BLS Begins Fudging “Employment Level” in October

Because of travel and family obligations, I’m a few days late commenting on the October employment report, released on Friday by the Bureau of Labor Statistics (BLS).

According to the report, the economy added 214,000 jobs in October, short of expectations for 240,000 jobs.  And, of course, unemployment fell once again to 5.8%, which aligns nicely with the number of jobs added.  But the way that they were brought into alignment is almost amusing.  Now that the unemployment rate has fallen below 6%, all of the pressure and media attention on that figure is off.  (Never mind the fact that it got down to that level primarily by claiming that workers left the labor force.)

As the unemployment rate fell, though, attention began to turn to the fact that the percentage of the population that’s actually  employed is still at historically low levels.  So, I suppose, we shouldn’t be surprised that it appears that the BLS has now begun to fudge the “employment level” – the number of Americans employed as determined by the household survey.  In October it jumped by 683,000.  However, if that was the only figure that the BLS fudged, then unemployment would have plunged by four tenths to 5.5%, which surely would have been met with a lot of skepticism.  No problem.  Just claim that 416,000 people rejoined the work force.  Voila!  Per capita employment takes a big jump.  Unemployment drops a tenth.  And the October employment report looks really rosy.

Nobody can believe that 683,000 Americans found work in October.  Two days before the employment report was released, payroll processing firm ADP announced its estimate that the economy added 230,000 jobs in October – a number that is consistent with past months and consistent with the BLS’s establishment survey.  The same day, polling firm Gallup announced that its “U.S. Job Creation Index” actually slipped in October.  The following day, Gallup also announced that its estimate of  “payroll-to-population rate” (per capita employment) actually fell in October to 44.4% from 44.8% in September.  That’s a big one-month drop.  And, that same day, Challenger estimated that layoffs rose sharply in October.  In light of the other data, the BLS’s claim that the employment level rose by 683,000 in October is clearly preposterous.

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