How to Read Unemployment Numbers Correctly!

There is one simple fact. Most journalists know very little about economics. Let us talk about the unemployment numbers. Have jobs been lost over the past four years or not? Here are the facts. Since Bush has been elected, payroll jobs have been reduced but overall employment has increased! How is that you say? Simple, the government keeps separate books. First, they measure payroll numbers. These are figures that come from businesses. When you throw in the recession, high-energy cost and 9/11, most businesses failed to hire in the first two years of the Bush administration. The Department of Labor also conducts household surveys. This data is used to produce the unemployment rate that we are all familiar with and this figure has shown net gains in overall employment since the Bush years.

So what does a voter do when presented with conflicting data? The payroll is a good judge on corporate thinking but the household survey is a much more accurate and broader gauge of unemployment. What we are seeing is an economy in transition as many individuals are working for smaller firms or becoming self-employed. Many of these employees do not get counted immediately in the payroll surveys. In an economy that grows and changes, this is not unusual. This is part of the creative destruction of free market economics that sees some industries decline or die whereas others rise to prominence.

The media has shown to emphasize the payroll numbers but often failed to discuss the broader household numbers. Why? Good question. In some cases, I suspect simple ideology. Lou Dobbs of CNN has been a critic of free trade over the past several years and his use of the payroll numbers is done for one reason. To make the economy look worse than it is and make his arguments appear better. Democrats like John Kerry use payroll numbers because it makes their case that a change is needed. It is better to say that your opponent policies have led to job losses as oppose to admitting that your opponent policies have produce new job gains. The rest of media does so because either because of ignorance or bias against the incumbent.

So what does the real data show? Counting the recession of 2001 and 9/11, American corporations have sliced 585,00 jobs since Bush took office. However, nearly two million more Americans have found jobs and more Americans are working than ever before since Bush took his oath of office! One number shows a decline in jobs and another shows an increase. Considering that many self-employed are not counted in the payroll data, the number to consider is the household survey. That is the number that the unemployment rate is based on. Since the end of the recession, corporations have added nearly 1- 1.5 million workers to their payroll and the household surveys have shown that more than 3.4 millions Americans have gone to work since the recession end. Those are the facts.

Article Author: Tom Donelson

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