03 February 2012

Lies, Damn Lies, and the BLS [updated]

That's Bureau of Labor Statistics. The headline over the column in my dead trees version of the NY Times reads: "Stagnant Job Growth is Expected in Report". Yet, the number this morning was glorious. How does that happen? Why did the numbers come in so much better than expected? Were the numbers figured? Let's see whether we can find out.

First: these numbers are estimates from sample surveys. The only population number related to employment is the weekly UI filing number. Everything else is an estimate from some kind of survey.

Second: as every fourth grader knows, a percent is just a decimal fraction with the point shoved over two places to the right. And every fourth grader knows that a percent goes up whenever the numerator goes up or the denominator goes down. Or both.

This is real time, in the sense that I haven't looked at the numbers. I'm going to go out on a limb and say that, at least, the denominator went down. That number is the estimate of the total labor force. That number has been declining through 2011 - 2012 (here is the table and this is the almost raw data), the difference being seasonal adjustment. Seasonal adjustment of economic data is still controversial.

Now, have a look at the next table. What we see is that the number not in the labor force is up, as is the number working multiple jobs.

Table A-15 is where the doubters gather. U-6 is the number cited by both Left Wing and Right Wing sympathizers as justification for either blaming all those lazy poor people who can't seem to stay put in Mitt's safety net, or blaming Mitt and Friends for slicing away at the safety net. The not seasonally adjusted is the number which matters. And it's up a tad from December to January.

I rest my case.

Today's Times has a longer piece, complete with interviews, which I don't get to do from my drafty Frost Belt garret. As well, I see that I wasn't sufficiently explicit about seasonal adjustment. What I expect happened is that the adjusted numbers (the ones nearly always quoted) overstate the level of employment. One of the reasons to adjust the numbers is truly seasonal: weather is lousy here in the Frost Belt in January, and the purpose of adjustment is to make a level playing field, month to month. Since the Frost Belt last month was more like October (the January "season" was largely absent), the quoted number got a double dose. I don't expect to see it continue, alas.

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