Labor's Department's funny math
By Ralph R. Reiland
Published: Sunday, Oct. 14, 2012, 8:56 p.m.
The funny thing about the Labor Department's monthly unemployment report is that the number-crunching bureaucrats act like they're delivering high-carat diamonds when the real worth of what they're reporting is closer to the value of a mud pie.
First, a college graduate with a degree in biomedical engineering who gets a $70,000 job in his field is counted exactly the same as a biomedical engineering graduate who can't find a job and is working weekends as a busboy at Applebee's.
Or as “PBS NewsHour” reported, “If you only worked one hour in the past week, you're counted as officially employed.” An estimated 50 percent of college graduates are either jobless or significantly underemployed in positions that don't utilize their education.
Second, if a $100,000 guy loses his job and he and his previously stay-at-home wife each get part-time jobs paying $25,000, the Labor Department counts that as job growth, two jobs rather than one.
If they can't make ends meet, there's even more job growth if their kid gets a Saturday job drying cars at the local car wash.
If another kid in the family ends up selling apples on the street corner, that's a 400 percent rate of job growth, as the Labor Department figures it.
Third, if everyone in that family throws in the towel and quits working and quits looking for work, then no one is counted as unemployed. The jobless household simply vanishes from the government's calculations and there's nothing in the headlines to indicate that the economy is failing to provide employment for that family.
The share of adults in the labor force — the participation rate — is now at a 30-year low. If the participation rate today was the same as just four years ago, the unemployment rate would currently be 11 percent.
The front-page story from the Labor Department is that the nation's jobless rate suddenly has dropped from 8.1 percent to 7.8 percent in September, the lowest level since January 2009 — an official jobless rate below 8.0 percent for the first time since President Barack Obama's inauguration.
Look a bit deeper into the report and there are these two sentences, directly related to the Labor Department's practice of counting part-time employment the same as full-time employment: “The number of persons employed part time for economic reasons, sometimes referred to as involuntary part-time workers, rose from 8.0 million in August to 8.6 million in September. These individuals were working part time because their hours had been cut back or because they were unable to find full-time work.”
That's a 600,000 jump in “involuntary part-time workers” in September, which isn't reflected in the 7.8 percent unemployment number.
The monthly jobs report is prepared by government employees who interview people in 60,000 households or visit them door to door. To produce a more accurate picture of how many jobs the economy has to generate to get to full employment, how hard would it be for these staffers to proportionately include these involuntary part-timers in the jobless number? Bottom line: Count the involuntary part-timers and those who've given up, and 23 million Americans are out of work.
Ralph R. Reiland is an associate professor of economics at Robert Morris University and a local restaurateur. His email: email@example.com
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