Tuesday, June 8, 2010

Fake Job Market Booming

I have already touched on the fudge factor, birth/death model, that results in the Bureau of Labor Statistics adding jobs that don't exist, but it doesn't hurt to emphasise how absurd this number is. Here's John Crudele with his take on the recent unemployment number and the birth/death model:

First, the basics. The Bureau of Labor Statistics reported that 430,000 new jobs appeared in the US economy in May.

That, of course, would be reason for profound joy, except for the fact that 411,000 of those jobs were temporary, part-time positions created by the US Census.

And we don't really know whether the Census is making its employment statistics look better by churning workers and hiring unnecessarily....

That leaves us with 19,000 "real" jobs -- certainly nothing to rejoice about in an economy where millions are unemployed and 150,000 new jobs a month are needed just to absorb people entering the work force....
...if you are in any way familiar with the job market -- by trying to find work, say, rather than just following government numbers -- at this point in my column you should start taking comfort in the fact that the hopelessness of the situation isn't all in your head.

It's not. In fact, withholding taxes during May declined sharply, confirming what you are feeling down in your gut -- people just can't find work and less taxes, in total, are being forked over to local and federal authorities.

Now, here's what everyone else failed to tell you.

Included in Friday's report were the Labor Department's guesses as to how many new jobs were created by small, newly formed businesses that the government is unable to count. (Unable to count because they probably don't exist.)

These estimates were proven to be totally wrong last year, and the Labor Department was forced to reverse itself by removing 1.2 million jobs from its total in the annual benchmark revision this past February.

This guess has an official name: the Birth/Death model and you can search for it on the Bureau of Labor Statistics Web site. Since this 2009 guesstimate was abysmally wrong, you'd think Labor would tone down its optimism this year, right?

Wrong! The BLS thinks small businesses that it hopes -- but again can't confirm -- exist created 215,000 jobs this May, compared with 186,000 in the same month a year ago. I'll repeat, those 186,000 jobs did not exist last May. So why should the BLS be any more right with this year's guess of 215,000?

The real employment situation may not be improving much, but there's a noticeable boom in the make-believe job market.

1 comment:

  1. it would be very revealing to have actual figures of income tax or SS collection made by feds or states.