This article first appeared at the McAlvany Intelligence Advisor on Monday, August 4, 2014:
Criss Jami, the lead singer of the rock band Venus in Arms, may reasonably be accused of having given the president lessons in deceit, especially as they both live in the city where truth-telling is a lost art. Said Jami:
Just because something isn’t a lie does not mean that it isn’t deceptive. A liar knows that he is a liar, but one who speaks mere portions of truth in order to deceive is a craftsman of destruction.
When Friday’s jobs report came out from the Bureau of Labor Statistics (BLS), President Obama spoke “mere portions” of its truth: “The good news is, the economy clearly is getting stronger”, referring to the BLS headline that in July more than 200,000 new jobs had been created. He added that this was the sixth month in a row over 200,000, “the first time that has happened since 1997.”
All true and yet half a truth. The BLS reported that its “establishment survey” showed job growth of 209,000, less than the 230,000 anticipated by economists, but still pretty good if the number is to be believed. Jeffry Bartash, writing for MarketWatch, said this showed that the economy is on a “hot streak”, having generated more than 200,000 jobs each month for the last six months, adding:
In the first seven months of 2014 the economy has gained an average of 230,000 jobs. That’s the best stretch of job creation since the [Great Recession] ended in mid-2009 and 19% faster than the pace of hiring in 2013.
He said the job growth was in all the right places: mining, construction, manufacturing, transportation and warehousing: all real jobs, making real things for the real economy. Unfortunately, however, a closer look at the fine print, and some footnotes, reveals a different story. First of all, nearly half of those 209,000 jobs came from the retail trade, professional and business services, leisure and hospitality. Most of these are low-paying, often temp jobs. Second, wages are flat and have been for months, not even keeping up with inflation (using government numbers). In a robust economy wages should be rising, reflecting a business owner’s need to bid for talent. Thirdly, long-term unemployment remains flat as well. Bartash was perplexed, noting in his comments that “the economy continues to grow well below its historical average of 3.3% a year.”
If things are so rosy, how does he explain that? Perhaps he’s looking at the wrong set of numbers. The BLS report does two surveys – an “establishment” survey and a “household” survey – which differ widely. Here’s BLS’ official explanation:
The household survey has a more expansive scope than the establishment survey because it includes self-employed workers whose businesses are unincorporated [and are thus excluded from the “establishment” survey], unpaid family workers, agricultural workers, and private household workers.
In addition, the “establishment” survey often double-counts workers. Notes the BLS: “In the establishment survey, employees working at more than one job and thus appearing on more than one payroll are counted separately for each appearance.”
According to the “household” survey – the more realistic, broader, more accurate survey, the one that Bartash and Obama conveniently overlooked – just over 130,000 real jobs were created in July.
Something else neither Bartash nor the president mentioned: the population is growing faster than job growth. A year ago July the total civilian population was 245.8 million while last month it was 248 million, a gain of 2.3 million souls. Over that same period, however, the number of employed grew from 144.3 million to 146.4 billion, a gain of just over two million jobs. Put another way, the economy failed to generate 250,000 jobs that were needed just to keep up with the population growth.
Then there’s the eternally pesky question of the real unemployment rate which, according to the BLS, ticked up slightly last month to 6.2%. But according to the BLS, when all the people who want a job but gave up looking for one are counted, along with those with part-time jobs but wanting full-time work, and those who dropped off the unemployment rolls when their benefits ran out, the unemployment rate is twice the headline rate: 12.2 percent.
Rex Nutting, another writer at MarketWatch, thinks even that number is too low. By his own calculations there are nearly 25 million Americans who would like to find a job or find one that gives them full-time hours. That translates to an unemployment rate approaching 15 percent, a far cry from the headline number of 6.2%.
The big number that neither Bartash nor Obama mentioned is this one: how many Americans have left the workforce under Obama? How many, in other words, not only didn’t have a job but didn’t look for one in the last 30 days? In January, 2009 there were 80,529,000 Americans not in the workforce. Last month there were 92,001,000 not in the workforce: a difference of 11,472,000. Say it right: that’s 11 million Americans who have left the workforce since Obama’s first inauguration.
This from an economy which, according to Bartash is on a hot streak and which, according to the president is “clearly getting stronger.” Alfred Lord Tennyson perhaps said it best of all: when it comes to statistics, “a lie which is half a truth is ever the blackest of lies.” Perhaps Jami, not only a lead singer in a rock band but also a poet, an essayist and an existentialist philosopher, has been reading Tennyson?
CNS News: 11,472,000 Americans Have Left Workforce Since Obama Took Office
BLS.gov: THE EMPLOYMENT SITUATION —JULY 2014
Forbes: Jobs Report: U.S. Economy Adds 209,000 Jobs In July, Unemployment Ticks Up To 6.2%
BusinessInsider: JOBS DISAPPOINT, UNEMPLOYMENT RATE RISES TO 6.2%
MarketWatch: Best part of jobs report: rise in unemployment rate
MarketWatch: U.S. adds 209,000 jobs in July to keep hot streak intact
NPR: President Obama Slams Congress As He Welcomes Economy’s Gains