Op.Ed.

Smoke and Mirrors

On the first Friday of each month, the DOL (Department of Labor) announces the number of jobs created or laid off and the related unemployment rate.  We all know it has been very unfavorable for the last few years in the 9%-10% rage as a result of the deep recession the U.S. has been in from 2008-2009.  It has not been a good metric for the current administration because no incumbent president has ever been re-elected with an unemployment rate over 8%. 

Over the last couple of months it has been announced that over 200,000+ jobs were filled to bring the unemployment rate down to 8.3% from around 9.1% last summer.  It is very good news that some companies are hiring additional workers, well over the 100,000 level of last year.  This will only help the economy as more families will have more income to spend.  On the surface this is starting to look good for the President.  But if one reads the footnotes and does some basic analysis, the headline message is not as good as Washington would like you to believe.  The footnote is that the DOL increased the civilian employment percentage of the population by .2% up to 58.5%.  This added 620,000 people to the denominator.  What is the impact?  The larger denominator will help reduce the calculated unemployment rate. 

If that is not enough, the DOL has two other adjustments it makes to both the numerator and denominator.  We all know the 77 million baby boomers are approaching retirement with 10,000 turning 65 everyday.  So how is this adjustment handled?  The DOL is removing that number from the unemployed and workforce on a periodic basis.  This adjustment has a much more significant effect on the smaller numerator resulting in a lower unemployment rate headline.

Finally, the DOL removes the number of people who drop out of the workforce.  (If they dropout, they are not looking for a job.  Where are they getting income to live off?  Are they just lying on a beach drinking beer purchased with food stamps or some other government dole?)  Any way, this adjustment just reduces the numerator resulting in a lower unemployment rate calculation. 

It is a given that the current administration has the highest percentage of the population on some form of subsidy and over 50% do not pay any income taxes.  It is also given that the current administration wants to get re-elected and take back Congress.  Therefore the unemployment rate must improve and come down in this election year.  Is the DOL using smoke and mirrors?  Things may not be as they appear.  Can one really trust the calculations and announcements?  With just a little manipulation it is possible to make statistics support whatever argument you want.  Political silliness!!!