Revenge of how the “unemployment rate” is calculated
Who could have predicted this, a made for headlines declining nominal “unemployment rate” which would be used by the Obama campaign to its advantage while the reality underneath the numbers showed a disaster.
I predicted it, as did many others.
The September jobs report has the headline the Obama campaign wanted: September Jobs Report: Unemployment Falls to 7.8 Pct:
I don’t think arguing that the BLS “manipulated” the numbers is productive, it gives the MSM the perfect excuse not to look at what the numbers really show.
The reality is that the top line number of 7.8% was a huge drop with only 114,000 net new jobs created. How is that possible? 114,000 net new jobs is a horrible number yet the unemployment rate dropped by 0.3%?
James Pethokoukis explains:
Is this the Obama October Surprise?
Only in an era of depressingly diminished expectations could the September jobs report be called a good one. It really isn’t. Not at all.
1. Yes, the U-3 unemployment rate fell to 7.8%, the first time it has been below 8% since January 2009. But that’s only due to a flood of 582,000 part-time jobs. As the Labor Department noted:
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) rose from 8.0 million in August to 8.6 million in September. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.
2. And take-home pay? Over the past 12 months, average hourly earnings have risen by just 1.8 percent. When you take inflation into account, wages are flat to down.
3. The broader U-6 rate — which takes into account part-time workers who want full-time work and lots of discouraged workers who’ve given up looking — stayed unchanged at 14.7%. That’s a better gauge of the true unemployment rate and state of the American labor market.
4. The shrunken workforce remains shrunken. If the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.7%. If the participation rate had just stayed steady since the start of the year, the unemployment rate would be 8.4% vs. 8.3%. Where’s the progress?
Pethokoukis has more.
Don’t expect the MSM to go beyond the headline. They just found their answer to Romney’s debate perfomance.
Obama surge on Intrade, wipes out Romney debate gains
— James Pethokoukis (@JimPethokoukis) October 5, 2012
It is up to Paul Ryan, at the debate next Thursday, to explain this to tens of millions of voters.
Update: I originally indicated that this was the last jobs report before the election. That was wrong, the October report will come out the Friday before the election. But by that time a large percentage of the vote will already have been cast in early voting and absentee ballots.