Job Number Truthers

I guess today is Tinfoil Friday.  Allen West and Jack Welch think the BLS is manipulating unemployment number in response to some Chicago Mafia move to make Obama and the economy look better.  Huhn?  I would think if that was possible they would’ve been doing it all along instead of just suddenly producing a better but still anemic result at the last moment.

The Bureau of Labor Statistics released an unexpectedly strong monthly jobs report on Friday, finding a dramatic drop in unemployment to 7.8 percent and revised the number of jobs added in July and August up from initial estimates. While for most Americans, the growing economy is good news, conservatives immediately expressed their skepticism in the jobs report’s credibility.

1) Minutes after the report was released, Jack Welch, who famously cooked General Electric’s accounting books when he was CEO, accused President Obama of manipulating the numbers to distract from his debate performance.

This is pretty weird. The jobs report was  straightforward this month.

The controversy, if it’s worth using that word, is over the unemployment rate, which dropped from 8.1 percent to 7.8 percent. That’s three-tenths of one percent. That’s what all the fuss is about.

Let’s get one thing out of the way: The data was not, as Jack Welch suggested in a now-infamous tweet, manipulated. The Bureau of Labor Statistics is set up to ensure the White House has no ability to influence it. As labor economist Betsey Stevenson wrote, “anyone who thinks that political folks can manipulate the unemployment data are completely ignorant of how the BLS works and how the data are compiled.” Plus, if the White House somehow was manipulating the data, don’t you think they would have made the payroll number look a bit better than 114,000? No one would have batted an eye at 160,000.

The fact is that there’s not much that needs to be explained here. We’ve seen drops like this — and even drops bigger than this — before. Between July and August the unemployment rate dropped from 8.3 percent to 8.1 percent — two-tenths of one percent. November-December of 2011 also saw a .2 percent drop. November-December of 2010 saw a .4 percent drop. This isn’t some incredible aberration. The fact that the unemployment rate broke under the psychologically important 8 percent line is making this number feel bigger to people than it really is.

What’s even odder is that Romney said the report wasn’t “realistic” and actually misstated the reasons for the change in numbers.

Mitt Romney challenged the significance of the drop in the unemployment rate today, arguing that the “real reality” is that the figure declined because “more and more people have just stopped looking for work.”

“There was a report that just came out this morning on job creation this last month,” said Romney at a rally in the battleground state of Virginia. “There were fewer new jobs created this month than last month. And the unemployment rate as you noted this year has come down very, very slowly, but it’s come down nonetheless.”

“The reason it’s come down this year is primarily due to the fact that more and more people have just stopped looking for work,” Romney said. “And if you just dropped out of the work force, if you just give up and say look I can’t go back to work I’m just going to stay home, if you just drop out all together why you’re not longer part of the employment statistics.”

“So it looks like unemployment is getting better, but the truth is, if the same share of people were participating in the workforce today as on the day the president got elected, our unemployment rate would be around 11 percent,” said Romney. “That’s the real reality of what’s happening out there.”

This morning’s jobs report released by the Bureau of Labor Statistics found that the nation’s unemployment rate dropped from 8.1 percent to 7.8 percent, the first time it’s been below 8 percent in four years. September saw the addition of 114,000 jobs, according to the report, a decrease from the 142,000 that were added in August, and  statistic that Romney emphasized on the trail today.

Yes, random variation is quite suspicious and unrealistic.  Here’s the labor force numbers straight from the report. Romney told an audience the exact opposite had happened.  There is no way he actually read the report.  Well, that or he was lying again.

The civilian labor force rose by 418,000 to 155.1 million in September, while the labor force participation rate was little changed at 63.6 percent. (See table A-1

The best article I’ve seen today explaining the job situation and the Welch Tin Foil hat theory is here at The Atlantic.

A number of conservatives have suggested the 873,000 household figure is wildly implausible, if not an outright conspiracy to help Obama on the part of the BLS. This is nonsense. As Greg Ip of The Economist points out, the employer and household numbers often diverge over the short-term, but they mostly match up over the long-term. And they still do if we look at the past three months. The employer survey showed job gains of 181,000 in July, 141,000 in August and 114,00 in September, for an average gain of 146,000. The household survey showed job losses of 195,000 in July, 119,000 in August, and job gains of 873,000 in September, for an average gain of 186,000. If you can’t see the conspiracy there, well, you just might be mathematically literate.

Wow. Is this the silly season or what?