Jobs...What Jobs?

I read an interesting little known fact today about how our government, and the Department of Labor in particular, estimates the increase or decrease in employment. As you know, a decrease in unemployment indicates an improvement in the overall economy. Since 2000, the economy has been in the doldrums with layoffs and business closings making the headlines every week.

It seems that in 2003, the Department of Labor started using a business birth/death model to adjust employment numbers. You can read all about it here. As with all government data, these numbers are derived through statistical analysis and are subject to statistical error. This business birth/death adjustment is really of questionable accuracy as the only numbers collected involve business closings. This is from their website, they “use business deaths to impute employment for business births.” In other words, they have no idea how many new businesses are started each month or how many people these new businesses hire, but they are using business deaths in some way to estimate these numbers. This adjustment over the last several months has helped the government to show a substantial increase in employment.

If you back out the birth/death adjustment, you can get a better idea of just how many jobs are being created by this weak economic recovery. For example, during the March-April timeframe, the government reported an increase of 420,000 jobs. If you back out the birth/death adjustment of 436,000 jobs, it becomes apparent that there were no new jobs created and in fact, we actually lost jobs.

This is just another example of how by manipulating numbers; the government tries to put a rosy spin on the current state of the economy. Why do this? So that you and I will continue to go into debt and spend every penny we can on cars, clothes, houses, and food to keep the economy moving forward.