In August, the labor-force participation rate in the U.S. dropped to 63.5%, the lowest since September 1981. By definition, fewer people in the workforce leads to better unemployment numbers. That's why the unemployment rate dropped to 8.1% in August from 8.3% in July. Meanwhile, we're told in the BLS report that in the months of August and September, federal, state and local governments added 602,000 workers to their payrolls, the largest two-month increase in more than 20 years.The first claim is true – the labor force participation rate did fall from 63.7% to 63.5% but Welch conveniently omits the fact that this same rate rose from 63.5% to 63.6% as of September. And who told Mr. Welch that reported government employment shot up by over 600 thousand workers in just two months? I guess this person may have been Neil Cavuto or perhaps Donald Luskin because when I checked out the same series per FRED, I see an increase of only 55,000 over the past 3 months. As our graph shows, we have seen a very mild reversal of the unfortunate downward drift of government employment (I'm using seasonally adjusted data here - Mr. Welch didn't say what he was using and his claim is not even consistent with the data not seasonally adjusted). In all of his rants, Mr. Welch has proven only one thing – he is utterly clueless per the employment statistics that the professionals at the Bureau of Labor Statistics report. Before he decides to attack their integrity again – might I suggest he actually learn something about what they report?
Wednesday, October 10, 2012
Jack Welch’s Ignorance Regarding Employment Data
Mark Thoma is very upset with the latest from Jack Welch and he should be. But let’s be calm and look at a couple of Welch’s two key claims: