In our previous discussions about unemployment brought on by the ‘miraculous’ jobs report numbers that came out 2 days after Romney shellacked “Obama the Liar” in the first nationally televised presidential debate and the extreme (but well deserved) humiliation felt by his supporters who had spent the last 6-9 months crowing about Obama’s debating skills (using a standard “my dad can beat up your dad” argument style). Due to Obama’s inability to tell the truth about anything and propensity to be deceitful about everything, many people’s first reaction, myself included, to the unbelievable numbers in the latest jobs report was “NFW!” (No Effing Way).
The theory is that the Obama administration (David Axelfraud) cooked the unemployment numbers to change the topic from Obama’s pathetic showing in the debate back to a more controllable and complimentary one where the MSM could once again tell us all that Obama was great, Obama was fixing the economy, Obama was still the chosen one, …the messiah…the anointed one…and tough and manly??? Are you kidding… not only was he not the gay peter puffer with the lifetime membership to Chicago’s notorious gay bath house “Man’s Country” …HE was in fact still the testosterone filled Man’s Man who killed Osama bin Laden and had now single handedly brought the unemployment rate down under 8% for the first time since 2009 by the sheer force of his mighty will. (OK I admit that the last paragraph was added only to pull in gay people surfing for a bath house / steam room and not just to bad mouth Obama)
And that’s exactly what they did.
Local headlines (from Associated Press and the NYT) shouted out the news …sometimes using three different stories on 2 separate pages. “Obama single handedly lowers unemployment to 7.8%!”… (If they only knew how close to the truth that statement was)
Their argument was that there were too many people involved with generating those numbers for anyone to get away with cheating
When I showed how statistically unlikely it was that these newly released numbers were true…I then wrote about how easily these numbers were being manipulated by the government…not by compromising the integrity of the work done by the fine statisticians at the BLS …Noooo, the government has been able to render all of their hard work and results meaningless simply by changing the number of the most important underlying determinant: the “Net Labor Force Participation rate”…or in English it’s the percentage of the entire population who make up the entire labor force…
First some historical perspective … the NLFP has mostly been a very constant and seldom changing factor. For the 4 years leading up to 2001 that number used was a constant 67.1% from 2001 to 2008 the number fell slightly from 66.8% (end of 01) down to 66.0% or roughly .1% per year leading up to Obama being selected. Realize here that every .1% growth, or .1% shrinkage of the civilian workforce represented by the NLFP is equal to approximately 250,000 people and a full 1% is equal to approximately 2.5 Million people.
Everybody with me?
When Obama took office the NLFP (the entire civilian workforce) was 66.0% … if this number were to follow historical patterns then in Obama’s 4 years it would have dropped as much .4% and no more ( During Bush’s term of office just prior to Obama, the number dropped by only .6% in 8 yrs)
So far after only 3 1/2 years of Obama and his socialist agenda the most important number used to determine the U-3 unemployment rate went from 66.0% to 63.6%. Simply by changing this number and reducing the size of the civilian workforce by almost 2 ½% the government is able to make almost 7 million unemployed people disappear!
Of course Occam’s razor notwithstanding there are those like my liberal progressive acquaintance; Russell, and other lefties who would like the truth to be something other than what it is they have jumped onto an explanation that they say explains this drop in the workforce (but what it really does is showcase how out of out of touch with the way Americans think)
“The answer is simple” they say…
“the labor participation rate is going down because the labor pool is shrinking because of all of those retiring baby boomers aren’t being replaced by new workers (as far as you know) Think about it they say …”with the economy so bad and unemployment so high a lot of the older workers have given up and retired” makes perfect sense to them and everyone else who has no idea of what they are saying. When I heard this from Russell my first thought was…”a bad economy and high unemployment and all of the things you just cited as reasons why the first of the baby boomers were just giving up and retiring are the same exact reasons I would give for why they would NOT be retiring. The economy has wiped out a lot of their retirement accounts…it is also responsible for the bottom falling out of the housing market (most retiring peoples #1 asset) people who were all set to retire in 07/08 have been so devastated they still can’t afford to retire still today. Inflation has taken a huge bite out of their retirement plans and if anything, in my opinion this age demographic would have seen a growth in their participation numbers …not a steep decline.
So in all fairness to my friend Russell’s theory which he no doubt based upon a quick reading of the headlines somewhere and combined it with his own counterintuitive –intuitive thinking I decided to have a look for myself. What I discovered really really surprised me …NO I wasn’t wrong …don’t be silly. (BTW The number of workers per retiree number will come into play some day …maybe as soon as 5 years from now …but not today or even tomorrow)The government isn’t cooking the books using the oldest demographic …they are doing it with the youngest demographic instead.
If it were an aging population that was driving the percentage changes in labor force participation rates, then we would expect to see nothing happening with people below age 50, and the declining rates would be with people in their 50s, 60s and over. But that isn’t what is happening at all.
On a percentage basis, the largest number of people “defined out of the workforce” by the government were 16-19 year olds. In 2007, 41.3% of teens were counted for employment and unemployment purposes, but by January of 2012, it turned out that only 30.8% were in the labor force, a sharp reduction of 10.5%. So 1.8 million teens were dropped from the labor force by definition, so they no longer existed for unemployment statistics purposes, and what every one of those teens had in common was that they didn’t have jobs.
The next biggest percentage change was among 20-24 year olds, who had an abrupt decline of 4.6% in their workforce participation. For some reason known only to the government, one million 20-24 years olds just lost all interest in work, and could be removed from the unemployment calculations.
In the largest age bracket, those 25-54 year olds in their prime working years, there was another mysterious participation rate decline of 1.5%. While much smaller than the percentage declines with the younger workers, for the simple reason that there are so many 25-54 year olds (124 million), the greatest number of jobless people went missing – 1.9 million – from the unemployment calculations in what is usually the very heart of the labor force.
The 55+ age group actually saw minor increases in their workforce participation rates, with 55-64 year olds experiencing a 0.1% rise, and those 65 and up seeing a full 2.0% rise. This change in behavior can be relatively easily explained by what has happened to retirement account values, as well as the currently very low level of interest rates, which slashes retirement income levels for many potential retirees who have followed the conventional retirement planning advice.
A generation that can’t afford to retire, doesn’t retire, and the government statistics reflect this with a very small increase in workforce participation rates among those 55 and older. Frankly, given the state of retirement accounts and retirement income, it is curious and even remarkable that the increase in workforce participation is reported to have been so low in these age categories. If, say, 10% more of the people turning 65 were actually wanting to stay in the work force in 2012 when compared to 2007, but couldn’t find jobs, then the size of the labor force – and therefore unemployment rates – would be significantly higher.
(Interestingly, 55+ is the very best place to “game” the workforce participation rates, precisely because it is the hardest to get “caught” there, and there are statistical reasons to believe that is exactly what is happening. If true, then the degree of participation rate manipulation, and the millions of jobless people inappropriately removed from unemployment calculations, could be much larger than what is shown herein. However, to keep this article from becoming book-length, that needs to be another topic for another day.)
Sorry Russell your people are shoveling horse and bull manure at us and that’s not OK. The happiness and stability of 300 million people is much more important than Obama cooking the books and lying to us just so he can continue to lie to us for 4 more years