The Bureau of Labor Statistics (BLS) February, 2012 Employment Situation report is out. The “official” measure of the nation’s unemployment rate is unchanged at 8.3%. You can read it here. Now the blogosphere will delve into the numbers and issue their interpretations as to their meaning. We’ve witnessed the generally steady decline in the unemployment rate for months now and the statistics have revealed the reason for the drop has been those dropping out of the labor force and no longer counted rather than actual job creation.
The February 2012 report is different from the recent pattern. The January 2012 report showed that 1.177 million people were added to the “not in labor force” category. The February 2012 report shows a decrease of 310,000 in the same category. That’s quite a turnaround. Let’s look closer.
From December 2011 to January 2012, we added 284,000 non-farm payroll employees, had 1.177 million drop out of the labor force and the unemployment rate dropped from 8.5% to 8.3%. From January 2012 to February 2012, we added 227,000 non-farm payroll employees, had 310,000 fewer people drop out of the labor force and the unemployment rate stayed the same. Hmmm. We created 57,000 less new non-farm payroll employees than the month before. We had a swing in the “not in labor force” category of 1.487 million people. Yet the rate was unchanged. Confusing?
BLS methodology always is. Here’s some further confusion. The BLS Establishment survey shows an increase of the civilian non-institutional population of 3.584 million. What is this statistic? From the BLS.
The civilian noninstitutional population consists of persons 16 years of age and older residing in the 50 States and the District of Columbia who are not inmates of institutions (for example, penal and mental facilities and homes for the aged) and who are not on active duty in the Armed Forces
To be clear, this is not the overall population increase of the country, only the people included above. Now, you can’t get monthly revisions to the actual population numbers from the U.S. Census Bureau, so the BLS institutes a model in its methodology to estimate these numbers. For a comparison, consider the Federal Reserve of St. Louis (FRED). Take a look at this chart of their estimate of the TOTAL population of the country, not just those of working age. If you’ll scroll down, you can see their source is also the U.S. Census Bureau. If you look to the left of the chart, you can see the recent month-by-month changes.
I looked at their data and saw an increase of the total U.S. population from December of 2010 at 310,760,000 people to December of 2011 at 313,020,000. The difference is 2.26 million people. How can this be? The BLS and FRED both use U.S. Census Bureau numbers, yet the BLS says the civilian non-institutional population alone expanded by 3.54 million in the last year and FRED says the entire population increased 2.26 million. A difference of 1.28 million people. In summary, the BLS says the population is expanding much faster based upon their methodology than other Federal entities utilizing the same source data.
What to take away from this? The same thing I say over and over. The data is unreliable regardless of whether it’s positive or negative. BLS methodology uses modeling and surveys extensively to issue reports that determines policy and, in some cases, elections. That’s a serious concern. Anyone should be able to extract numbers from these reports to put their candidate or party in a positive light. The end result is invalidating the BLS entirely.