02.09.2015 0

Gallup CEO: “Unemployment report amounts to a Big Lie”

By Rick Manning

Young_AmericansThe unemployment numbers got weird in January as they jumped dramatically across the board.  The household data for January 2015 was revised, according to the Bureau of Labor Statistics, to “reflect updated population estimates.”

In a nutshell, the underlying assumptions the government uses in the survey of approximately 50,000 households were changed due to a recalibration of how many people are in the total population, what age groups they are in, along with other considerations.

Here is how it works: The survey makes assumptions based on Census data about how many people are in the overall population and the workforce, and over time those assumptions get adjusted based upon new data.  These changes adjust the gender, racial and age composition of those answering questions about their employment status. Even very modest changes in what percentage of different population groups get asked questions can create seemingly incoherent shifts in the data when compared to the previous, unadjusted months and years.

Eventually, BLS adjusts the previous months based upon a statistical formula to allow for apples-to-apples comparisons on month-to-month data.

On top of the statistical adjustments made to January’s survey data, BLS also uses its normal seasonal adjustment formulas which attempt to level out the data to eliminate the glaring impacts of kids going to school and leaving the workforce in September, or the normal elimination of temporary Christmas employees once the decorations are down.

With all of those considerations in mind, it is almost impossible to draw any conclusions from the January unemployment report, as the December to January data that is presented use different sampling criteria.

With all the statistical changes in the data, it gives particular pause to read Gallup Organization CEO Jim Clifton’s column on the unemployment rate and its methodology where he writes, “There’s no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.”

In deriding the official unemployment rate, Clifton points to the fact that those who have left the workforce even if they are of working age are not counted as unemployed.  He points to the unfair categorization of a person trained to be an engineer working as a fry cook as being employed rather than underemployed.

He alarmingly notes that only 44 percent of the adult population 18 years old and older have full-time jobs (more than 30 hours a week) asserting, “We need that to be 50 percent and a bare minimum of 10 million new, good jobs to replenish America’s middle class.”

As President Obama asserts that happy days are here again and is urging Congress to amp up the federal government spending machine by 7 percent this year, perhaps the House and Senate Committees that oversee the Labor Department should call Mr. Clifton as a witness to tell them the truth about why people continue to feel they are running in place, working harder and harder but not getting ahead.

His insights into what the real employment situation is in America would be far more enlightening than the hodgepodge of data presented from the Labor Department that, without insider knowledge, is difficult to put into context.

Rick Manning is the President of Americans for Limited Government.

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