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September BLS Unemployment Numbers Differ Vastly from Gallup

The U.S. Bureau of Labor Statistics (BLS) released the September Unemployment figures on October 3rd. The Seasonally Adjusted Unemployment Rate was 5.9% down from 6.2% in August. The Unadjusted Unemployment rate was also down from 6.3% in August to 5.7% in September.

BLS_vs_Gallup_Unemployment_2_Sep2014For the last couple of months the BLS numbers have been surprisingly close to the Gallup numbers but it appears that the period of sanity has ended. This month the BLS numbers went down while the Gallup numbers went up. So Gallup says the unadjusted Unemployment rate is 6.6% while the BLS says it is only 5.7% for a whopping 0.9% difference. That is a 15.8% margin of error. Notice the major divergence at the end of the chart.

According to the commissioner of the Bureau of Labor Statistics monthly report, “Total nonfarm payroll employment increased by 248,000 in September, and the unemployment rate declined to 5.9 percent. Employment increased in professional and business services, retail trade, and health care.”

The BLS says the broader U-6 unemployment fell from 12.0% in August to 11.3% in September while Gallup says that it is actually 15.1% a difference of 3.8% or a 33.6% margin of error. A cynical person might say that the past two months of reality on the part of the BLS was just creating an opportunity to create a drastic drop for the months prior to the election. But that can’t be … can it?

Many people consider the U-6 unemployment rate to be the “real” unemployment rate because it includes “discouraged workers” i.e. those who would like to work but have given up looking because they don’t feel there are any jobs available for them. See What is U-6 Unemployment? for more information.

Payroll to Population Rate

The payroll to population rate looks at a slightly different metric than the unemployment rate although at first blush it sounds similar. While the unemployment rate looks at the percentage of the “workforce” that can’t find a job (and a fairly narrow definition of the term workforce at that). Gallup’s Payroll to Population rate (P2P) looks at the percentage of the total population that is working. This number, in my opinion, is much less subject to fudging since although you can redefine the term “workforce” as evidenced by the various unemployment rates (U1 through U-6) it is much more difficult to redefine the total population of the United States.

Unlike the unemployment rate where a lower number is better, in the P2P, a higher number is better in that it indicates a greater percentage of the population is working. In September, Gallup’s P2P was 44.8% down from June’s 45.0%, July’s 45.1% and August’s 44.9% .

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About Tim McMahon

Work by editor and author, Tim McMahon, has been featured in Bloomberg, CBS News, Wall Street Journal, Christian Science Monitor, Forbes, Washington Post, Drudge Report, The Atlantic, Business Insider, American Thinker, Lew Rockwell, Huffington Post, Rolling Stone, Oakland Press, Free Republic, Education World, Realty Trac, Reason, Coin News, and Council for Economic Education. Connect with Tim on Google+