Behind September’s BLS 7.8 percent Unemployment Rate: Omissions, Deceit and Deception

Published on October 17th, 2012

In February, my CAPS blog titled “How the White House Plans 0 Percent Unemployment by November,” turned out to be frighteningly prescient. Today, eight months later, the Bureau of Labor Statistics September report indicated a 7.8 unemployment rate, down 0.5 percent from the date of my post. Read my complete blog here.

Not surprising given that about 22 million Americans are unemployed or underemployed, the BLS data raised eyebrows every where. Jack Welch, Jr. General Electric’s Chairman and Chief Executive Officer from 1981-2001, accused the White House of lying in order to campaign on stronger job numbers. As Welch famously Tweeted:

“Unbelievable jobs numbers…these Chicago guys will do anything…can’t debate so change numbers” [Chicago Guys Will Do Anything, by Betsi Fores, Daily Caller, October 5, 2012]

Although President Obama’s defenders like Secretary of Labor Hilda Solis immediately attacked Welch, he’s unquestionably correct. Since data collectors don’t include those who have given up their job search or are marginally employed, the U6 categories, published unemployment rates could be in continuous free fall as more people abandon hope.

Of greater concern is that mainstream analysts that may talk about percentages of unemployed rarely discuss what is and what isn’t behind the raw numbers.

First, what kinds of jobs are being created? The answer is grimmer than you might suspect. According to a study compiled by Northeastern and Drexel Universities and the Economic Institute Policy Institute, recent graduates are now more likely to work as "waiters, waitresses, bartenders and food-service helpers than as engineers, physicists, chemists and mathematicians combined."

Second, job creation—however optimistically it may be presented— isn’t keeping up with population growth.

Third, who is benefiting from whatever few jobs may be created? Edwin S. Rubenstein, an economist and adjunct fellow at the Manhattan Institute, calculated that from January 2009 to September 2012, foreign-born employment rose 1.5 million while native-born employment fell by 0.74 million. Read Rubenstein’s research here.

Fourth, pursuant to point number three above, the Pew Hispanic Center estimates that nearly 7 million aliens living in the United States hold payroll jobs. Congress blocked the Legal Workforce Act that would have mandated E-Verify and thereby removed aliens from those jobs.

Fifth, President Obama’s Deferred Action for Childhood Arrivals will grant work authorization to as many as 1.8 million young, previously unemployable aliens.

Roll points one through five into one big ball to understand why the September BLS report is a combination of discreetly omitted facts blended with a smattering of truth to come up with a 7.8 unemployment rate that’s conveniently timed as November rapidly approaches.

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