Thread: Jack Welch accuses Obama of cooking jobs numbers

Jack Welch accuses Obama of cooking jobs numbers

Posted by Rachel Weiner on October 5, 2012 at 9:14 am

]Jack Welch

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@jack_welch
Unbelievable jobs numbers..these Chicago guys will do anything..can't debate so change numbers

5 Oct 12

Immediately following of a jobs report showing unemployment below 8 percent for the first time in four years, former General Electric CEO Jack Welch accused the White House of skewing the numbers to help President Obama win.

Labor Secretary Hilda Solis called Welch’s comments “ludicrous” on CNBC Friday morning, saying, “I have the highest regard for our professionals who do the calculations.”

As The Post’s Eli Saslow reported in March, career professionals at the Bureau of Labor Statistics come up with the monthly jobs report in total secrecy, walled off from all political staff:

They would do it all with absolute discretion during an eight-day security lockdown, signing confidentiality agreements each morning, encrypting their computers and locking data into a safe every time they walked 10 yards away to use a bathroom. “Is your workstation secure?” asked a sign in the hallway.

Like News Corp. CEO Rupert Murdoch, Welch wants Mitt Romney to win but has a habit of giving the Republican candidate unsolicited (and perhaps unwelcome) advice. This time, he’s not getting much support.

Former Bush administration spokesman Tony Fratto quickly weighed in:

TonyFratto
BLS is not manipulating data. Evidence of such would be a scandal of enormous proportions & loss of credibility.

5 Oct 12

Former Obama administration economic adviser Austan Goolsbee was more direct:

Austan_Goolsbee
love ya jack but here you've lost your mind @jack_welchUnbelievable jobs #s. the Chicago guys will do anything..can't debate, change #s

5 Oct 12

Rep. Allen West (R-Fla.) agreed with Welch, writing on Twitter, “Chicago style politics is at work here.” Keith Urbahn, former Defense Secretary Donald Rumsfeld’s chief of staff,suggested there was something fishy going on. Some Fox

News personalities have agreed.

Douglas Holtz-Eakin, a former director of the Congressional Budget Office and economic adviser to Sen. John McCain (R-Ariz.) in 2008, argued that the positive household survey “must be an anomaly – it is out of line with any of the other data.” But he was not suggesting a conspiracy, just that the numbers were wrong.

But the more popular Republican line is that if so many people hadn’t given up on looking for work in the past four years, the unemployment rate would be higher. While labor force participation went up in September, it is still below what it was four years ago.

Of course, there is one president who actually tried to manipulate the BLS — Richard Nixon.

Jack Welch accuses Obama of cooking jobs numbers

Jack Welch: I Was Right About That Strange Jobs Report

The economy would need to be growing at breakneck speed for unemployment to drop to 7.8% from 8.3% in the course of two months.


By JACK WELCH

Imagine a country where challenging the ruling authorities—questioning, say, a piece of data released by central headquarters—would result in mobs of administration sympathizers claiming you should feel "embarrassed" and labeling you a fool, or worse.

Soviet Russia perhaps? Communist China? Nope, that would be the United States right now, when a person (like me, for instance) suggests that a certain government datum (like the September unemployment rate of 7.8%) doesn't make sense.
Unfortunately for those who would like me to pipe down, the 7.8% unemployment figure released by the Bureau of Labor Statistics (BLS) last week is downright implausible. And that's why I made a stink about it.

Before I explain why the number is questionable, though, a few words about where I'm coming from. Contrary to some of the sound-and-fury last week, I do not work for the Mitt Romney campaign. I am definitely not a surrogate. My wife, Suzy, is not associated with the campaign, either. She worked at Bain Consulting (not Bain Capital) right after business school, in 1988 and 1989, and had no contact with Mr. Romney.

The Obama campaign and its supporters, including bigwigs like David Axelrod and Robert Gibbs, along with several cable TV anchors, would like you to believe that BLS data are handled like the gold in Fort Knox, with gun-carrying guards watching their every move, and highly trained, white-gloved super-agents counting and recounting hourly.

Let's get real. The unemployment data reported each month are gathered over a one-week period by census workers, by phone in 70% of the cases, and the rest through home visits. In sum, they try to contact 60,000 households, asking a list of questions and recording the responses.

Some questions allow for unambiguous answers, but others less so. For instance, the range for part-time work falls between one hour and 34 hours a week. So, if an out-of-work accountant tells a census worker, "I got one baby-sitting job this week just to cover my kid's bus fare, but I haven't been able to find anything else," that could be recorded as being employed part-time.

The possibility of subjectivity creeping into the process is so pervasive that the BLS's own "Handbook of Methods" has a full page explaining the limitations of its data, including how non-sampling errors get made, from "misinterpretation of the questions" to "errors made in the estimations of missing data."

Bottom line: To suggest that the input to the BLS data-collection system is precise and bias-free is—well, let's just say, overstated.

Even if the BLS had a perfect process, the context surrounding the 7.8% figure still bears serious skepticism. Consider the following:

In August, the labor-force participation rate in the U.S. dropped to 63.5%, the lowest since September 1981. By definition, fewer people in the workforce leads to better unemployment numbers. That's why the unemployment rate dropped to 8.1% in August from 8.3% in July.

Meanwhile, we're told in the BLS report that in the months of August and September, federal, state and local governments added 602,000 workers to their payrolls, the largest two-month increase in more than 20 years. And the BLS tells us that, overall, 873,000 workers were added in September, the largest one-month increase since 1983, during the booming Reagan recovery
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These three statistics—the labor-force participation rate, the growth in government workers, and overall job growth, all multidecade records achieved over the past two months—have to raise some eyebrows. There were no economists, liberal or conservative, predicting that unemployment in September would drop below 8%.

I know I'm not the only person hearing these numbers and saying, "Really? If all that's true, why are so many people I know still having such a hard time finding work? Why do I keep hearing about local, state and federal cutbacks?"

I sat through business reviews of a dozen companies last week as part of my work in the private sector, and not one reported better results in the third quarter compared with the second quarter. Several stayed about the same, the rest were down slightly.

The economy is not in a free-fall. Oil and gas are strong, automotive is doing well and we seem to be seeing the beginning of a housing comeback. But I doubt many of us know any businessperson who believes the economy is growing at breakneck speed, as it would have to be for unemployment to drop to 7.8% from 8.3% over the course of two months.

The reality is the economy is experiencing a weak recovery. Everything points to that, particularly the overall employment level, which is 143 million people today, compared with 146 million people in 2007.

Now, I realize my tweets about this matter have been somewhat incendiary. In my first tweet, sent the night before the unemployment figure was released, I wrote: "Tomorrow unemployment numbers for Sept. with all the assumptions Labor Department can make..wonder about participation assumption??" The response was a big yawn.

My next tweet, on Oct. 5, the one that got the attention of the Obama campaign and its supporters, read: "Unbelievable jobs numbers..these Chicago guys will do anything..can't debate so change numbers."

As I said that same evening in an interview on CNN, if I could write that tweet again, I would have added a few question marks at the end, as with my earlier tweet, to make it clear I was raising a question.

But I'm not sorry for the heated debate that ensued. I'm not the first person to question government numbers, and hopefully I won't be the last. Take, for example, one of my chief critics in this go-round, Austan Goolsbee, former chairman of the Obama administration's Council of Economic Advisers. Back in 2003, Mr. Goolsbee himself, commenting on a Bush-era unemployment figure, wrote in a New York Times op-ed: "the government has cooked the books."

The good news is that the current debate has resulted in people giving the whole issue of unemployment data more thought. Moreover, it led to some of the campaign's biggest supporters admitting that the number merited a closer look—and even expressing skepticism. The New York Times in a Sunday editorial, for instance, acknowledged the 7.8% figure is "partly due to a statistical fluke."

The coming election is too important to be decided on a number. Especially when that number seems so wrong.
Mr. Welch was the CEO of General Electric for 21 years and is the founder of the Jack Welch Management Institute at Strayer University.

A version of this article appeared October 10, 2012, on page A19 in the U.S. edition of The Wall Street Journal, with the headline: I Was Right About That Strange Jobs Report.
Jack Welch: I Was Right About That Strange Jobs Report - WSJ.com

I will give Welch credit. After joining Team Obama on 'green energy' he appears to have seen the 'red' light. Obama and company did cook the books, but I do not believe there is going to be much consumption, not even in the liberal soup lines.