Laboring to Take the "L" Out of the BLS Jobs Numbers

The Bureau of Labor Statistics is reporting that the September unemployment rate dropped from 8.2% to 7.8%. This occurred even though only a paltry 114, 000 jobs were estimated to have occurred during this period as figures for July and August have been revised upwards. Still the U-3 rate dropped below the magic 8.0% which will allow President Obama to trumpet this achievement in the last month of his re-election campaign.

There are a couple of remarkable things about this BLS report. Firstly, if the labor force participation rate was the same as when Mr. Obama took office, the rate would be reported as 10% percent. The U-6 number which counts underemployment and people who have given up looking for work is still around 14%. President Obama promised that if the $847 Billion stimulus was passed in 2009 that unemployment would never rise above 8%. Moreover Austan Goolsbee, Obama’s former Chairman of the President’s Council of Economic Advisors claimed after the stimulus passed the unemployment rate in September 2012 would be 5.8%. This irrational exuberance was used to pass Porkulous.

But most people are not going to delve into the green eyeshade numbers. They will hear the Obama 2012 campaign proclaim that these are the best unemployment figures since 2009! These numbers do not add up. Economists presume that the American economy needs to create 175,000 jobs a month to decrease the unemployment rate a 0.1% downward. The September jobs report only indicated 114,000 jobs created and the unemployment rate drops 0.4% –amazing! If we are to believe it, this is the highest monthly job rates gain in 29 years.

However, it is typical in the Obama Administration to proclaim a rosy initial number and then quietly revise them upward when out of the limelight. This time, the prior numbers were tweaked to make the September number shine. Moreover, the upward revision come in government jobs. The monthly average in 2011 was 153,000 jobs but in 2012 that average is 146,000 jobs. So the number of employed decreases by 7,000 jobs a month yet the unemployment rate keeps dropping.

Jack Welch, the former CEO of General Electric reacted via Twitter: “Unbelievable jobs numbers..these Chicago guys will do anything..can't debate so change numbers.” For those who doubt that politics are not engaged in how unemployment numbers are calculated, consider the case of Lockheed Martin.

 The impending Sequestration cross the board cuts should require government defense contractors to obey the law and WARN their workers 60 days prior to the layoff. Since sequestration takes effect on January 2nd 2013, that would have required pink slips to be sent just before the election. But per Jack Tapper at ABC News, the White House requested that Lockheed Martin did not follow the law and send these WARN notices. The OMB urged contractors to avoid waste and disruption due to these layoff notices. The guidance told contractors that the government would cover certain liability costs associated with not complying with the WARN law but only if the contractor abides by the Obama Administration wish not to send out notices now.

This circumventing of WARN is troubling for several reasons. It shows the leviathan government dictating to business on how to operate for the government’s benefit. Some might call that shades of fascism. It also is another flagrant violation of the rule of law by the Obama Administration. When a law is inconvenient or the Obama Administration agrees, the rule is ignored and contractors are forced to follow, lest future contracting be endangered. Thirdly, the WARN work around bribes businesses to do Obama Administration bidding on the taxpayers dime. Congress had clear intent when they passed it in 1988. And the last time I read the Constitution, Congress makes budgetary decisions, not the Executive Branch. But then again, Majority Leader Harry Reid and the Democrat controlled Senate have failed to do their jobs and pass a budget in over 1200 days. Lastly, the WARN Act was supposed to give a heads up to lowly workers being laid off. So why is Obama against giving the little guy a heads up when they are losing their jobs.

While the nation is hungry for economic improvement, these reports are a mirage that make the Obama 2012 campaign messaging easier but does not reflect reality. Maybe the BLS can revise their moniker and take the superfluous “L” away.

h/t: R.J. Matson 

Grading Obamanomics on a Curve?

It seems quite remarkable that the Obama 2012 campaign effort has the temerity to argue for re-election with 8.2% unemployment, yet that is one of the few policy arrows in their quiver. Alas, Obama’s economic argument is far off the mark.

 To sway Congress to approve the $837 Billion Stimulus legislation, the Obama Administration vowed that the unemployment rate would not exceed 8.0%. Obviously that Obama promise was inoperative as the official unemployment rate hit 10.1% in the summer of 2009 and currently the U-3 number is 8.2%, but this does not include discouraged workers which is 14.9%

[L] Austan Goolsbee & President Barack Obama

Austan Goolsbee, the Obama Administration’s former Chairman of the President’s Council of Economic Advisors, has tried to temper any criticism concerning Porkulus.by essentially blaming Bush and claiming that the problem was worse than anyone in the Obama Administration understood in February 2009.  Goolsbee points to the official CEA report from late 2009 which shows that June 2012 unemployment was predicted to be 8.2%, leading people to believe that everything is going according to plan.

The problem with pointing to this revised economic forecast is that the same report anticipated that stimulus spending would vault American economic growth to 4.3% in both 2011 and 2012.  Those rosy scenarios have not panned out and the American economy has significantly underperformed.  In 2011, the GDP grew by only 1.7%.  In the first quarter of 2012, economic growth “skyrocketed” to 1.9%.  Economic analyst anticipate that economic growth with be below 2% in the second quarter of 2012.  Oops.  How is it that Obamanomics can demand an over $800 Billion Keynsian spending spree, garner only half the growth that it promised yet have the same unemployment rate than if Porkulous was not approved?

Playing with the unemployment numbers had mainly been the domain of the Department of Labor.  On Thursday mornings, the DOL would release unemployment numbers which are not as robust as expected, which will be chalked up to holidays or bad weather.  Some weeks, numbers would hint at the right direction and the Lamestream Media along with minions of the White House will crow that the recovery is continuing.  The problem is that unemployment numbers seem to be routinely revised upwards a couple of weeks later, without any fanfare.

The other trick to minimizing employment rates is through workers dropped from the unemployment rolls.    As the ninety nine weeks of  unemployment benefits expire, the people are dropped off the U-3 unemployment rate and such discouraged workers become part of the underreported U-6 roll.  Dropping long term unemployment benefits has accelerated has been accelerated as economic conditions are not as dire in individual states.  So if state unemployment rates does not spike over 10% during a three year period, the long term unemployment benefit disappears.  Since January, over 400,00 people have lost several weeks of the extended unemployment benefits, particularly in key battleground states such as Florida, Ohio, Pennsylvania, Colorado and North Carolina.

Bill Clinton signing Welfare Reform, 1996

This inconvenient truth about unemployment benefits may have partly inspired the Obama Administration’s ukase which ignores President Bill Clinton’s landmark achievement in "changing welfare as we know it."  The 1996 Personal Responsibility and Work Opportunity Act required that welfare recipients to work two years after starting to receive assistance, but some states enacted additional requirements to gain wider latitude over the program.


The Obama Administration recently issued “an official policy directive” which HHS Secretary Kathleen Sebelius to wave workfare requirements.  Unfortunately, such flexible authority in Welfare Reform is not authorized in the Public Law, but if the First Amendment did not stop Sebelius or the Obama Administration from threatening the free exercise of religion through the Contraception Mandate, why should the lack of authority in legislation slow them down?

Conservative Constitutional observers opine that it is likely that Obama’s workfare waiver will probably lose in court, adjudicating the infraction will take time and will not be concluded by the election.  If a couple of large “Blue” states, like California, New York and Illinois, avail themselves to the waiver, this regulatory legerdemain will have the serendipitous effect of tempering rising unemployment statistics through the election.

Instead of grading Obamanomics on a curve, maybe the electorate ought to offer a participation ribbon  and send someone “home” to Chicago.

h/t: AEI