Was BLS forced to drink the Kool-Aid?

Did you hear any speeches, or get the memo? How did Bush-Cheney manage to get a million people to drop out or stay out of the labor force? Who cares? Well, in these times of mixed economic news, to put it charitably, I’ll bet they care a whole lot about the Bureau of Labor Statistics being able to report an official unemployment rate of 4.6 per cent for July – historically on the low side and a mere one-tenth of a percentage point increase over the previous 3 months – instead of a deteriorating employment market with unemployment having moved past 5.2 per cent in a few short months. Combined with the collapse of the housing bubble, the headlines would have looked a lot worse. After all, the press is constitutionally unable to go any deeper than the official unemployment rate, and an increase of just 0.1 can’t be too bad. Could be just a statistical glitch. It even allows the Wall Street barkers to talk knowledgeably, so they sound, about the “strong labor market” that will give us a “soft landing” from the housing crisis.

Let’s look at the numbers. Between December 2006 and July, the working age population grew by over 1.8 million. Normally, about two-thirds of that population joins the labor force, which would be about 1.2 million, and with an unemployment rate under 5 per cent, that would mean over 95 per cent of them would have gotten jobs. In other words, the number employed should have increased by more than 1.1 million. In fact, however, between December and July, the labor force grew by only 456,000 and the number employed increased by only 186,000, which means there were about 950,000 fewer jobs than there should have been. It means unemployment should have been about 8.05 million. Very thoughtful for that million or so people to decide to help out George and Dick politically by allowing them to crow about a low 4.6 per cent unemployment rate. Or did BLS somehow “lose” them? (Think U.S. Attorneys.) I wonder if they got one of Karl Rove’s Power Point presentations?