Thread: Record 1.2 Million People Fall Out Of Labor Force In One Month, Labor Force Participa

Contrary to Government Claims of 243,000 Jobs Created, Hundreds of Thousands of Jobs Were Actually LOST In January

Posted on February 3, 2012 by WashingtonsBlog

Government Misrepresents Employment Picture

While everyone is popping the champagne corks over the fact that the Bureau of Labor Statistics says that 243,000 jobs were created in January, the facts are slightly different.

Lee Alder notes:

The seasonal adjustment fudge that the Gummit adds to the mix grossly overstated what the actual survey data showed. Here’s a picture. The red line is the actual survey numbers. The blue line is the fake seasonally adjusted number.



Remember: Red… actual. Blue… fake.

Just so you know your eyes aren’t playing tricks on you, let’s zoom in to just the past 13 months.



There you have it. The headline, fake, number was up by 243,000, purportedly the biggest increase since 2006. But what’s this? The actual survey number showed a decrease of 1.1 million jobs. In the world of seasonally adjusted government data, down can be up.

Karl Denninger writes:

There are times when one questions a report as possibly being wrong or in error, and then there are times when one has to raise a flag and say “This is an intentionally false picture being presented by a government agency.”

I’m in the latter camp with this one, and it is rare for me to brand something as not possibly wrong and in error, but intentionally fraudulent.

***Remember that last month the alleged 200,000 jobs that were gained were a phantom; when one looked inside the household data we found instead deterioration in both the employment participation rate and a decline in the absolute number of employed persons, while population rose. That is, the actual counts (as opposed to black-box statements) said that the labor picture deteriorated in December, contrary to the reported numbers.This month it was worse. Far worse.Let’s start with the “base picture” that is causing the cheering:


That nice red line looks good, right? Well……


“Not in labor force” numbers leaped upward on an annualized basis (seasonally adjusted the “right way”) and what’s worse on a raw basis 1.572 million people exited the labor force last month.This is reflected in the percentage of those not in the labor force as a percentage of the working-age population, which hit an all-time high going back to the initiation of the data series I’ve tracked since 1999:


That’s 0.6% of the entire labor force that departed the working population in one month, three times the alleged drop in the unemployment rate. This means that internally, the numbers were even worse than they first appear!


Indeed, the total number of employed persons fell. A lot. To put a number on it, the total number of employed persons fell by 737,000 by actual count.Now the cheerleaders will state that this is a common thing in January, and indeed it is. But the correct adjustment is to look at the population increase and subtract that back off as well. In other words, we take the loss of employment and add the population growth. When we do this we get a whopping 2.422 million in the wrong direction which was bested only by the -2.618 million in January of 2009 through the process of this downturn!In fact other than January 2009 there has never been a single month in my table, which dates back to 1999, that put up a worse combined number. This “performance” rates a literal “second from utter despair and disaster”, and the employment rate shows it:


This is not a strong report folks, and in fact documents an actual and ongoing collapse in the US labor force, despite the crooning on the mainstream media disinformation channels!

Zero Hedge points out:

It appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that’s not a typo: 1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation. As for the quality of jobs, as withholding taxes roll over Year over year, it can only mean that the US is replacing high paying FIRE jobs with low paying construction and manufacturing. So much for the improvement.
Chart below shows it all – that jump is not a fat finger!


And Labor Force Participation:


This is the largest absolute jump in ‘Persons Not In Labor Force’ on record…and biggest percentage jump in 30 years.



Chart: Bloomberg

Mish writes:

• In the last year, the civilian population rose by 3,565,000. Yet the labor force only rose by 1,145,000. Those not in the labor force rose by 2,420,000.
• In January, the Civilian Labor Force rose by 508,000.
• In January, those “Not in Labor Force” rose by an amazing 1,177,000. If you are not in the labor force, you are not counted as unemployed.
• Participation Rate fell .3 to 63.7%, taking out a 1984 low
• Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.

Some of those labor force numbers are due to annual revisions. However, the point remains: People are dropping out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low.***

The official unemployment rate is 8.3%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 15.1%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Grossly Distorted Statistics
Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers. Digging under the surface, the drop in the unemployment rate is nothing but a statistical mirage.
In January, those “Not in Labor Force” rose by a staggering 1,177,000. Things are much worse than the reported numbers indicate.

And TrimTabs says:

Either there is something massively changed in the income tax collection world, or there is something very, very suspicious about today’s BLS hugely positive number.
***
Actual jobs, not seasonally adjusted, are down 2.9 million over the past two months. It is only after seasonal adjustments – made at the sole discretion of the Bureau of Labor Statistics economists – that 2.9 million fewer jobs gets translated into 446,000 new seasonally adjusted jobs.

For background on why more jobs haven’t been created, see this this and this.

Zero Hedge also notes that the gap between implied and reported unemployment is soaring, and that there is a marked shift from high-paying to low-wage jobs.Update: see this rebuttal.

Contrary to Government Claims of 243,000 Jobs Created, Almost 1 Million Jobs Were Actually LOST In January

Nonfarm Payroll +243,000 ; Unemployment Rate 8.3%; Those Not in Labor Force Rose an Amazing 1,177,000

Friday, February 03, 2012 11:09 AM

Quick Notes About the "Falling" Unemployment Rate

In the last year, the civilian population rose by 3,565,000. Yet the labor force only rose by 1,145,000. Those not in the labor force rose by 2,420,000.

In January, the Civilian Labor Force rose by 508,000.


In January, those "Not in Labor Force" rose by an amazing 1,177,000. If you are not in the labor force, you are not counted as unemployed.

Participation Rate fell .3 to 63.7%, taking out a 1984 low

Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.

Some of those labor force numbers are due to annual revisions. However, the point remains: People are dropping out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low.

Jobs Report at a Glance

Here is an overview of today's release.

• US Payrolls +243,000 - Establishment Survey
• US Unemployment Rate Declined .2 - Household Survey
• Average workweek for all employees on private nonfarm payrolls was +.1 to 34.4 hours
• The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged higher 0.1 hour to 33.7 hours in November.
• Average hourly earnings for all employees in the private sector rose by 4 cents to $23.24

Recall that the unemployment rate varies in accordance with the Household Survey not the reported headline jobs number, and not in accordance with the weekly claims data.

January 2012 Jobs Report

Please consider the Bureau of Labor Statistics (BLS) January 2012 Employment Report.

Total nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment changed little over the month.

Unemployment Rate - Seasonally Adjusted



Nonfarm Employment - Payroll Survey - Annual Look - Seasonally Adjusted



Actual employment is about where it was in 2001.

Nonfarm Employment - Payroll Survey - Monthly Look - Seasonally Adjusted



click on chart for sharper image

Between January 2008 and February 2010, the U.S. economy lost 8.8 million jobs.

The January employment gained in total nonfarm brings the number of net jobs recovered since a trough in February 2010 to 3.2 million jobs, or 36 percent of the 8.8 million jobs lost between January 2008 and February 2010.

Statistically, 127,000 jobs a month is enough to keep the unemployment rate flat. The average increase in 2011 was of 152,000 per month, barely enough make a dent in the unemployment rate.

Nonfarm Employment - Payroll Survey Monthly Details - Seasonally Adjusted


Average Weekly Hours


Index of Aggregate Weekly Hours


In January 2012 the index of aggregate weekly hours stood 4.8 percent below its peak in January 2008.

Average Hourly Earnings vs. CPI


"Success" of QE2 and Operation Twist

• Over the past 12 months, average hourly earnings has increased by 1.9 percent; while in December, the CPI-U had a 12-month percent change of 3.0 percent.
• Not only are wages rising slower than the CPI, there is also a concern as to how those wage gains are distributed.

BLS Birth-Death Model Black Box

The BLS Birth/Death Model is an estimation by the BLS as to how many jobs the economy created that were not picked up in the payroll survey.

The Birth-Death numbers are not seasonally adjusted while the reported headline number is. In the black box the BLS combines the two coming out with a total.

The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance.

Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way.

Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions.

Birth Death Model Adjustments For 2011



Birth Death Model Adjustments For 2012



Birth-Death Notes

Once again: Do NOT subtract the Birth-Death number from the reported headline number. That is statistically invalid.

Household Survey Data



click on chart for sharper image

In the last year, the civilian population rose by 3,565,000. Yet the labor force only rose by 1,145,000. Those not in the labor force rose by 2,420,000.

That is an amazing "achievement" to say the least.

Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.

Table A-8 Part Time Status



click on chart for sharper image

Part-time status shows little improvement vs. a year ago.

Table A-15

Table A-15 is where one can find a better approximation of what the unemployment rate really is.



click on chart for sharper image

The official unemployment rate is 8.3%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 15.1%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Grossly Distorted Statistics

Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers. Digging under the surface, the drop in the unemployment rate is nothing but a statistical mirage.

In January, those "Not in Labor Force" rose by a staggering 1,177,000. Things are much worse than the reported numbers indicate.

Mike "Mish" Shedlock
Mish's Global Economic Trend Analysis
Mish's Global Economic Trend Analysis: Nonfarm Payroll +243,000 ; Unemployment Rate 8.3%; Those Not in Labor Force Rose an Amazing 1,177,000

Nonfarm Payroll +243,000 ; Unemployment Rate 8.3%; Those Not in Labor Force Rose an Amazing 1,177,000

Friday, February 03, 2012 11:09 AM

Quick Notes About the "Falling" Unemployment Rate

In the last year, the civilian population rose by 3,565,000. Yet the labor force only rose by 1,145,000. Those not in the labor force rose by 2,420,000.

In January, the Civilian Labor Force rose by 508,000.

In January, those "Not in Labor Force" rose by an amazing 1,177,000. If you are not in the labor force, you are not counted as unemployed.

Participation Rate fell .3 to 63.7%, taking out a 1984 low

Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.

It doesnt matter if they are a Democrat or a republican; we will expose them as the LIAR's that they are

We aim to PROTECT the American Work Force and Expose the Federal Government Intentionally Lowering the Employment rate in the Hopes of Giving AMNESTY to 32 - 48 Million Illegal Aliens.

20 Million Plus are Anchore Babies / 12 Million Plus are Illegal Aliens

Dont let them Dumb You Down America ... EXPOSE THE FRAUD