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September Jobs Report: Neither a Conspiracy nor a Game-Changer

October 8, 2012

The September Jobs Report came out last Friday, arguably the most important economic data being released between now and the November election, and the unemployment rate has finally fallen below the much-discussed 8% threshold, falling from 8.1 to 7.8 percent, coincidentally the same rate as the day Obama was sworn in.

This is undoubtedly good news for an Obama administration that has been looking to recover from the first debate, which a vast majority of viewers believed Romney won. This takes away one of Romney’s go-to planks while on the campaign trail, that unemployment has been above 8% for X consecutive months, and allows Obama to claim that the economy is finally showing signs of recovery.
Some conservatives have even gone so far as to cry foul at the convenient timing of this unexpectedly positive jobs report:

On his Facebook page, Rep Allen West wrote:

Chicago style politics is at work here. Somehow by manipulation of data, we are all of a sudden below 8 percent unemployment, a month from the presidential election. This is Orwellian to say the least

One-time candidate for the Republican nomination and long-time sideshow attraction Donal Trump said on ‘Fox and Friends’:

I don’t believe the number and neither do any of the other people that have intelligence. Because that number came out of nowhere.

While it is true that these numbers help Obama, reverting to conspiracy theories and charges levelled at the non-partisan and fairly transparent Bureau of Labor Statistics unnecessarily clouds the issue, and in many ways shifts the focus to these unfounded, in many ways bizarre claims. There are many things to find fault with in the current employment environment without having to resort to these tactics, and furthermore, many of these ‘theories’ look like a case of sour grapes, where these people are actually upset to see the economy finally show at least some signs of recovering almost four years out from the crisis. This adds fuel to the narrative that ‘Republicans would rather see Obama fail than fix the economy’ and makes the conspiracy theorists seem out of touch.

There are many more factors to the unemployment picture than the headline rate of 7.8%, for instance the civilian employment-population ratio, or the proportion of  the country in the labor force, has fallen sharply since 2008 and has remained at this lower level, although part of this may be due to demographic changes as the older baby boomers near retirement age. This lower ratio would lead to decreases in the headline unemployment rate because it serves as the denominator.

As James Pethokoukis at AEI notes, “The shrunken workforce remains shrunken. If the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.7%. If the participation rate had just stayed steady since the start of the year, the unemployment rate would be 8.4% vs. 8.3%”

Also significant in the report was the large jump in the number of people working part-time due to economic reasons, which rose from 8.0 million in August to 8.6 million in September,. These are people working part-time because their hours had been cut back or because they were unable to find a full-time job. While these jobs are without question better than being fully unemployed, they do not constitute a full, sustainable economic and employment recovery, and the fact that they constitute such a large portion of the drop in the headline unemployment rate (these new part-time jobs accounted for 600,000 out of roughly 870,000 new jobs)  mitigates, to some degree, the extent to which this is a ‘surprisingly good’ jobs report.

Caveats aside, and whether you agree with Obama’s policies or not, crafting conspiracy theories directed at a non-partisan agency like the BLS, that shows no real signs of being under political sway, and has one month aberrations similar to this somewhat regularly due to the complexity and uncertainty surrounding their estimates, does little other than distract from the real issue of economic policy and performance.

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From → Economics, Politics

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