will be take an extreme reduction in Compensation. Most younger agents will not survive. Analysts predict the loss of 300,000 jobs. Agents having been in the industry more than 20 years will likely be a le to survive. This will leave the general public with absolutely no one to act as their advocate in dealing with insurance companies and insurance in general. If the government thinks they have created a great piece of legislation they are hopelessly deluded…..

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