The Real August Jobs Report
The Monthly Jobs Report from the Bureau of Labor Statistics (BLS) is defective. Always has been. It combines data from different databases and mixes them together into one report as if they are both one and the same thing. They are not.
The two combined reports are:
- Table A-1 – Employment status of the civilian population by sex and age
- Table B-1 – Employees on nonfarm payrolls by industry sector and selected industry detail
In the current economy, the way these two databases are combined presents a skewed view of the real job creation picture in the United States.
The BLS failed to report there were -119,000 jobs lost last month!! It reported +96,000 jobs created instead. That is a big difference.
Why is the real monthly job creation number so much different from what is reported in the Monthly Jobs Report that we hear so much about in the news?
Table A-1 is the more complete of the two. It accounts for total non-military employment in the United States. Last month that total was 142.1 million seasonally-adjusted jobs.
Table A-1 was used to create the above graphic of job creation from January 2008 through August 2012.
Table A-1 provides us very useful data: unemployment rate (8.1%), total size of the employable population over 16 years of age(243.6M), size of the civilian labor force(154.6M), total employed(142.1M), Participation Rate(63.5%), employment-population ratio(58.3%), total number unemployed(12.5M), total not in the labor force(88.9M) and the number of persons who currently want work but don’t have a job(7.0M).
The numbers in parenthesis are the seasonally-adjusted figures reported by the BLS in the August 2012 Monthly Jobs Report. The seasonally-adjusted numbers are calculations based on the actual non-seasonally adjusted numbers that the BLS also reports.
Table B-1 is a subset of Table A-1. It contains total nonfarm, non-military employment. Last month that total was 133.3 million jobs. It was 8.8 million FEWER jobs than accounted for in Table A-1.
Table B-1 was used to create the above view of nonfarm job creation from January 2008 through August 2012. Note the big differences from the more comprehensive Table A-1.
Table B-1 provides the Monthly Jobs Report two things:
- Total nonfarm jobs created (+96,000)
- Job totals by nonfarm business sectors
Table B-1 is important in the Monthly Jobs Report because it specifically identifies job creation statistics from various business sectors.
Business sectors include things like mining, construction, manufacturing, automotive, financial and public-sector job creation.
For example, from Table B-1 we learn that since Barack Obama became President there have been +115,100 total jobs created in the automotive industry. That includes +90,000 in manufacturing and parts. It includes +25,100 in retail sales of both cars and parts.
The main problem with combining Table A-1 and Table B-1 data into one report is one crucial number… total jobs created.
The Monthly Jobs Report uses the Table B-1 number that erroneously overstates the real job creation record at the present time. As can be seen in the graphs above, the real job creation numbers are far more ragged in this recovery than those of nonfarm job creation only.
That one change alone is the difference between reporting +96,000 jobs created last month instead of -119,000 jobs lost.
Earlier this month there was a great deal of conflicting buzz surrounded the unemployment rate dropping to 8.1%. Normally that would be great news, but it wasn’t.
That was primarily because of several other statistics from the more comprehensive Table A-1. Those numbers were the participation rate (63.5%) and the number of workers who dropped out of the workforce (-368,000). That was 4 times more than the reported net gain in jobs from Table B-1.
Basically, the unemployment rate dropped because -368,000 discouraged workers gave up and dropped out of the workforce. In August we had the lowest workforce participation rate since September of 1981.
The Monthly overall job creation statistics should be derived from Table A-1 instead of Table B-1. In the current recovery it paints a gloomier, but more truthful picture. It would spur Congress and the President to take job creation more seriously if the more accurate jobs picture were reported.
If reported from Table A-1, the public would then know this country has LOST -314,000 jobs in the last two months alone.
Instead, using Table B-1 overall job creation allows both Congress and the President to claim we are slowly creating jobs when the truth is that we remain in a jobs depression that is getting worse again.