Gap Between BLS and Gallup Data Growing
Gallup’s Unemployment “Bottom Line” for November was: “The overall U.S. jobs market was stagnant in November, neither growing nor shrinking the pool of stable, full-time employment… Gallup’s seasonally adjusted U.S. unemployment rate — the closest comparison it has to the official numbers released by the Bureau of Labor Statistics — rose in November, propelled by losses in part-time employment. Gallup data suggest that when BLS releases its November employment report on Friday, it will likely report a similar increase in the U.S. unemployment rate.”
Boy were they wrong! Although Gallup’s Unemployment numbers were up significantly the BLS says they were down!
The U.S. Bureau of Labor Statistics (BLS) released the data for November. According to the U.S. Bureau of Labor Statistics (BLS), the current Seasonally Adjusted Unemployment Rate for November 2013 (released December 6th) is 7.0% down from 7.3% in October.
However, according to surveys by the Gallup organization Adjusted Unemployment was actually 8.6% in November and Unadjusted Unemployment was 8.2%. Supposedly, these two surveys are comparable! So we have a major divergence between what Gallup is telling us and what the BLS is claiming and the gap is growing. Last month the difference between the BLS unadjusted and Gallup unadjusted was 0.3% this month the difference is 1.6%. See Is the Government Fudging Unemployment Numbers? for the comparison of Gallup numbers vs. Bureau of Labor Statistics numbers.
In addition according to Gallup the U.S. Payroll to Population employment rate (P2P), as measured by Gallup, was only 43.7% in November (meaning that less than 44% of the people in the county are working) down from 44.6% in July. In other words according to Gallup, a smaller percentage of the entire population of the country are working than in July! But according to the BLS unemployment went down?
Here’s what Chuck Butler, President of EverBank World Markets has to say about BLS employment numbers… “Personally, I would just prefer that we scrapped the Bureau of Labor Statistics (BLS) survey, and go with the ADP report each month. ADP does payroll services for just about every company in the U.S. So. THEY KNOW The REAL NEW HIRES And PEOPLE LET GO! No, birth/ death model, no hedonic adjustments, no book cooking. But that’s not going to happen, so we’re stuck with the BLS survey.”
Current US Unemployment Rate Chart
(Click for Larger Image)
If we compare the BLS employment numbers to their own unemployment numbers we can get an idea of what is really happening, unless they decide to have another major revision (read massive number fudging) like they did in December 2012. In June 2013 the BLS said we had 136.769 million people employed (at least 1 hour a week) in November they say we had 137.942 million employed. So that looks good. A net increase of 1.173 million jobs. during that same period the civilian non-institutional population increased by 811,000.
|Unadjusted U-6||Unadjusted U-3||Adjusted U-3||Employment||Civilian Population||Net|
|December 2011||15.2%||8.3%||8.5%||133.292 Million||240.584 Million|
|December 2012||14.4%||7.6%||7.8%||135.560 Million||244.350 Million|
|January 2013||15.4%||8.5%||7.9%||132.704 Million||244.663 Million|
|February 2013||14.9%||8.1%||7.7%||133.752 Million||244.828 Million|
|March 2013||13.9%||7.6%||7.6%||134.570 Million||244.995 Million|
|April 2013||13.4%||7.1%||7.5%||135.513 Million||245.175 Million|
|May 2013||13.4%||7.3%||7.6%||136.383 Million||245.363 Million|
|June 2013||14.6%||7.8%||7.6%||136.769 Million||245.552 Million|
|July 2013||14.3%||7.7%||7.4%||135.577 Million||245.756 Million|
|August 2013||13.6%||7.3%||7.3%||136.002 Million||245.959 Million|
|September 2013||13.1%||7.0%||7.2%||136.612 Million||246.168 Million|
|October 2013||13.2%||7.0%||7.3%||137.521 Million||246.381 Million|
|November 2013||12.7%||6.6%||7.0%||137.942 Million||246.567 Million|
|2 mo. Change||-0.4%||-0.4%||-0.1%||1.538 Million||0.399 Million||
|12 mo. Change||-1.2%||-0.8%||-0.8%||2.226 Million||2.393 Million||
So over the last 12 months employment has increased 2.226 million but the civilian non-institutional population (a fairly narrow measurement of population) increased by 2.398 Million so that results in a net LOSS of 172,000. This corresponds to Gallup’s Payroll to Population employment rate. So how can a decline in P2P possibly result in a decline in unemployment by -0.8% ?
Note: With all the scandals coming out of Washington these days, the key question of course is whether we can actually trust the numbers coming out of the BLS. I’ve been saying for a while that the unemployment numbers don’t match up with the employment numbers. And in January 2013 the BLS decided to “fix” this problem so they went back to July of 1991 and simply changed the employment numbers. How the number of people employed could have suddenly changed that far back in history is beyond me, especially considering that they are supposed to come from reports from employers, the change started small and grew to 738,000 jobs at the peak in December 2012. Yes, they simply added 3/4 million jobs out of thin air.
Currently the US (unadjusted) unemployment rate is 7.0% according to the ”Current Population Survey” (CPS; household survey) and according to the Current Employment Statistics (CES) survey (the Employment Survey) there are 137.540 million people employed up from 135.560 million in December 2012.
Back at the peak of the unemployment, there was some discussion in the media about “discouraged workers” U-6 is the broadest measurement of unemployment which includes ”discouraged workers” and part-time workers who would rather be working full-time but can’t find full-time employment. Back in November 2011 the unadjusted U-6 unemployment rate was 15.0% and in November 2012 just in time for the election it was down to 13.9% but in December 2012 it jumped up to 14.4% and in January 2013 it jumped back to 15.4% (worse than November 2011) in February 2013 it was 14.9%. In both April and May 2013 it was 13.4%, while in June it jumped back up to 14.6%. Gallop calls this the “Underemployment Rate” and says it is was 17.3% in July 2013, 17.4% in August and 17.1% in September exactly the same as July 2012 but down from 18% in July of 2011. Of course the BLS is telling us U-6 in November is “only” 12.7%. There is a 4.6% difference between Gallup’s 17.3% and BLS’s 12.7%. In October the numbers were Gallup 16.5% and BLS 13.2% still a 3.3% difference so just like Pinoccio’s nose the lie is growing.
See U-6 Unemployment Rate for more information on the broader U-6 unemployment calculation that includes these “discouraged” unemployed and gives a truer picture of the total unemployment situation. Also see the Misery index ( which includes Unemployment Rate+ Inflation Rate). The adjusted unemployment rate in January of 2009 when Obama was sworn in was 7.8% the current adjusted unemployment rate is 7.2% if we accept the government numbers or 7.7% if we use Gallup numbers. In the intervening years the rate reached a peak of 10.1% with an average of 8.76%. The average unemployment rate during the Bush presidency was 5.3% and during the Clinton presidency it was 5.2%. In addition to looking at the unemployment rate, I prefer to look at the actual employment rate, which often shows a different picture, in that we can see how many people are actually employed and it is less easily manipulated, since the number of people who have opted for retirement or just stopped looking for work is not a factor. See the Current Employment Data.
How the US Government Comes Up with the Current Unemployment Rate
According to the U.S. Bureau of Labor Statistics they don’t actually track the unemployment numbers but instead they base the all important “Unemployment Rate” on a survey. You would think they would collect the numbers from the 50 states who would get them from their unemployment offices. But that is not how it is done. Unemployment rates are calculated based on a random survey called the Current Population Survey (CPS). Instead of calling the main office of 50 state offices, the government calls up 60,000 households every month and then estimates the unemployment rate based on that sample. According to the BLS,
Every month, one-fourth of the households in the sample are changed, so that no household is interviewed more than 4 consecutive months. This practice avoids placing too heavy a burden on the households selected for the sample. After a household is interviewed for 4 consecutive months, it leaves the sample for 8 months, and then is again interviewed for the same 4 calendar months a year later, before leaving the sample for good. This procedure results in approximately 75 percent of the sample remaining the same from month to month and 50 percent from year to year.
For more information on how the BLS performs the survey see BLS: How the Government Measures Unemployment Unemployment data is interesting but my question is always… yeah, but how many real people actually have jobs? In addition to calling 60,000 households, the government also performs a Current Employment Statistics (CES) survey where they collect data from employers. The CES survey sample is larger and so the employment data is considered more reliable than the unemployment data. For more information See: Current Employment Data Historical Employment Data Chart The Misery index measures inflation plus unemployment and is a good measure of the discomfort of the country’s population. Current Employment vs Unemployment Chart Are they just two sides of the same coin or is there more? Sometimes the best thing to do during times of economic decline is to go back to school and wait out the decline while improving your skills at the same time. See The Difference a Degree Makes in Unemployment Levels for more information on how a degree might help. Unemployment, Part-time Workers and Obamacare 7 Tips for the Newly Unemployed Job Hunting Success: How to Make Yourself More Employable Highly Skilled Worker Shortage in a Recession? The Fastest Growing Careers of 2012 Source: US-BLS Current Unemployment Rate Data