Jack Welch Makes Good Points About Cooked-Job-Number Claim
Older readers may remember that last week, in a
simpler, more innocent America, the 7.8 percent U-3 unemployment
rate was supposed to reverse the stunning collapse of President
Obama’s re-election campaign. At the time, some
spoilsports cast doubts on the surprising 0.3 percent drop in a
month (which was unsupported by any discernable improvements in
economic growth, increases in job creation or declines in new
unemployment benefits claims), and the gloomiest Gus was former
General Electric CEO Jack Welch, who accused the Obama Labor
Department of fudging the numbers.
pilloried for that claim, but
he’s back with a more detailed defense. Although his
Wall Street Journal op-ed starts out inauspiciously,
by comparing his travails to Soviet show trials and Maoist
re-education, Welch makes some interesting points about how the
Census Bureau and the Bureau of Labor Statistics conduct their
unemployment surveys: Â
Some questions allow for unambiguous answers, but others less
so. For instance, the range for part-time work falls between one
hour and 34 hours a week. So, if an out-of-work accountant tells a
census worker, “I got one baby-sitting job this week just to cover
my kid’s bus fare, but I haven’t been able to find anything else,”
that could be recorded as being employed part-time.
The possibility of subjectivity creeping into the process is so
pervasive that the BLS’s own “Handbook of Methods” has a
full page explaining the limitations of its data, including how
non-sampling errors get made, from “misinterpretation of the
questions” to “errors made in the estimations of missing data.”
Bottom line: To suggest that the input to the BLS
data-collection system is precise and bias-free isâ€”well, let’s just
Even if the BLS had a perfect process, the context surrounding
the 7.8% figure still bears serious skepticism. Consider the
In August, the labor-force participation rate in the U.S.
dropped to 63.5%, the lowest since September 1981. By definition,
fewer people in the workforce leads to better unemployment numbers.
That’s why the unemployment rate dropped to 8.1% in August from
8.3% in July.
Meanwhile, we’re told in the BLS report that in the months of
August and September, federal, state and local governments added
602,000 workers to their payrolls, the largest two-month increase
in more than 20 years. And the BLS tells us that, overall, 873,000
workers were added in September, the largest one-month increase
since 1983, during the booming Reagan recovery.
These three statisticsâ€”the labor-force participation rate, the
growth in government workers, and overall job growth, all
multidecade records achieved over the past two monthsâ€”have to raise
some eyebrows. There were no economists, liberal or conservative,
predicting that unemployment in September would drop below 8%.
I know I’m not the only person hearing these numbers and saying,
“Really? If all that’s true, why are so many people I know still
having such a hard time finding work? Why do I keep hearing about
local, state and federal cutbacks?”
I sat through business reviews of a dozen companies last week as
part of my work in the private sector, and not one reported better
results in the third quarter compared with the second quarter.
Several stayed about the same, the rest were down slightly.
can’t trust General Electric CEOs, this country really is
The BLS maintains six different
measures of unemployment, and U-6, which measures part-time
work, is the only one that didn’t go down last month. I don’t know
whether that does or does not support Welch’s hypothesis about
babysitting accountants. Would the hanky panky come from shifting
part-timers who would have counted toward U-3 into U-6?
The Census Bureau’s 26-page
tries gamely to
comprehend the shifting, idiosyncratic nature of work, and the
BLS and Census gather a wide range of nuanced information. The
data-gathering certainly seems to be a pretty transparent process.
(Caveat: I’ve never met anybody who’s been contacted for an
unemployment survey, but I’ve also never met anybody who’s been
contacted by Gallup and I’ve only met one person who’s
been contacted by AC Nieslen; I’ve also never seen a trapdoor
in the ceiling of an elevator nor a loose floorboard which allows
important items to be concealed, though I understand from movies
and literature that these are ubiquitous.)
Secretary of Labor Hilda Solis says top men are working
on the unemployment statistics, but that doesn’t mean the
numbers couldn’t be manhandled. Welch scores a nice hit by digging
New York Times op-edÂ former Obama economic
advisor (is there any other kind of Obama economic advisor?) Austan
Goolsbee wrote back in 2003, when the genocidal G.W. Bush
administration was sucking dry the marrow of the laboring classes
with an unconscionable
5.9 percent unemployment rate. Money quote: “the government has
cooked the books.”
Besides the skepticism a reasonable person should have about
Solis’ Labor Department, Obama in 2009
moved to get the Census Bureau to report directly to the White
House. This was widely believed have doomed one of Obama’s
celebrated efforts to “reach across the aisle,” when Commerce
Judd Gregg dropped out of the running.
Welch still doesn’t present any evidence of fraud. But the
accuracy on items that are more important than jobless numbers
seems notably less fervent than its commitment to protecting
lady parts and its wildly popular
children’s television characters from the mortal threat posed
Stacey Dash. Good on Jack Welch for keeping this question