If anyone had doubts about the madness that has spread through a large part of the US political spectrum, the reaction to Friday’s better-than-expected report from the US Bureau of Labor Statistics should have settled the issue. For the immediate response of many on the right — and we are not just talking fringe figures — was to cry conspiracy.
Leading the charge of what were quickly dubbed the “BLS truthers” was none other than Jack Welch, the former chairman of General Electric, who posted an assertion on Twitter that the books had been cooked to help US President Barack Obama’s re-election campaign. His claim was quickly picked up by right-wing pundits and media personalities.
It was nonsense, of course. Job numbers are prepared by professional civil servants, at an agency that currently has no political appointees. However, then maybe Welch — under whose leadership GE reported remarkably smooth earnings growth, with none of the short-term fluctuations you might have expected (fluctuations that reappeared under his successor) — does not know how hard it would be to cook the jobs data.
Furthermore, the methods the bureau uses are public — and anyone familiar with the data understands that they are “noisy,” that especially good (or bad) months will be reported now and then as a simple consequence of statistical randomness. That in turn means that you should not put much weight on any one month’s report.
However, in that case, what is the somewhat longer-term trend? Is the US employment picture getting better? Yes, it is.
Some background: The US’ monthly employment report is based on two surveys. One asks a random sample of employers how many people are on their payroll. The other asks a random sample of households whether their members are working or looking for work. If you look at the trend over the past year or so, both surveys suggest a labor market that is gradually on the mend, with job creation consistently exceeding growth in the working-age population.
On the employer side, the current numbers say that over the past year the US economy added 150,000 jobs a month and revisions will probably push that number up significantly. That is well above the 90,000 or so added jobs per month that the US need to keep up with population growth. (This number used to be higher, but underlying workforce growth has dropped off sharply now that many baby boomers are reaching retirement age.)
Meanwhile, the household survey produces estimates of both the number of Americans employed and the number unemployed, defined as people who are seeking work, but do not currently have a job. The eye-popping number from Friday’s report was a sudden drop in the unemployment rate to 7.8 percent from 8.1 percent, but as I said, you should not put too much emphasis on one month’s number. The more important point is that unemployment has been on a sustained downward trend. Yet is that not just because people have given up looking for work, and hence no longer count as unemployed? Actually, no. It is true that the employment-population ratio — the percentage of adults with jobs — has been more or less flat for the past year. However, remember those ageing baby boomers: the fraction of US adults who are in their prime working years is falling fast. Once you take the effects of an ageing population into account, the numbers show a substantial improvement in the employment picture since the summer of last year.