The BLS’s seasonal adjustments to the job numbers also make the labor market seem stronger than it actually is. Take the announcement that “seasonally adjusted” payroll employment increased by 243,000 in January. The “unadjusted” or actual raw totals showed a loss of 2.7 million jobs. It’s useful to try accounting for the well-known layoffs that occur at different times of the year, such as right after Christmas, but how you make the adjustment is important. Although the Bureau of Labor Statistics does not disclose its exact adjustment method, the problem is that their adjustments put most weight on recent years.
It is easy to see the huge difference this makes. The average December to January job loss over the preceding three years was 3.1 million. So the most recent 2.7 million drop in jobs would indeed appear as relatively small, and would appear as -- in relative terms -- as the economy improving. But how many jobs appear to be created using seasonal adjustment depends a lot on what time period that is being used in comparison. In the five years before the recession, December to January job losses averaged 2.7 million. If pre-recession monthly changes had been used as the base, the most recent relative jobs “gain” would have disappeared.
The current job “gains” only exist because the job losses a few years ago were so large.
President Obama may not be “manipulate[ing] numbers to get [the] unemployment headline under 9%,” as Rush Limbaugh accuses him of. Nevertheless, the numbers are quite misleading. The already record slow recovery seems destined to pad its lead even further in the history books.
John R. Lott, Jr. is the coauthor with Grover Norquist of the just-released book Debacle: Obama's War on Jobs and Growth and What We Can Do Now to Regain Our Future(John Wiley & Sons, March, 2012).
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