Oct 07 2009

Unemployment Worse Than Being Reported By News Media

[Optional Subtitle: Obama’s 1 Million ‘Saved’ Jobs Discovered?

Below I think we have found Obama’s mythical 1 million ‘saved’ jobs. They are a statistical ‘adjustment’ made to the unemployment data by bureaucrats that add tens of thousands of phantom jobs to the unemployment data each month]

The unemployment numbers that came out for September were pretty bad at 9.8% (red lines – U3 – in the chart below), which was a 26 year high . When we look at the underemployment rate (blue lines – U6) we find an even more staggering number 17%. As tragic as this data is, this is not the complete picture – not by a long shot. (Click to enlarge)

The government defines the two metrics U3 and U6 thusly:

  • U3: Total unemployed, as a percent of the civilian labor force (official unemployment rate)
  • U6: Total unemployed, plus all marginally attached, plus total employed part time for economic reasons, as a percent of the civilian force plus all marginally attached workers

Note when the faux stimulus bill was passed (green dotted line) and how it had no effect on job creation. That is because over 95% of the jobs program money in the ‘stimulus bill’ has yet to get out of the federal bureaucracy (see here for data).

Sadly, this turns out to be the rosy part of the whole picture, because apparently half a million unemployed workers are not included in the latest data - as reported by the AP:

The rate would have been higher if 571,000 people hadn’t dropped out of the labor force, which many did in frustration over failing to find jobs.

That leaves 15.1 million Americans out of work, a huge pool of people.

Some simple calculations shows that 571,000 is 3.8% of 15 million. Therefore a more accurate unemployment rate, including these half million job seekers off the government radar, would be 1.038 * 9.8 = 10.2% unemployment (rounded up from 10.1724).

Even worse, more and more people are clinging to the last rung of the unemployment safety net, which is the Emergency Unemployment Compensation program (EUC) (Click to enlarge):

There are 3.725 million Americans on EUC as reported by the Department of Labor last week. This is over double the number since the stimulus bill passed, which means what few ‘new and saved’ jobs that may be out there, they are insufficient to lower the growing pool of unemployed and underemployed workers.

My guess is those 571,000 who left the workforce last month are the first of many waves who are falling off the safety net because few, if any, new jobs are being created (if they were, the length of time on unemployment and the number of people on EUC would be dropping, not sky rocketing).

But as if that is not bad enough, it seems there are 100’s of thousands of fantasy jobs now in the employment numbers, jobs that will disappear come January 1, 2010:

I’ve been writing in this column for years that the way the Labor Department calculates the number of jobs in this country is deceptive.

In 11 of the 12 months, the government adds massive numbers of jobs — sometimes more than 100,000 — that it thinks, but can’t prove, exist.

So the Labor Department, essentially, lied again when it reported last Friday that only 263,000 jobs disappeared from the economy during September.

As shocking as that figure was, the more truthful number was actually worse because there were 34,000 of these phantom birth/death jobs included in the count. Nearly 1 million of these non-existent jobs have been added to the government’s count since the beginning of 2009, mostly this past spring.

The Labor Department is not only still using this model, but it nearly doubled the number of phantom jobs for this September compared with the same month last year.

Woah, here Nelly! Could these 1 million jobs be the same 1 million jobs President Obama claimed were ‘created’ (clearly not given the data) or ‘saved’ (something not measured, a mythical statistic)? They were ‘created’, in the sense they were created out of thin air.

The Department of Labor adjusted the September number jobs number by 34,000 jobs, which meant it should have reported 297,000 jobs lost in September. That is an 11% adjustment in just one month! Not surprisingly, in President Obama’s and the Liberal Democrats’ favor.  It seems that Global Warming is not the only topic where government cooks the data.

This admission means the economy is doing much worse than reported. If I recalculate the unemployment rate I derived above by adding another million unemployed to the 15.571 million  I get an unemployment rate of 10.8%! That is a staggering number, but it does explain how over 15 states are running over 10% unemployment, many are well over 10% (as of August 2009). Again, note how the stimulus bill had no impact on the unemployment rate for these states (half of which were under 10% at the time it passed).

One final key point from the article – these phantom jobs will be wiped from the record at the end of this year:

Then, on Friday, Feb 5., Labor will report the number of job losses for the month of January.

This is the one month in every year that the birth/death model removes jobs from the economy — lots of them.

Live by the false data, die by the false data.

And is if that is not bad enough, the administration and congress are preparing for a long and ugly year of unemployment to the 2010 elections:

With unemployment expected to rise well into next year even as the economy slowly recovers, the Obama administration and Democratic leaders in Congress are discussing extending several safety net programs as well as proposing new tax incentives for businesses to renew hiring.

“Well into the next year” – which means through spring. I said this many times since February when the faux stimulus bill passed and the Dems made all these exaggerated promises: The country will be living through a bleak economy until the liberals give up on the fiction that government make-work programs can stimulate our economy and instead go with tax cuts to individuals and businesses.

It is pathetic that it has taken 8 months of failure, and the realization we have probably another 8 months of suffering ahead of us, for the liberals to start even considering the proven method of economic stimulus through tax cuts (proven under Kennedy, Reagan and George W Bush). Just don’t hold your breathe on them actually admitting they screwed up and taking any real stimulus actions:

But officials emphasized that a decision was still far off and that in any event the effort would not add up to a second economic stimulus package, only an extension of the first.

Clearly, the liberal Democrats are also planning their BS campaign to try and snow the voters on how they made huge progress in ‘creating and saving’ jobs all this time. Too bad we now know all that ‘creating and saving’ was were on fictional jobs, which is befitting the fictional success they will be claiming.

7 responses so far

7 Responses to “Unemployment Worse Than Being Reported By News Media”

  1. kathie says:

    It is clear that people who run companies, large and small will not hire anybody until they know what it will cost them. This is a obvious statement that Obama just doesn’t seem to understand. As Obama and congress dither over Health care Insurance and Cap and Trade, and the EPA continues to regulate further everyone for breathing, employers are waiting. The wait pushes more people to the brink. How pathetic is this situation?

  2. AJ,

    The bottom line is that American unemployment is getting worse via business disinvestment — running down — of it’s capital so it can have reserves of cash to make up for a lack of credit and as a edge against uncertainty.

    The unwillingness of the Obama Admistration to deal with the mortagage credit bubble, because the writting off of bad loans would hurt blue state Democrats more, is the heart of the reason why there is no loanable credit.

    The unwillingless of higly credit worthy small businesses to apply for credit is due to the financial uncertainty caused by Obama domestic program priorities will cause huge unanticipated costs for any business expansion.

    Obama’s _inactions_ here are a decision for what economic future we will have.

    So we now have a Leftist domestic policy positive feedback loop for reduced economic activity that is cratering tax revenues at all levels of American government just as certainly as writting off bad mortages without lancing the boil of bad loans.

  3. WWS says:

    Leftist domestic policy positive feedback loop – aka, the death spiral. Until something drastic is changed we have not even the slightest hope of breaking free, and to me everything suggests that the descent is going to dramatically accelerate by the end of this year.

    A comment on the supposed “second stimulus” which isn’t a stimulus: Read the article proposing it, and you’ll see that all they are talking about is extending current plans that are set to expire.

    They’re right, continuing to do the same thing while doing nothing new is certainly no “stimulus”. But it does drain quite a few more billion dollars from the treasury for – what? For programs that have already proved that they will create no jobs and have no effect at all on economic recovery. Why do I say proved? Because all of these programs are already in place, and it ain’t happening.

    That’s what makes the current situation so hopeless – even the radical fixes being considered have not the slightest chance of changing the situation, which anyone with even the slightest bit of sense can prove with 5 minutes effort.

    And it hasn’t even occurred to them that playing with the unemployment numbers doesn’t actually do anything, since unemployed people have a *real* and *daily* negative impact on the economy whether you count them or not. Obama and Axelrod still live in a world where image is all that matters, not reality, and they keep believing that if they can just manipulate the image enough, the reality will come around. News flash – only psychotics believe that’s the way the world really works.

    That’s not to say there’s no fix at all for things, but the current pantheon of jokers has got to be swept from power before there is even a chance of anything positive happening.

    “The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane.”
    Marcus Aurelius

  4. MerlinOS2 says:

    Another factor causing people to leave the work force is seniors who see little to no chance of being rehired are biting the bullet and applying for their social security or even disability coverage.

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