06.05.2013 0

Washington bureaucrats are okay, the rest of us, not so much

By Rick Manning

America has been breathlessly awaiting the calamity that was predicted to befall the Washington D.C. area due to the “draconian” budget cuts known as the sequester.

Now, the April data is in from the Labor Department’s Bureau of Labor Statistics detailing how the D.C. area is doing as it copes with the much bemoaned big government spending reduction hit.

Well it turns out the D.C. job situation is just fine.

While the number of government workers declined nationwide over the past year, in D.C., where people learn early how to feather their own nests, the situation is quite cozy.  The stunning 0.8 percent increase in the number of government jobs in the D.C. area since last April certainly belies the predicted local economic catastrophe.

Now that the Bureau of Labor Statistics has provided assurance to America that D.C.’s bureaucrat class is thriving amidst the sequester tsunami, they are turning their attention to the more mundane unemployment report for the month of May.

This monthly ritual creates great fanfare in the financial world as bettors attempt to ride the stock and bond markets upward or downward based upon what happens on the first Friday of virtually every month.

Yet, the awful truth is the reported headline of the unemployment rate is not at all reflective of the economic condition of our nation.

The highlighted unemployment rate (known as the U-3 rate) eliminates people who have left the workforce from being considered unemployed among other flaws.  This is the rate that currently sits at 7.5 percent.

However, when you count people who are classified as marginally attached to the labor force, along with those who are only employed part time for economic reasons in the ranks of the functionally unemployed, that 7.5 percent turns into a startling 13.9 percent of the U.S. workforce.

And this is without including the millions who have dropped out of the workforce as unemployed.

This rate, known as U-6, is measured each month by the Bureau of Labor Statistics.  Over the past year, the U-6 rate has only dropped 0.2 percent as it stood at 14.1 percent in April of 2012.

Given all the political blather over the past year about how job creation has been accelerating over the past year, the actual impact on the workforce has been virtually nil, nada, zippo +0.2%.

What gets lost in the headline percentage that gets reported are the 7.9 million workers who are stuck in part time jobs either because they can’t find a full time position, or due to slack economic conditions causing their employers to take them off full time status.

What gets lost in the investment buzz is the sad reality that 13.2 percent of the African American community that wants a job, can’t find one, and this doesn’t include those who settle for part time work to get by.

What gets lost as politicians pat themselves on the back in their monthly round of self-congratulatory releases is the unemployed worker in places like Mendota, California where government environmental policies are directly responsible for an unemployment rate that hovers near 40 percent of the workforce.

On the first Friday of the month, reporters will be locked in a room at the Department of Labor at 8:00 am, cell phones taken away, as they get presented the employment information for the previous month.  They frantically write their initial stories that get released at 8:30 am Eastern time on the dot, providing the first look at the nation’s employment situation.

They can ask questions of the BLS experts in the room, but they need to get the topline data out, so there is no time for analysis.

That is what most people read or hear about the nation’s employment situation, that it disappointed or encouraged investors.  All too often lately, after hearing the number, the people shrug their shoulders wondering why their own personal observations are so different than what the government reports.

Perhaps it is time for the government, and those who report on it, to shelve single-minded reliance on the standard U-3 unemployment rate measure and include in their press release and reporter briefing the still under-stated U-6 data.  At least then, the reports would bear some semblance to the unemployment reality America faces.

Rick Manning (@rmanning957) is the Vice President of Public Policy and Communications for Americans for Limited Government. 

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