Friday, April 6, 2012

More Fun & Games With Job Loss Figures

Economist Dr. John Lott has a column at Fox News pointing out something that makes sense, but that I have not heard others point out: the "seasonal adjustment" of employment numbers are hiding a very large job loss:

But you won’t hear this depressing information on the news because everyone reports what are called the “seasonally adjusted” employment numbers, not the actual number of jobs.
Seasonal adjustments normally make sense. At certain time of the year, such as before and after Christmas, there are swings in the number of people employed. We use so-called “seasonal adjustments” to separate the normal temporary ups and downs in the employment number from more permanent trends. So if there were 2.7 million fewer jobs in January this year than there were in December, the “seasonal adjustments” compare the change in employment this past January to what normally happens at that time every year.
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Okay, most of you already know that, and there's nothing nefarious about that.  But:
The Bureau of Labor Statistics does not disclose its exact “seasonal adjustment” method, but their adjustments put most weight on recent years. But this means that there were such large job losses over the last few years that even relatively normal January job loss of 2.7 million looks good. Thus, a 2.7 million-job loss this past January produces a larger “seasonally adjusted” 275,000 increase in jobs, but five years ago the same 2.7 million loss would have probably produced an adjusted number closer to zero.
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Dr. Lott says that if you compare January 2012 employment to January 2009 employment, there were 
either 492,000 or 1.26 million fewer jobs than existed in January 2009 depending on whether one uses the Household or Employer job surveys, respectively.
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That explains why things don't feel much better--and in some ways, feel worse, than they were in 2009.

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