What’s Going On Behind the Unemployment Report Curtain?
Posted by Michael A. Kamperman on April 16, 2011
This morning I read a fascinating article about job gains in March for the Greater Waco Area. Somehow in one month we added 2,300 jobs, which is huge considering we only have 117 thousand people in the workforce. We supposedly added 600 government workers and 400 workers in education and healthcare. This seems odd since the newspaper is full of stories about cutbacks in State funding impacting numerous governmental agencies, especially local school districts. It turns out the Texas Workforce Commission used to compile the data, but starting in March the federal Bureau of Labor Statistics started doing the calculations. According to a story in today’s Waco Tribune Herald, “with this transition the BLS implemented several methodological changes to standardize the estimation across states. The use of these procedures allows the BLS to rely less on individual analyst judgement and more on the use of standard statistical methodology.” Now, its possible the TWC was not estimating Waco’s workforce properly and this represents a one-time adjustment. It is also possible the new methodology is flawed. A person (analyst) would note that government agencies and schools are cutting back employment. But the new mathematical model programmed by the BLS only calculates numbers and avoids common sense. This is the same type of modeling that was used to justify rating subprime loans AAA. The unemployment rate has dropped a surprising 1% in the last few months. Could it be the new methodology, which lacks all common sense, is the reason so many people seem to be voluntarily dropping out of the workforce in hard economic times? Afterall, if a husband loses his job and his wife stays at home, don’t most families now have two people looking for a job rather than one, or none?
Unfortunately, the economic policies being pursued by the Whitehouse invites the possibility that these “changes” are not random, but designed. The President and his political advisors know he cannot get re-elected if unemployment doesn’t fall. Yet he is pursuing job reduction policies rather than job growth policies to win over the angry middle of the electorate upset with bailouts and spending. Why? Most of the electorate is ignorant of the fact that everything would be much worse, but for the bailouts and the spending. Still, the President would rather placate them to educate them. The only response I have to the new methodology to calculate the unemployment rate is “Oh Really.”
What with $100 plus oil and the Japanese nuclear plant meltdown, a strong consensus if growing that the economy is slowing. Estimates for first and second quarter GDP are falling. At this point the stimulus plan and QE2 were supposed to achieve escape velocity whereby the economy roars back on its own without government support. Yet while that’s not happening the President has joined the ”we must have government live within its means crowd.” Sorry, but the federal government is already living within its means. The federal government has the capacity (means) to run large and sustained deficits, just like its doing now. What the President should be worrying about is how to make sure the next time something is invented in America, that it also gets made in America.
