Was November Dip in Unemployment Faked or a Fluke?


The Labor Department announced this morning that jobless claims rose to 480,000 last week, the second consecutive week of rising claims since bottoming at 454,000 in the November 28th week.  (Link to the Labor Department report provided above.)

In light of the continuing high level of claims, one has to wonder if the administration was playing games – the same kind of games they’ve been accused of using to inflate their figures for jobs created by the stimulus program – to show a drop in unemployment last month.  In November the Bureau of Labor Statistics reported that the employment level actually rose by 227,000 – a key factor in holding job losses to only 11,000.

That seems highly unlikely, given the current rate of weekly jobless claims.  In a normal, healthy economy we typically see weekly jobless claims of about 250,000.  Yet, unemployment holds steady because laid off workers normally find employment elsewhere at about the same rate.  About a million are laid off each month and about a million find new work, keeping the employment level steady.  But analysts have noted that in today’s environment, almost no one is hiring.  Hiring is well below the rate we’d see in a normal economy. 

So if no one is hiring, how did the employment level jump by 227,000 in November?  In order for that to happen, employers would have to be snapping up workers at a much higher than normal rate.  At this rate of weekly jobless claims, employers would have to be rehiring these workers at a rate almost double that of a normal, healthy economy.  It doesn’t seem plausible.

The current rate of weekly jobless claims – 200,000 more per week than normal, should be translating into unemployment rising at a rate of about 0.5% per month, especially considering the rate at which the labor force is growing as a result of a growing population.

Are they fudging the numbers as part of a campaign to talk up the economy and restore confidence?  I don’t generally subscribe to conspiracy theories, but these numbers just don’t add up. 


As an aside, the Labor Department report for this week reports that only two states – Kansas and Kentucky – reported that weekly jobless claims (unadjusted) fell by more than 1,000.  By contrast, 29 states reported increases in claims of at least 1,000.  California was by far the worst, with a rise of more than 28,000.  Now, let’s do some more math:  If we add up the net increase in jobless claims for these 31 states, the figure comes out to an increase in jobless claims of 200,000 in one week.  Not exactly a picture of a stabilizing employment situation.

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