Why U.S. Unemployment Numbers Can't Be Trusted

by: Daryl Montgomery

There is more fantasy in the U.S. employment numbers than in a Harry Potter novel. According to the BLS, the U.S. added 120,000 jobs in November 2011 and the unemployment rate fell by 0.4%. This is not possible.

The U.S. economy needs to create approximately 150,000 jobs a month to keep the unemployment rate steady based on new entrants into the labor force (the oft cited 200,000 figure is based on past conditions that are no longer applicable). According to official sources, the U.S. added 131,000 jobs a month in 2011. This is better than in previous years, but still not enough to reduce the unemployment rate. Yet, the BLS (Bureau of Labor Statistics) claims the unemployment rate is dropping and fell from 9.0% to 8.6% in November. How is this possible?

Well, first of all, it isn't. These numbers were created - and "created" is a very appropriate word in this case - by claiming that large numbers of workers left the U.S. labor force. At the same time, the U.S. government has stated that an economic recovery has taken place. A country's labor force does not shrink during recoveries, it grows. This has not happened during the current U.S. "recovery."

The U.S. labor force had approximately six million fewer workers in November 2011 than it did in November 2007. Four years ago, 146,793,000 people were employed in the U.S. In November 2011, only 140,987,000 had jobs. This makes no sense if a recovery has taken place. It does make sense, however, if there is an ongoing recession and government statisticians have decided to massage the numbers for political reasons.

On the flip side, there were 79,069,00 people not in the labor force in November 2007 and today that number is 86,757,000 - almost eight million greater. The labor force of the U.S. should not be shrinking because the number of students and immigrants looking for jobs exceeds the number of people retiring. People do leave the labor force if they have determined that there simply are no jobs to be found. The recent Consumer Confidence survey from the Conference Board indicated that less than 6% of Americans thought jobs were currently plentiful.

In November 2011 alone, the BLS claims that the U.S. labor force dropped by almost a net 600,000. This helped reduce the reported unemployment rate to 8.6%. This form of statistical manipulation is something that might be expected in a corrupt third-world backwater. Apparently, this is the standard that Washington is now adhering to for its statistical reporting.

Disclosure: None.