Another 'say what?' set of labor statistics from BLS

Monday, March 12, 2007 at 02:26 PM

The Bureau of Labor Statistics (BLS) is the agency that issues the monthly reports on jobs, employment & unemployment, wages, and a host of other information on our collective economic health.

In keeping with the cheerleader mentality that views public confidence as more important than the reality on which the confidence is based, the BLS issued its report on February employment, and mainstream publications like the NY Times published stories based on various pieces of that report.

From the report itself (reformatted):

Month to month change for Jan '07 to Feb '07 for:

Civilian Labor force...............-190,000



Not in labor force.................+374,000

So almost 400,000 additional people moved to the category of "not in the labor force," while almost 200,000 left the category of in the Civilian Labor Force. Those two numbers alone would indicate that the reported "drop" in unemployment % (from 4.6 to 4.5) is likely to be misleading. Unemployment % is calculated as number of unemployed divided by number in the labor force. Absent the 374,000 who left the labor force, the denominator of the unemployment % calculation would have been larger.

Is it large enough to account for the entire .1% drop in unemployment rate? I'm not sure. It's difficult to tell exactly what the report's categories mean, and whether they directly correspond to the categories used to compute the unemployment %. But I do know how to use a calculator to see how these civilian labor force changes change some things.

In Feb, there were 6,685,000 unemployed, from a civilian labor force of 153,784,000, or 4.347%

Add back in the 374,000 who left the labor force, and would presumably be unemployed (add the 374,000 to both the number of unemployed and the civilian labor force) and the numbers are:

7,059,000 unemployed out of 154,158,000, or 4.579%.

4.579 minus 4.347 is a reduction of .232%.

Another way of looking at this is that the January figure of not in the labor force of 77,676,000 increased by .481% to get to the Feb total of 78,050,000. That's an increase of almost half of one percent.

None of this is even mentioned in the analytical text accompanying the tables. Not even mentioned.

Compounding the problem, the NY Times report headline emphasizes three things:

More finding work in U.S.

Jobless rate off (down).

97,000 added to payrolls

An accompanying chart is captioned "Job Growth Remained Healthy in the United States."

The rather odd reporting continues in the Times, which pairs the U.S. economic story with one on Europe, headlined "Jobs Go Begging in Europe.", This is accompanied by a chart which is captioned "Even in Europe, Skilled Labor is Hard to Find" but the chart of the % of European companies estimating that labor availability is limiting their production does not really show any such increase in labor scarcity. It shows the % of companies reporting labor shortages to be roughly the same as in the beginning of 2000 and the end of 2001. Only when compared to 2002-2005 is there an increase in labor scarcity, a fact explained by the drop in labor scarcity from 2002-2005.

The statement of the BLS Deputy Commissioner, which is issued at the same time as the Feb stats, also contributes to the "good news" spin. It says:

"Payroll employment was up by 97,000 over the month, following gains of 226,000 in December and 146,000 in January, as revised." So we've got a "new jobs" 3-month trend line of 226,000 dropping to 146,000 dropping to 97,000. Yet the NYT says "More finding work" and "Job Growth Remained Healthy."

Unless I'm really missing something here, the mainstream business press really needs to explain exactly where the good news was in this monthly report.