NEW YORK – Anticipating the mid-term 2014 elections in November, the Obama administration appears to be manipulating unemployment numbers to mask an economy about to slip back into recession.
The Bureau of Labor Force announcement that unemployment dropped from 6.3 percent in March to 6.1 percent in April was partly attributable to the more than 92 million Americans classified as out of the labor force, reducing the labor participation rate to 62.8 percent, a historic low dropout rate that has remained the same since April.
Adjusting the BLS unemployment number to report what is known as “U-6” – a measure that includes total unemployed, all persons marginally attached to the labor force and the total part-time employed for economic reasons – unemployment in April was 14.6 percent.
Still, on the eve of the July 4 holiday, President Obama claimed at a tech incubator meeting in Washington, “We just got a jobs report showing that we’ve now seen the fastest job growth in the United States in the first half of the year since 1999.”
The Commerce Department reported in April that the GDP grew at a seasonally adjusted annual rate of 0.1 percent in the first quarter, the second-worst quarterly performance since the recession ended in mid-2009.
Hidden in the jobs report released Thursday showing non-farm employment advanced at a seasonally adjusted 288,000 in June, the Labor Department also reported the number of persons employed part time because they were unable to find a full-time job increased by 275,000 in June to 7.5 million.
Manipulated unemployment rates
According to John Williams, an economist known for arguing government reports manipulate “shadow statistics” of economic data for political purposes, drops in the unemployment rate as reported by the BLS have become virtually “meaningless.”
“The broad economic outlook has not changed, despite the heavily distorted numbers that continue to be published by the BLS,” Williams wrote in his subscription newsletter on ShadowStats.com. “The unemployment rates have not dropped from peak levels due to a surge in hiring; instead, they generally have dropped because of discouraged workers being eliminated from headline labor-force accounting.”
Williams recreates a ShadowStats Alternative unemployment rate reflecting methodology that includes “long-term discouraged workers” that the Bureau of Labor Statistics (in 1994 under the Clinton administration) removed from those considered “unemployed,” in any of the government’s unemployment measures.
The BLS publishes six levels of unemployment, but only the U3 unemployment rate gets the press. The headline number does not count as unemployed those “discouraged” workers who are workers without jobs who have not looked for work in the past four weeks because they believed no jobs were available.
Williams has demonstrated that it takes an expert to truly decipher BLS unemployment statistics.
The U6 unemployment rate is the BLS’s broadest measure. It includes those marginally attached to the labor force and the “under-employed,” who have accepted part-time jobs when they are really looking for full-time employment. Also included are the short-term discouraged workers.
Since 1994, however, the long-term discouraged workers, those who have been discouraged for more than one year, have been excluded from all government data.
The only measure BLS reports to the public, as the official monthly unemployment rate, is the headline, seasonally adjusted U3 number.
Williams calculates his “ShadowStats Alternative Unemployment Rate” by adding to the BLS U6 numbers the long-term discouraged workers, i.e., those workers who have not looked for work in more than a year, but still consider themselves to be unemployed.
Williams argues that his ShadowStats Alternative Unemployment measure most closely mirrors common experience.
“If you were to survey everyone in the country as to whether they were employed or unemployed, without qualification as to when they last looked for a job, the resulting unemployment rate would be close to the ShadowStats estimate,” Williams explained to WND.
The headline BLS unemployment rate has stayed relatively low because it excludes all discouraged workers, Williams argues.
As the unemployed first become discouraged and then disappear into the long-term discouraged category, they also vanish from inclusion in the headline labor force numbers. Those workers still are there, however, ready to take a job if one becomes available. They are unemployed and consider themselves to be unemployed, but the government’s popularly followed unemployment reporting ignores them completely.
Here is a more complete unemployment table that includes the seasonally adjusted unemployment percentages for U3 unemployment, as well as the same for U6 unemployment, followed by the ShadowStats Alternative Unemployment rate, comparing April 2013 for March and April 2014:
Increasingly, critics like Williams believe the seasonally adjusted U3 numbers reported by the BLS as the official monthly unemployment rate do not give a reliable picture of the true magnitude of unemployment in the United States.
“Underlying economic reality and the fundamental drivers of economic activity would suggest a general upturn in U.3 in June, but the BLS’s continuing purge of discouraged workers from the unemployment rolls and headline labor force would argue in favor of a lower rate,” Williams wrote in his subscription newsletter June 25.
The BLS definitions conveniently exclude from the definition of unemployed those who have grown so discouraged that they are not actively looking for work in the past year, without distinguishing those who would look for work if there were a reasonable chance their job search might result in employment.
Obamanomics: an economy of part-time jobs
In August 2013, the House Ways and Means Committee documented that seven out of every eight new employees under Obama have been part-time employees, as approximately 90 percent of all jobs created in the U.S. economy since 2009 have been part-time.
“The headlines citing last week’s jobs report as the lowest unemployment rate in years may have been technically accurate, but they are also reminders that looks can be deceiving,” the House Ways and Means report noted.
“The reality, as you dig into the latest jobs data, reveals that few are finding the full-time work they want and need, and many are forced to accept part-time employment.”
To support the argument, the House Ways and Means Committee produced the following table drawn from Bureau of Labor Statistics:
The House Ways and Means Committee linked to an article published Aug. 4, 2013, by Associated Press economics writer Paul Wisemanthat said: “So far this year, low-paying industries have provided 61 percent of he nation’s job growth, even though these industries represent just 39 percent of overall U.S. jobs, according to Labor Department numbers analyzed by Moody’s Analytics.”
Wiseman noted part-time work has made up more than 77 percent of the job growth so far this year, with part-time work defined as being less than 25 hours a week.
Appearing on PBS’s “McLaughlin Group,” in October 2013, real estate mogul Mort Zuckerman said 88 percent of the jobs that had been created that year were part-time jobs.
“A large part of the reason for that number of part-time jobs, which is unprecedented in American history, is because people are apprehensive about the impact of Obamacare and the costs of Obamacare on full-time jobs.”