Reply: Playing with unemployment statistics in the USA

President Obama’s political campaign has publicized as a triumph of his economic policy some alleged results showing a reduction of the unemployment rate in September 2012. He argues in his campaign adds that "total unemployed", as a percent of the civilian labor force, fell from 8.1% in August to 7.8% in September.

That assertion implies an increase in the total employed work force of some 800,000 in one month. That means that people who found employment minus those who lost their jobs result in a positive 800,000 number. It is hard to believe that nearly a million more jobs opened in one month that those closing its doors! And the facts of a simple arithmetic test will not give such a number if we follow other figures registered by the Bureau of Labor Statistics.

These statistics include two important calculations. One is identified as U-3 or the “official unemployment rate” and the other is identified as U-6 by giving the “Total unemployed”. Let us have a look at U-6, described by the Bureau as "Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force":

Sep.2011: 16.4%
May 2012: 14.8%
Jun.2012: 14.9%
Jul.2012: 15.0%
Aug.2012: 14.7%
Sep.2012: 14.7%

If we are to take the September figure without question, the Bureau gives the same numbers for August and September, not a reduction of the unemployment rate.

However, the total registered US work force was just over 143 million in September, while the “total unemployed” figures according to the U-6 Bureau of Labor Statistics parameters add-up to just over 22.75 million. A simple arithmetic calculation results in a 15.9% total unemployed figure. Why is it different than the Sept. figure in the chart? Let us find out.

If we use instead the U-3 parameters used by the Bureau of Labor Statistics for the 7.8% unemployment rate announced for September 2012, we find that the Bureau has a figure of just over 12 million officially unemployed (officially means those registered in the unemployment rosters). Such figures result in an 8.4% unemployment rate. Why is there such a discrepancy? Simply because those no longer looking for work “officially” are just not counted as unemployed. And that applies to both the U-3 and the U-6 rates.

During political presidential campaigns it is to be expected that the incumbent candidate will try to enhance whatever the government is doing well, but a little more honesty is to be expected. It is to be expected that the candidate uses what is good for his/her campaign, but it is not acceptable that figures are blatantly doctored.