If Congress Allows this BLS Fraud to Stand, We are Responsible!

Russ Steele

This came in over the e-mail  transom from a regular reader of this blog. It is clear that the Bureau of Labor Statistics is in the manipulation business. ZeroHedge has the details in Real Jobless Rate Is 11.4% With Realistic Labor Force Participation Rate

One does not need to be a rocket scientist to grasp the fudging the BLS has been doing every month for years now in order to bring the unemployment rate lower: the BLS constantly lowers the labor force participation rate as more and more people “drop out” of the labor force for one reason or another. While there is some floating speculation that this is due to early retirement, this is completely counterfactual when one also considers the overall rise in the general civilian non institutional population. In order to back out this fudge we are redoing an analysis we did first back in August 2010, which shows what the real unemployment rate would be using a realistic labor force participation rate.

To get that we used the average rate since 1980, or ever since the great moderation began. As it happens, this long-term average is 65.8% (chart 1). We then apply this participation rate to the civilian noninstitutional population to get what an “implied” labor force number is, and additionally calculate the implied unemployed using this more realistic labor force. We then show the difference between the reported and implied unemployed (chart 2). Finally, we calculate the jobless rate using this new implied data. It won’t surprise anyone that as of December, the real implied unemployment rate was 11.4% (final chart) – basically where it has been ever since 2009and at 2.9% delta to reported, represents the widest divergence to reported data since the early 1980s. And because we know this will be the next question, extending this lunacy, America will officially have no unemployed, when the Labor Force Participation rate hits 58.5%, which should be just before the presidential election. [Emphasis in original]

Labor Force Participation since 1980:

Reported and Implied number of Unemployed:

 

Difference between Reported and implied unemployment rate:

I want to know why Congress is allowing the BLS to foster this fraud on the American Public.  By November it will appear the economy is doing just fine, with million of citizens still out of work.

On Wednesday, Congressman Tom McClintock is going to speak at our local Tea Party Patriot Luncheon and I plan to ask him if he is aware of this deception and what can Congress do to apply some corrective measures.  I suggest readers not at the Luncheon to do the same. Call your Congressman, we cannot let this fraud continue to November!

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About Russ Steele
Freelance writer and climate change blogger. Russ spent twenty years in the Air Force as a navigator specializing in electronics warfare and digital systems. After his service he was employed for sixteen years as concept developer for TRW, an aerospace and automotive company, and then was CEO of a non-profit Internet provider for 18 months. Russ's articles have appeared in Comstock's Business, Capitol Journal, Trailer Life, Monitoring Times, and Idaho Magazine.

14 Responses to If Congress Allows this BLS Fraud to Stand, We are Responsible!

  1. Barry Pruett says:

    Math Question: If the current American workforce consists of about 153,000,000 people and unemployment dropped by 0.5%, then the economy should have added about 765,000 jobs, right? However, the economy only added 200,000 jobs? Am I missing something or am I trying to calculate this thing all wrong? George or Russ?

  2. Dena says:

    What needs to happen is once a year when you file your taxes you record your employment status (house wife, employed, unemployed but looking for work, unemployed and not looking, retired, etc). Then we could know from employer tax payments what the real numbers are. I forgot http://www.foxnews.com/politics/2012/01/06/irs-study-17-percent-taxes-went-unpaid/?test=latestnews

  3. Dixon Cruickshank says:

    Russ do me a big favor and thank Tom for his efferts against NOAA and NMFS on the fisheries management crap. I watched a hearing and he was quite aggressive and knew his stuff. I could also put him in touch with an individual with ears everywhere on the inside – he would know months in advance what was coming – confidentially of course.

  4. Russ says:

    National Review Online:

    The recession may have ended in mid-2009 according to the economists, but the normal rate of growth in the size of the labor force stopped in 2008 and has yet to return.

    Labor Force Size January 2009: 154,236,000.

    Labor Force Size December 2011: 153,887,000.

    We’re still down 349,000 from the size of the labor force when Obama’s term began. The labor force hit its lowest point during that time in January 2011, at 153,250,000.

    Now look at the labor-force-size growth over the preceding three years:

    January 2006: 150,214,000.

    December 2008: 154,626,000.

    That’s 4,412,000 more Americans in the labor force.

    Heck of a job, Mr. President. If you drive enough Americans out of the labor force, unemployment will get down to the 4 to 6 percent range it was during the Bush years!

  5. RL Crabb says:

    While I would agree that Obama’s policies have done little to restore jobs, the nosedive began in Bush’s last three months in office. Hence the lopsided win for the opposition in 2008. I doubt any President would have been able to bring the unemployment numbers back to those heady days of 4 to 6%.

    • Dena says:

      You need to study your history. Mellon as treasure gave us the roaring 20’s and by this point in Regan”s time in office they were starting to worry about the economy overheating. Truman had a republican congress that forced recovery and even Kennedy used the same formula. I will admit that in the current crop only Ron Paul looks like he might be able to do the job but he has many other problems. The solution is simple. Look up the Lafer curve – the solution is a 20% tax rate and control of government spending. In two years we could be well on the road to recovery.

    • That is a devilish comment RL. Didn’t Obama campaign for the office by telling us all how he was going to fix all of the problems Bush created? Seems to me a 4.5 percent unemployment rate and millions of jobs created over the 7 years and 9 months of Bush were fine with most Americans. Of course those Americans on the dole were ambivalent as long as someone else was paying their way.

    • Dena says:

      Yes we do know and we will find out. Obama and Federal Reserve money have been flooding the economy and will continue to until after the election. If you think what we have now is bad, wait till that money stops flowing. The best example of our economy is a drug addict. As long as we keep receiving our fix of government money the worst of the pain stays away. When the drug stops, we will have the withdrawal pain that we have been putting off and it will be worst because of all the debt we ran up trying to keep the pain away. The only solution is to get business going again and that means reduced regulation and taxes.

  6. RL Crabb says:

    As usual, you seem to think I’m defending Obama. I’m not, by any stretch of the imagination. Just sayin’ the big collapse began in the waning days of Bush II. Most conservatives thought we should have just let the economy collapse and dug ourselves out of the ruins. We’ll never know how that one would’ve played out.

    • Yes we will never know but is what happened better than what could have happened? It is a circle argument. Obama and the democrats have rammed O care down the throats oa America and the unintended consequence of grabbing 1/6 of the conomy is right in front of our eyes, No hiring and hiding noney in the trillions under the mattress. That is for real.

      Obama wanted to be Predisdent and told us he would fix the mess Bush made. But all he has done is blame Bush for his own failue to fix things. I would call that crap leadership.

  7. Russ says:

    RL,

    You might recall that in the last two years of the Bush administration, Congress was run by the Democrats, and they were pushing the Banks, Fanny and Freddy to make home loans to people that did not have the resources to pay the loans. Thus the start of the housing collapse under Bush. The table was set by the Democrats who were cooking in the kitchen and Bush got the blame for a bad meal.

    • Dena says:

      The original bill that started it was signed under the Clinton administration and Bush toward the end of his administration tried to fix it but congress wouldn’t act so Bush let it drop.

  8. RL Crabb says:

    I agree there were some Republicans who were sounding the warning bells, but there were plenty of others who were willing to ride the wave of false prosperity. And of course it was Bernanke and Paulsen, both Bush people, who engineered the beginning of the bailouts that Obama continued with gusto. Plenty of blame to go around.

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