The employment report for February, released yesterday by the Bureau of Labor Statistics (BLS), has completely lost all credibility. I’m not talking about the headline numbers – the gain of 242,000 jobs or the fact that unemployment held steady at 4.9%. It’s how the latter number was arrived at. And it’s the little-noticed (because it’s not a headline number) jump in the labor force participation rate.
According to the BLS, the “employment level” (the number of people in the household survey who report having work) soared again in February by 530,000 – far in excess of the 242,000 jobs added by the establishment survey – many of which are part-time jobs that were likely held by people already working other part-time jobs. In other words, the rise in employment level should be less that the number of new jobs created – not more, and especially not more than double.
This is almost a duplicate of the situation reported in January, when the BLS reported that the employment level rose by 615,000. That’s a gain in employment level of 1.15 million people in only two months! (Don’t believe me? Here’s a link to that part of the household survey: http://data.bls.gov/timeseries/LNS12000000?years_option=all_years&periods_option=all_periods) Folks, these numbers are simply impossible. They would be impossible in a healthy economy. How much more impossible are they when GDP is running at 1.0%, when manufacturing is in steep decline and when other economic indicators -aside from auto sales and construction spending – are completely flat? Even this report itself found that wages fell in February, along with the average work week. Those aren’t numbers that are consistent with huge gains in the employment level. Finally, if the economy were doing that well, polls wouldn’t be consistently finding that 80% of Americans, representing both the left and right of the political spectrum, believe that the country is on the wrong track.
It gets weirder. This huge jump in the employment level would have sent the headline unemployment number plunging so much that it would have raised all kinds of red flags about the report. Unemployment would have fallen from 5.0% in December to 4.4% in February – a number that no one would have believed and a number that would have sent the Federal Reserve into a mad scramble to raise interest rates – right at a time when global markets were in a major sell-off. Instead, the unemployment rate held steady because the BLS also claimed that 1.05 million workers flooded back into the labor force. In other words, in only two months time, 1.05 million people suddenly began looking for work and every single one of them – plus an additional 100,000 (where did they come from?) found work.
There’s something very fishy going on with these employment reports. I can see three possibilities:
1) Throughout the “recovery,” the Obama administration has continued to receive flak for a low labor force participation rate. In other words, the economy wasn’t adding enough jobs to put back to work all of the people laid off in the Great Recession. Are they now rigging the numbers so that that won’t be part of the president’s legacy?
2) The only plausible piece of this data is that, in fact, a million people have begun looking for work again but, if the employment level didn’t rise in lockstep, the unemployment rate would be skyrocketing – setting off alarm bells about a recession that markets have already begun sensing.
3) The BLS is in cahoots with the Federal Reserve, now practically in a panic mode to make itself appear relevant to the economy again, and is helping it with justification for doing just that.
And let’s not forget that this is an election year. A low unemployment rate supports the Democratic candidate.
Too bad that these employment reports are simply taken at face value by the media with no one bothering to scrutinize the details.