As we approach the year’s end, positive trends in job creation are making headlines. With one month remaining, payroll figures indicate a remarkable increase of 2.65 million jobs—an achievement not witnessed since the late 1990s.
The Bureau of Labor Statistics released November employment figures last Friday, revealing the addition of 321,000 jobs that month. While the unemployment rate remained steady at 5.8 percent, economists and financial analysts greeted the news with enthusiasm.
“In one line: spectacular and, more importantly, credible,” stated Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Strong hiring indicators have emerged across multiple surveys, along with decreasing jobless claims, making this blockbuster number inevitable.”
However, Shepherdson’s enthusiasm appears clouded. In his eagerness to celebrate a “blockbuster” figure, he neglects to consider the broader context.
The prevailing consensus is that the BLS employment statistics often serve more as government rhetoric than accurate assessments. Each month, we review these figures for amusement rather than enlightenment, eager to critique the absurdities emerging from Washington. There are several reasons to approach these figures with caution; here are a few.
Cube Steak Statistics
To begin with, the labor force participation rate is currently at 62.8 percent, meaning there are over 92 million individuals not active in the labor market. To find a similar level of disengagement, one would need to look back to March 1978—36 years ago.
According to the latest statistics, there were 156,397,000 participants in the labor force. Out of these, 147,287,000 were employed, while 9,110,000 were actively seeking work. This means that approximately 9.1 million unemployed equates to an unemployment rate of 5.8 percent.
Though a 5.8 percent unemployment rate appears favorable, the data supporting it is suspiciously distorted. It has been massaged and manipulated much like a butcher tenderizing tough cuts of meat, resulting in skewed statistics.
In contrast, John Williams from Shadow Government Statistics estimates the actual unemployment rate to be as high as 23 percent. Williams employs measurement methods predating 1994, which consider discouraged workers who have been excluded from current unemployment statistics. The choice of which figure to accept is ultimately yours; we merely present the facts for your reflection.
Moreover, Williams is not alone in calling out the discrepancies in these figures. The credibility of BLS employment data has deteriorated to a degree that even mainstream media cannot overlook.
Something to Cheer About
“Consider it a brutal lesson in government math,” notes CNBC.
The report of 321,000 new jobs owes much of its flair to seasonal adjustments and other complicating factors at the Bureau of Labor Statistics. This headline figure stands in stark contrast to the household survey, which offers a more accurate count and suggests significant work remains.
To illustrate: that substantial headline number actually represented just 4,000 additional working individuals. Concurrently, there were an additional 115,000 people seeking unemployment benefits. This discrepancy can be attributed to a growing labor force, which expanded by 119,000, yet the participation rate remains at a meager 62.8 percent—the lowest it has been in approximately 36 years.
Furthermore, many of the newly created jobs are of lower quality. While the number of full-time positions decreased by 150,000, part-time roles increased by 77,000.
At the Economic Prism, we eagerly await genuine successes that we can cheer about. However, this current situation falls short.
The prevailing illusion suggests that the U.S. economy is making gradual improvements. If this is indeed true, such progress parallels the painful and slow process of passing a kidney stone—unpleasant and agonizing.
All the while, despite a temporary pullback, the DOW is rapidly approaching the 18,000 mark. For those who thrive on fantasies and illusions, this might indeed be something to celebrate.
Sincerely,
MN Gordon
for Economic Prism
