Is the United States Department of Labor Manipulating Its Data?ByRaymond D. Matkowsky
The Bureau of Labor Statistics (BLS) stated in its latest Employment Situation report that the unemployment rate declined by 0.9% to 10.2%. The number of unemployed workers in July 2020 fell by 1.4 million people to 16.3 million. This is an absurd statement! It is nowhere near reality. Also according to the report it includes as employed, 27,000 temporary federal workers that were hired to work on the 2020 census.
A different section of the Labor Department separately reported that people on state and federal unemployment insurance increased to 31.5 million. Either we have 15.2 million people fraudulently collecting unemployment insurance or the 16.3 million numbers that the department put out in its July report is suspect or a figment of someone’s imagination. The BLS credibility is on the line. They were either incompetent in not correcting their data or they were playing politics.
Recently for the week of August 10, 2020, we learned that there were first time unemployment claims of 1.1 million. There was an additional filing of 1 million first time claims the week of August 17, 2020. New unemployment filings are increasing not decreasing as the federal government claims.
When confronted, the department admitted a known reporting error for May 2020 that may have resulted in an unemployment level of around 20%. The same error was first noted in the April 2020 report. Rather than the 14.7% stated, unemployment was probably 19.5%. The stated reason for not correcting the error was that the Department of Labor did not want to be accused of politicizing the data. If the present situation isn’t politicizing, what is it?
This came to light because of a quirk in timing. Normally unemployment claims are reported weekly on Thursdays. The monthly Jobs report is issued on Fridays. Because of the July 4th holiday, both reports were issued on the same day making it easy to compare them. The numbers did not complement each other.
With the June report, 155.76 million people were in the workforce. Of this amount, 120.17 million people were still working. Subtracting the two numbers indicates that that 35.6 million people are unemployed. This gives an unemployment rate of 22.8%.
I am sure that everyone would agree that the department has some explaining to do.
Why Is It Important
First of all, every citizen expects or should expect accurate, not sugar coated and not politicized economic data from a taxpayer supported government agency. The purpose of the department is to analyze and accurately report on the state of this portion of the economy. Not to do so skew all the other economic data collected.
Almost every business uses these numbers to determine their future production needs and schedules. If a company looks at an unemployment level of 10% and from past history determines that they will sell x amount of units or fill so many tables, how much will they sell or fill if true unemployment is at 20%. It would probably be much less, a waste of resources and results in a large inventory of unsold goods. Someone will have to pay to store this inventory.
Henry Ford once said that when he lays off his workers, he also lays off steel mill workers and tire manufactures too. Most occupations are interconnected in some way. There is a ripple effect throughout the economy. If you underreport a certain segment of the unemployed, you most assuredly underreport many other sectors.
20% unemployment shows that we are nowhere close to a recovering economy. You cannot know whether policies are working to improve the economy unless you know starting point accurately. If the starting point is not known, you cannot formulate an affective stimulus. If it is known, you need to determine to what degree the stimulus is helping. You cannot make good policy decisions when they are based on faulty data.
As a business owner or manager, do not take the headline number propagated by the department and spread by the media (I know this to be true first hand) to be definitive. Dig deeply into the information and draw your own conclusions. Base your future business prospects on those conclusions.
If you have any further suggestions, do not keep it to yourself. Help your fellow readers!
If you have any questions, comments or suggestions drop me a line at rdm@datastats.com.
|
