Figures don't lie. Except when they do: Unemployment down to 7.8%! Don't be fooled.
After a little research, I have learned that the employment statistics released every month are actually based on ....drum roll, please... Polls! There are two employment surveys each month: One of businesses (in which 410, 000 businesses report) and a large phone survey of households (in which 60,000 homes are called). The first number, the payroll survey, tells us the net job creation in a month. The last survey is used to provide the unemployment figures.
Now, according to the household survey, 873,000 jobs were created last month. That's not unprecedented; it happened last in 1983. However, when that happened in 1983, in the middle of an economic boom, the country's gross domestic product was growing at a blistering 9.3 percent rate. And jumps nearly as big as this one have occurred in the past, but when the growth rate was around 5 percent.
The current rate of GDP growth is estimated at something like 1.3 percent.
So, you can buy that this number is real, and we all just missed the signs of a 9.3 percent growth spurt, (does it FEEL like an economic boom to YOU?) or maybe this is just an "implausible statistical quirk," as one analyst called it. Every poll and that's what the household survey is, a big poll is subject to the occasional outside-the-margin- of- error error. In fact, over the past six months, the household survey has shown wide fluctuations:
April, May, June, July:
-169,000, +422,000, +128,000, -195,000
Those fluctuations suggest that it is hardly a reliable indicator.
The bottom line is the economy simply did not add 873,000 jobs last month. No way. The payroll survey says it added a mere 114,000. There is absolutely no confirmatory data suggesting that the 873,000 number is right and the 114,000 number is wrong.
And regardless of which "poll" you choose to believe, here are the important numbers that you need to keep in mind:
1. For every job created in September, exactly 3 people abandoned the workforce entirely.
2. The broader measure of underemployment is unchanged at 14.7 percent.
3. Even accepting the household survey, the Labor Department reported "The number of persons employed part time for economic reasons rose from 8.0 million in August to 8.6 million in September. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job."
4. And take-home pay? Over the past 12 months, average hourly earnings have risen by just 1.8 percent. When you take inflation into account, wages are flat to down.
So, "Happy days are here again?" Hardly.
Pamela L. Shipman
Submitted by Virtual Newsroom