Joblessness data just don't match up

Reuters

Job seekers speak to recruiters at a job fair sponsored by the New York Department of Labor in New York, June 7, 2012.

Article Highlights

  • You don’t have to be a conspiracy theorist to raise an eyebrow at the recent jobs report.

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  • A jobless rate decline of 0.3 percentage points or more has occurred 9 times since 1990, including in September.

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  • Sometimes the jobless rate drops sharply because job creation is slight and millions stop looking for work.

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  • The Great Recession is over, but the Long Recession for workers continues.

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You don't have to be a conspiracy theorist to raise an eyebrow — maybe both eyebrows — at the recent jobs report. Plenty of economists doubted whether 900,000 jobs were created in September, dropping the unemployment rate to 7.8% from 8.1%. "I don't believe in conspiracy theories, but I don't believe in the household survey either," said David Rosenberg of Gluskin Sheff. RDQ Economics called it "implausible" and a "statistical quirk." Dennis Jacobe of Gallup concluded the report "should be discounted."

A jobless rate decline of 0.3 percentage points or more has occurred nine times since 1990, including last month. Usually when it drops like that, it's for one of two reasons. Sometimes it's because the economy is growing rapidly and creating lots of jobs. That was the case in the 1990s, when GDP growth averaged close to 5% during those months. And job growth was strong, according to the Labor Department's survey of households as well as its survey of employers. (The latter is the one that showed just 114,000 jobs created last month.)

Sometimes, though, the rate drops sharply because job creation is slight and millions of discouraged unemployed stop looking for work. If you stop looking, Uncle Sam stops counting you as unemployed. That has been the case during this recovery. But what happened last month was an odd combo of weak growth, rising labor force participation, and otherworldly job gains in at least one of the two Labor Department job surveys. The numbers just don't match up.

Future jobs reports will help explain exactly what happened last month. But here's what's not in dispute: The U.S. lost 9 million private-sector jobs during the Great Recession. Just 5 million have been recovered. Even worse, the level of private-sector jobs remains 13 million below the pre-crisis job growth trend. That's the true jobs gap, and it isn't closing.

The Great Recession is over, but the Long Recession for workers continues. The gap is a national emergency. That's no fanciful conspiracy. It's a heartbreaking reality. And Washington should start treating it like one.

James Pethokoukis is a columnist and blogger at the American Enterprise Institute, a think tank in Washington, D.C.

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