Fudging Unemployment Statistics; Conflicting Government Measurements Skew Jobless Rate

The Washington Times (Washington, DC), February 10, 2010 | Go to article overview
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Fudging Unemployment Statistics; Conflicting Government Measurements Skew Jobless Rate


Byline: THE WASHINGTON TIMES

Last week's new unemployment numbers were bittersweet. At the same time the Bureau of Labor Statistics was declaring that the unemployment rate had declined slightly, to 9.7 percent, the government also was announcing that the economy had lost about 824,000 more jobs during the recession from April 2008 to March 2009 than Americans previously had been told. If this sounds like bureaucratic doublespeak, it is.

The government doesn't really know the exact number of people with or without jobs. The number reported each month is based on surveys, and surveys often can have methodology issues. As it turns out, the surveys estimating the number of people with jobs reported over the past couple of years suffered from some really big problems. That's where government falsely claiming 824,000 more jobs than actually existed comes into play. Unfortunately, those adjustments have so far been made only through March 2009, and there are strong reasons to believe the survey data since then also need to be adjusted downward.

Economists measure the number of jobs two different ways: the establishment survey that asks about 370,000 employers how many people they are employing and the household survey that asks about 110,000 people each month whether they are working. The establishment survey is often given more weight because about 40 million Americans work for the companies surveyed, a lot more than the 110,000 people interviewed in the other survey. But 110,000 people still make up a huge sample (a large survey for a presidential election might involve 2,000 to 3,000 people), and it is hard to ignore the results. The household survey is also what is used to calculate the unemployment rate.

The problem is that the two surveys have reached different estimates, with the household survey showing a significantly greater drop in the number of jobs than the establishment survey.

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