Review-Journal’s gleeful headline today
You could almost see the AP reporter rubbing his hands in glee as he wrote: “The American job market isn’t just growing. It’s accelerating.”
That was the lede (typesetter jargon for the first paragraph) on the banner story in the Las Vegas newspaper today. It also appeared on The Washington Post website and in countless newspapers across the country.
“Employers added 236,000 jobs in February and drove down the unemployment rate to 7.7 percent, its lowest level in more than four years,” the writer informs.
Mixing stats is almost as bad as mixing metaphors, but everyone does it. I know I have.
You see, the jobs figure of 236,000 is from a Bureau of Labor Statistics payroll survey of businesses and government agencies at more than half a million worksites. But you can’t calculate an unemployment with payroll figures. For that the BLS surveys about 60,000 households to find the population, labor force, employed, unemployed and those not in the labor force at all to come up with the 7.7 percent unemployment rate. A quick guide to this is available online. Both figures are seasonally adjusted.
Jobs growth vs. those not in the labor force. (IBD graphic)
The figures never jibe. The household survey shows an increase of only 170,000 more employed from January to February, not 236,000.
More telling is that the household survey found that from January to February there were 296,000 more people saying they were not in the labor force, though the population grew by 165,000. The labor force itself fell by 130,000.
In the past year 1.7 million have fallen from the labor force, even though the population grew by 2.4 million.
Bottom line: If those 1.7 million had said they were looking for work, the unemployment rate would be 8.8 percent.
Rub your hands with glee over that, Mr. AP writer.
Investor’s Business Daily’s lede editorial today reports “just 58.6% of Americans work today, down from 60.6% when Obama took office. The average over the previous two decades was 63%,” and “the economy is still 3 million jobs below its previous peak. When you factor in population growth, the jobs deficit is more like 10 million.”
Household survey data from BLS
Seasonally adjusted BLS household data