Due to the government shutdown the Bureau of Labor Statistics is not publishing the regular Unemployment statistics.
The Federal Reserve Bank of Atlanta President, Dennis Lockhart, says that it is fortunate that the FED chose not to begin “tapering” the money stimulus under the circumstances. “We avoided a potentially very awkward situation of reducing stimulus just on the eve of what now has developed” he said.
Whether the Quantitative Easing is actually having much of an effect on unemployment or not is a discussion for another day. But as we said in a recent article entitled: What’s So Bad about Shutting the Government Down? since we don’t have BLS numbers we will turn to the free market and get our numbers elsewhere. Besides, free market numbers are probably more accurate anyway.
Speaking of accuracy, according to Gallup polls the Unemployment rate was 8.7% in August while the BLS said it was “only” 7.3%… a whopping 1.4% difference! This is much more than the average difference. We compare the BLS numbers to the Gallup numbers In Is the Government Fudging Unemployment Numbers? where you can see that the BLS numbers tend to underestimate unemployment but usually not by quite that much.
So was the August Gallup number just an anomaly? Did Gallup make a mistake? The number did appear a bit out of line. At 7.7% in September are they just returning to normal? It would have been interesting to see what the BLS numbers were for September. Would they have converged with the Gallup numbers at around 7.7% or would the BLS numbers fall to maintain the unbelievable gap of 1.4%? I guess we will still have to wait and see.
P2P vs. Unemployment
There are different ways to look at the Unemployment situation. One that we don’t see too often is Payroll to Population rate (P2P). The P2P estimates the percentage of the total population that is working, so technically speaking it is an employment number rather than unemployment but it is still a percentage.
Gallup stated this month that the Payroll to Population rate (P2P) has fallen from 44.6% in July to 43.5% in September, meaning that 43.5% of the total population is working more than 30 hours a week. That is a 1.1% loss in two months.
Both Gallup’s and the BLS unemployment rate measures the percentage of the workforce that isn’t working. Having 1% of the total population lose their jobs is significant since it should equate to approximately a 2% jump in the Unemployment rate. Since the workforce is only roughly half of the total population.
But that brings us to the following question- How can the unemployment rate fall while the P2P is also falling? You would think, they would move in opposite directions because one measures employment while the other measures unemployment.
In addition to being opposites they also use different parameters. The P2P measures “the percentage of the U.S. adult population aged 18 and older who are employed full time by an employer for at least 30 hours per week.” While the Unemployment Rate measures anyone who has worked at least 1 hour. So if you are employed part-time you are not “unemployed” but you still may not be counted in the P2P.
Obamacare and Unemployment
As we’ve said before, “There is evidence that Obamacare is causing a shift in the number of part-time employees (reducing the number of hours worked per employee) so the number of part-time workers necessary is increasing. See Unemployment, Part-time Workers and Obamacare.” This is exactly what is happening as the Gallup numbers indicate an increase in the percentage of workers who are working part-time but want to work full time. According to Gallup, the percentage of part-time workers who would prefer to work full time increased from 8.7% in August to 9.4% in September. For more information on the true unemployment rate see Employment vs. UnEmployment.
Image courtesy of Xedos4 / FreeDigitalPhotos.net.
