More Phony Employment NumbersPaul Craig Roberts There are a number of ongoing problems with the released numbers. For example, the concurrent-seasonal factor adjustments are unstable. The birth-death model adds non-existent jobs each month that are then taken out in the annual downward benchmark revisions. Williams calculates that the job overstatement through November averages 45,000 monthly. In other words, employment gains during 2012 have been overstated by about 500,000 jobs. Another problem is that each months jobs number is boosted by downside revision of the previous months jobs number. Williams reports that the 146,000 new jobs reported for November was after a significant downside revision to Octobers reporting. Net of prior-period revisions, Novembers seasonally-adjusted monthly gain was 97,000. Even if we believe the government that 146,000 new jobs materialized during November, that is the amount necessary to stay even with population growth and therefore could not be responsible for reducing the unemployment rate from 7.9% to 7.7%. The reduction is due to how the unemployed are counted. The 7.7% rate is known as the headline rate. It is the rate you hear in the news. Its official designation is U.3. The Bureau of Labor Statistics has another official unemployment rate known as U.6. In other words, the headline rate of unemployment is one-third the actual rate. The drop in the November headline rate of unemployment from 7.9 to 7.7 is due to a 20.4% increase in the number of short-term discouraged workers in November. In other words, unemployed people rolled out of the U.3 measure into the U.6 measure. The U.S. government simply lowers the unemployment rate by not counting all of the unemployed. We owe this innovation to the Clinton administration. In 1994 the Clinton administration redefined discouraged workers and limited this group to those who are discouraged for less than one year. Those discouraged for more than one year are no longer considered to be in the labor force and ceased to be counted as unemployed. If the U.S. government will mislead the public about unemployment, it will also A government that wants to cut the social safety net doesnt want you to know that the unemployment rate is 22.9%. A government that wants to cut the social safety net when between one-fifth and one-fourth of the work force is out of work looks hard-hearted, mean-spirited, and foolish. But if the government reports only one-third of the unemployed and presents that rate as falling, then the government can present its cuts as prudent to avoid falling over a fiscal cliff. If the free and democratic Americans cannot even find out what the unemployment rate is, how do they expect to find out about anything? linkwithin_text=Related Articles: 