Thursday, October 11, 2012

Jack Welch: I Was Right About That Strange Jobs Report

Welch is correct in an article he wrote for WSJ that the data collected by the Bureau of Labor Statistics is not collected in as precise a fashion as most believe. But note that Welch in his article fails to mention the large gain in jobs comes as a result of teachers going back to work and the complications with that data (See here and here). The big question as far as I'm concerned is whether the BLS will correct its data re:teachers, in its November data, as it has done in the past. The next BLS employment data is scheduled to be released November 4, two days before the election.

Here's Welch:
Imagine a country where challenging the ruling authorities—questioning, say, a piece of data released by central headquarters—would result in mobs of administration sympathizers claiming you should feel "embarrassed" and labeling you a fool, or worse.

Soviet Russia perhaps? Communist China? Nope, that would be the United States right now, when a person (like me, for instance) suggests that a certain government datum (like the September unemployment rate of 7.8%) doesn't make sense.

Unfortunately for those who would like me to pipe down, the 7.8% unemployment figure released by the Bureau of Labor Statistics (BLS) last week is downright implausible. And that's why I made a stink about it.

Before I explain why the number is questionable, though, a few words about where I'm coming from. Contrary to some of the sound-and-fury last week, I do not work for the Mitt Romney campaign. I am definitely not a surrogate. My wife, Suzy, is not associated with the campaign, either. She worked at Bain Consulting (not Bain Capital) right after business school, in 1988 and 1989, and had no contact with Mr. Romney.

The Obama campaign and its supporters, including bigwigs like David Axelrod and Robert Gibbs, along with several cable TV anchors, would like you to believe that BLS data are handled like the gold in Fort Knox, with gun-carrying guards watching their every move, and highly trained, white-gloved super-agents counting and recounting hourly.

Let's get real. The unemployment data reported each month are gathered over a one-week period by census workers, by phone in 70% of the cases, and the rest through home visits. In sum, they try to contact 60,000 households,asking a list of questions and recording the responses.

Some questions allow for unambiguous answers, but others less so. For instance, the range for part-time work falls between one hour and 34 hours a week. So, if an out-of-work accountant tells a census worker, "I got one baby-sitting job this week just to cover my kid's bus fare, but I haven't been able to find anything else," that could be recorded as being employed part-time.

The possibility of subjectivity creeping into the process is so pervasive that the BLS's own "Handbook of Methods" has a full page explaining the limitations of its data, including how non-sampling errors get made, from "misinterpretation of the questions" to "errors made in the estimations of missing data."

Bottom line: To suggest that the input to the BLS data-collection system is precise and bias-free is—well, let's just say, overstated.

Even if the BLS had a perfect process, the context surrounding the 7.8% figure still bears serious skepticism.

Read the rest here.


  1. Jack Welch is a fucking moron!

    23.8% unemployment, everything else is noise.

    1. For accuracy's sake, the unemployment rate is 22.8%, not 23.8%.

      For comparison, the average unemployment rate during the First Great Depression was 17.0%, with a peak of 25%. The Second Great Depression has a peak of 23.0%, with an average of over 20%, so far. The SHTF hasn't happened yet so expect those numbers to go up.

  2. >are gathered over a one-week period by census workers, by phone in 70% of the cases, and the rest through home visits.

    I thought data gathering Census workers were temporary part-time workers themselves? Perhaps not, maybe they were counting projected 2020 Census Worker hires to come up with the print below 8 percent.

    If nothing else, this blowup over BLS employment numbers lifts the cover over the process of govt. statistics and how inaccurate they likely are, even if no agenda in one direction or another.

    I am waiting for the calculation of inflation, how it has changed, and does change(chained CPI anyone) to 'meet requirements' becoming public chatter next.

  3. All government generated statistics are lies. How could it be otherwise. Look at the nature of the institution. It's a brutal, arrogant, murderous and deceptive extortion racket that treats it's victims worse than lab rats. That doesn't seem like the basis for a relationship of trust.

    As a hypothetical, what if the local crime lord published statistics purporting to show that crime was down within it's area of operation. Who would believe it? Only a fool, that's who. So why should we believe anything the government tells us, especially when it involves political ramifications one month before an important election.

  4. Jack Welch thinks there is gold at Fort Knox! What an idiot!