Seven Point Eight Percent



How could this have happened? Is it a conspiracy? Could Obama’s policies really have created so many jobs in one month? Is it just a freaky statistical fluke?

If you’ve been living under a rock the last few days and don’t know what I’m talking about… on Friday the U.S. Bureau of Labor Statistics (BLS) 2 days after a debate that can only be characterized as a good ol’ buttkicking released its monthly jobs report.  Here are the raw facts:

1.  The number of nonfarm jobs went up 114,000

2.  Working age population increased by 206,000

3.  The labor force grew by 418,000

4.  Total employment rose by 873,000(!)

5.  The unemployment rate decreased to 7.8%(?)

So how does it make sense that only 114,000 jobs were created, 90,000 more people entered the workforce than jobs were created and yet total employment rose by 873,000 to bring the unemployment rate down to 7.8%?  Well there is an explanation… I’m going to try to explain the explanation in regular English but I have to admit that I had to do quite a bit of research myself and even though I consider myself to be a relatively intelligent man I still had to read and re-read quite a bit (trying to be humble here) so please bear with me.

To put it in a nutshell, the way the BLS gets these numbers is by creating two type to surveys.  The first one is a survey of households called the Current Population Survey (CPS) and the second one is an employer survey called the Current Economic Statistics (CES).  In the CPS, the BLS (I know this is starting to sound the Military) samples approximately 66,000 households, every month changing about 25% of them so that the same families are not sampled.  It is this survey that reported the increase of 873,000 in total employment, the increase of 206,000 in working age population, and of course the 7.8% unemployment rate.  The CES samples 141,000 employers, both private and public, at 486,000 work places.  Here we get the statistic that the economy gained 114,000 nonfarm jobs.

Understanding all that begs the question:  How is that one survey (CES) increases jobs by 114,000 and increases the working age population by 206,000 and the other (CPS) reports and increase in total employment by 873,000!?

Well the BLS explains it this way:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) rose from 8.0 million in August to 8.6 million in September. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

Although this is a strong indication of a still very weak job market I’m not sure how this explains how one survey seems to have a 600,000 job deficit from the other (they both purport to survey all jobs full or part time).

So is this a conspiracy?  The fact that it occurred just days after Obama was badly bruised in a debate and seemed poised to lose the election points to this as a possibility but considering that the numbers are highly guarded and that they were compiled prior to the debate the conspiracy theory is highly unlikely.  Beside, I hate conspiracy theories, I guess I’m too practical which is why I just don’t think we’ll ever find the ghost of and alien Bigfoot.

My admittedly layman analysis of these numbers is that it was an unfortunate (or fortunate if you’re Obama) statistical anomaly, very similar to a poll outlier.  Because the CPS only samples 66,000 households and changes some of those families every month there is a possibility of a crazy number like this.  It just so happens to have happened 1 month before the election….

That means that we could see a correction next month….


2 Comments on "Seven Point Eight Percent"

  1. Nice breakdown. Even if this number is magically solid, I don’t think it’s enough to sway a vote.

  2. Witty Moniker | October 8, 2012 at 7:03 pm | Reply

    I don’t think it’s a “tin foil hat” conspiracy, but I’m still going to call “Shennanigan’s!” U-6 remains unchanged and both U-6 and official unemployment were (slightly) better one year ago. This whole thing is just smoke and mirrors. The main stream media is spinning this like crazy to offset the debate bump. There may have been someone in the BLS that massaged the numbers a tiny bit, but the real conspirators are the usual suspects who wrap our news with the pretty left-wing bow of insinuated opinion.

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