Unemployment Benefits

Jack Welch Makes Good Points About Cooked-Job-Number Claim

|

Jack Welch ready to throttle somebody

Older readers may remember that last week, in a simpler, more innocent America, the 7.8 percent U-3 unemployment rate was supposed to reverse the stunning collapse of President Obama's re-election campaign. At the time, some spoilsports cast doubts on the surprising 0.3 percent drop in a month (which was unsupported by any discernable improvements in economic growth, increases in job creation or declines in new unemployment benefits claims), and the gloomiest Gus was former General Electric CEO Jack Welch, who accused the Obama Labor Department of fudging the numbers.

Welch got pilloried for that claim, but he's back with a more detailed defense. Although his Wall Street Journal op-ed starts out inauspiciously, by comparing his travails to Soviet show trials and Maoist re-education, Welch makes some interesting points about how the Census Bureau and the Bureau of Labor Statistics conduct their unemployment surveys:  

Some questions allow for unambiguous answers, but others less so. For instance, the range for part-time work falls between one hour and 34 hours a week. So, if an out-of-work accountant tells a census worker, "I got one baby-sitting job this week just to cover my kid's bus fare, but I haven't been able to find anything else," that could be recorded as being employed part-time.

The possibility of subjectivity creeping into the process is so pervasive that the BLS's own "Handbook of Methods" has a full page explaining the limitations of its data, including how non-sampling errors get made, from "misinterpretation of the questions" to "errors made in the estimations of missing data."

Bottom line: To suggest that the input to the BLS data-collection system is precise and bias-free is—well, let's just say, overstated.

Even if the BLS had a perfect process, the context surrounding the 7.8% figure still bears serious skepticism. Consider the following:

In August, the labor-force participation rate in the U.S. dropped to 63.5%, the lowest since September 1981. By definition, fewer people in the workforce leads to better unemployment numbers. That's why the unemployment rate dropped to 8.1% in August from 8.3% in July.

Meanwhile, we're told in the BLS report that in the months of August and September, federal, state and local governments added 602,000 workers to their payrolls, the largest two-month increase in more than 20 years. And the BLS tells us that, overall, 873,000 workers were added in September, the largest one-month increase since 1983, during the booming Reagan recovery.

These three statistics—the labor-force participation rate, the growth in government workers, and overall job growth, all multidecade records achieved over the past two months—have to raise some eyebrows. There were no economists, liberal or conservative, predicting that unemployment in September would drop below 8%.

I know I'm not the only person hearing these numbers and saying, "Really? If all that's true, why are so many people I know still having such a hard time finding work? Why do I keep hearing about local, state and federal cutbacks?"

I sat through business reviews of a dozen companies last week as part of my work in the private sector, and not one reported better results in the third quarter compared with the second quarter. Several stayed about the same, the rest were down slightly.

If Obama can't trust General Electric CEOs, this country really is racist.

The BLS maintains six different measures of unemployment, and U-6, which measures part-time work, is the only one that didn't go down last month. I don't know whether that does or does not support Welch's hypothesis about babysitting accountants. Would the hanky panky come from shifting part-timers who would have counted toward U-3 into U-6?

Robin Goolsbee with unidentified male.

The Census Bureau's 26-page questionnaire [pdf] tries gamely to comprehend the shifting, idiosyncratic nature of work, and the BLS and Census gather a wide range of nuanced information. The data-gathering certainly seems to be a pretty transparent process. (Caveat: I've never met anybody who's been contacted for an unemployment survey, but I've also never met anybody who's been contacted by Gallup and I've only met one person who's been contacted by AC Nieslen; I've also never seen a trapdoor in the ceiling of an elevator nor a loose floorboard which allows important items to be concealed, though I understand from movies and literature that these are ubiquitous.)

Secretary of Labor Hilda Solis says top men are working on the unemployment statistics, but that doesn't mean the numbers couldn't be manhandled. Welch scores a nice hit by digging up a New York Times op-ed former Obama economic advisor (is there any other kind of Obama economic advisor?) Austan Goolsbee wrote back in 2003, when the genocidal G.W. Bush administration was sucking dry the marrow of the laboring classes with an unconscionable 5.9 percent unemployment rate. Money quote: "the government has cooked the books."

Besides the skepticism a reasonable person should have about Solis' Labor Department, Obama in 2009 moved to get the Census Bureau to report directly to the White House. This was widely believed have doomed one of Obama's celebrated efforts to "reach across the aisle," when Commerce Secretary nominee Judd Gregg dropped out of the running.

Welch still doesn't present any evidence of fraud. But the administration's dedication to accuracy on items that are more important than jobless numbers seems notably less fervent than its commitment to protecting America's lady parts and its wildly popular children's television characters from the mortal threat posed by Stacey Dash. Good on Jack Welch for keeping this question alive.

NEXT: Report: Adolescents Held in Solitary

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Good article

  2. I didn’t even know about the Census being directed from the WH. That stinks to high heaven.

    1. I’ve mentioned this before, and it’s anecdotal and unverifiable, but a friend of my sister-in-law was working for the census during 2010. Her story was that policy was handed down directing that everyone in the office be fired every friday, and hired again every monday. Nothing really illegal about that, I suppose. This was during the time when the gov had its “jobs created and saved” map online, which I recall, was called into question for containing various anomalous, and sometimes seemingly-impossible figures.

    2. Democrats have had a hard-on for the Census bureau starting with Clinton in the late 90s. They realized that by turning the process of the census into something similar to district gerrymandering, they could direct phat government dollars toward favored constituencies…

      1. The Census Bureau fucking sucks rocks. Somehow or another they managed to bribe the owners of condominiums to allow them to endlessly harass their residents.

  3. Hachi machi. Not bad for that man-stork.

    1. I would suck up to Obama and work in his cabinet if it meant my wife looked like that.

    2. I thought that was the White House Party Crashers of 2009.

    3. That picture is unusually flattering. In reality….not so bad, but she doesn’t make me want to roundhouse kick a Bolivian child either.

      1. I’d say he did alright for himself.

        1. Gentlemen: you’re both right.

  4. The second alt+text is dah bomb!

  5. Fail on alt text. Should’ve been:

    “Is Jack Welch gonna have to choke a bitch?”

  6. Welch still doesn’t present any evidence of fraud.

    Oh, so he’s still wrong?

    1. The BLS maintains six different measures of unemployment, and U-6, which measures part-time work, is the only one that didn’t go down last month. I don’t know whether that does or does not support Welch’s hypothesis about babysitting accountants. Would the hanky panky come from shifting part-timers who would have counted toward U-3 into U-6?

      1. That’s not evidence of fraud.

        1. He presented evidence that there could be fraud. The rediculous nature of the number cries out for some kind of explanation. Given the subjective nature of the data collection, Welch lays out a credible claim that fraud is potentially one of them.

          Welch says it is fraud and offers how fraud is a credible explanation for the number. What is your explanation for the number being so at odds with every other economic matrix?

          1. There’s nothing ridiculous about the numbers. Republicans just don’t like that they dipped below 8%, ruining their chance to continue gloating about a Obama not fulfilling a promise he never made.

            1. Re: Tony,

              There’s nothing ridiculous about the numbers.

              They’re certainly not ridiculous. Just not serious.

              Republicans just don’t like that they dipped below 8%,

              It hasn’t dipped below 8%. Real unemployment is near Great Depression highs

              ruining their chance to continue gloating about a Obama not fulfilling a promise he never made [sic].

              “Though the Stimulus I propose, unemployment will never be over 8%”

              1. Funny, I googled that quote and the first site listed was this one where you typed it. This qualifies as a big fat lie, I think.

                Where did you learn to constantly misuse [sic], btw?

                1. The waters also stopped rising.

            2. See the Household Survey chart in this article.

        2. “Good on Jack Welch for keeping this question alive.”

          RTFA.

        3. And Goolsbe said the same thing in 2003. I recall you agreeing with him. So its only fraud when Bush does it. God you are a hack.

        4. Hey joe! How about that Hugo Chavez! Just like ACORN, he’s doing God’s work in some of the worst neighborhoods in the Americas.

          Or to paraphrase, is their any truth to all these rumors I hear that allege that you fuck sheep?

        5. 1. What would you accept as evidence of fraud?

          2. If fraud did occur, what is the likelihood of your answer to (1) being produced?

    2. WelchHarry Reud still doesn’t present any evidence of fraudtax evasion.

      FTFY.

  7. The November report will be really interesting. Are they willing to fudge it for 2 months and not restate September?

    1. The November number will adjust the September number back to a reasonable term. And hacks like Joe from Lowell will say “no one ever said that number was legit. This is old news. Nothing to see here”.

    2. IIRC the next report comes out only two days before the election. Not enough time for “fine print” (which is what corrections to Sept would be treated as) to filter out to low-information voters, particularly if the MSM keeps the lid on it.

  8. Bottom line: To suggest that the input to the BLS data-collection system is precise and bias-free is?well, let’s just say, overstated.

    I can hear Krugabe stamping his little feet in a screeching tantrum now.

  9. “He built GE into the greatest company on Earth, and the Earth into one of the top three planets in the universe.”

  10. (Caveat: I’ve never met anybody who’s been contacted for an unemployment survey, but I’ve also never met anybody who’s been contacted by Gallup and I’ve only met one person who’s been contacted by AC Nieslen; I’ve also never seen a trapdoor in the ceiling of an elevator nor a loose floorboard which allows important items to be concealed, though I understand from movies and literature that these are ubiquitous.)

    Consider me thrice hit by lightning. First, I was a Neilsen participant a while back, though just for radio. Second, I not only have seen lots of trapdoors in elevators (they can be seen from above in buildings with atriums for one easy example), but I was evacuated from a stuck elevator via one. Third, the second house I lived in had a pier and beam foundation and if you went into the hall closet, which was on the landing of a staircase, there was a hatch that allowed access under the house – and had a second floor under the landing where you could stash stuff.

    I don’t think there was hanky-panky in the BLS data, just a month where the random sample was a good bit away from the mean.

  11. Welch still doesn’t present any evidence of fraud.

    Let’s say you just had dinner in a restaurant you frequent regularly. Let’s also say you had pretty much what you usually have. Now, let’s suppose the waiter drops off a bill which is substantially higher than it has been in the past.

    Wouldn’t you ask, “How the fuck did you come up with THAT number?”

  12. The possibility of subjectivity creeping into the process is so pervasive[…]

    The possibility, Jack? Please, you’re being too kind. It is a certainty.

    The Secretary of Labor (Hilda Solis) may say that the BLS has been delivering “reliable data” since 100 years ago until the cows come home. The fact is that you cannot trust the government numbers precisely because they’re based on surveys such like the one mentioned, and there’s no way around it: People lie.

    Some questions allow for unambiguous answers, but others less so.

    Leaving that aside, the interpretation of the data lends to subjectivity more easily. Take, for instance, the claim that Cuba has lower newborn children morality rates compared to the U.S., a claim that is entirely based on misconstrued data, as any newborn child that is born but dies soon after is considered as not having been born.

    Same case here.

  13. Secretary of Labor Hilda Solis says top men are working on the unemployment statistics

    “Who?!?”
    “Top. Men.”

  14. But the administration’s dedication to accuracy on items that are more important than jobless numbers seems notably less fervent than its commitment to protecting America’s lady parts and its wildly popular children’s television characters from the mortal threat posed by Stacey Dash.

    Oh, snap!!!

  15. I know I’m not the only person hearing these numbers and saying, “Really? If all that’s true, why are so many people I know still having such a hard time finding work?

    Uh-huh. I’m sure Jack is schlepping around a vast pool of unemployed compadres.

    There’s is almost no way I believe this is anything but a TEAM issue. If the roles were reversed, the TEAMs would have reacted identically.

    1. Re: MP,

      There’s is almost no way I believe this is anything but a TEAM issue.

      The fact that you can believe in no uncertain terms that it can easily become a TEAM issue either way speaks volumes about the highly touted “reliability” of government-originated numbers.

      1. No. It doesn’t. It speaks to the unquenchable desire to spin any situation to your political benefit. If unemployment went up or stayed flat, the TEAM out of power would claim the numbers were PROOF that the incumbent power was helpless. And when the numbers go down…well, we saw what happened.

        ANY survey based numbers have a built in level of unreliability. It’s the consistency of the survey technique that ultimately matters.

        And there’s ZERO evidence here for Jack’s claims. He’s just playing the TEAM card for all it’s worth.

        1. The numbers didn’t just go down… they went down in an extremely suspicious manner. The gap between the verifiable employer survey and the unverifiable household survey was, with the understandable exception of Sept 2001, the biggest it’s been in three decades.

    2. I don’t give a shit about the TEAMs and how they react. You’re probably right about the positions being reversed if the GOP held the WH. So? Doesn’t affect the likelihood that the numbers were fudged.

  16. Goolsbee says the government cooked the books in 2003 proves the government cooked the books in 2012? Goolsbee’s charge, which is heavily overstated, relates to amendments to disability legislation signed by Ronald Reagan in 1984. Welch’s charge, that BLS monkeyed with the statistics for this month and this month only, is total bullshit. If you want the T,TWT,ANBTT, see, who else, me:

    http://avanneman.blogspot.com/

    1. The charge isn’t that BLS monkeyed with the data, it’s that the Census Bureau reporting directly to the Anointed One did.

  17. First, I like Jack Welch and believe all government numbers should be suspect…,

    However, Mr. Welch is moving the goal posts here…. this all started with a twitter post from Welch claiming the number was specifically rigged by this adminstration for obvious reasons.

    He then writes, oh worries me, when people disagree.

    Followed up with a well reasoned and nuanced understanding of the UE number.

    However, he didn’t start this argument by claiming that the UE number is and has always been too subjective to be believed, he claimed instead that this adminstration did something in particular.

    FWIW – I believe very strongly that Obama is a bad president and needs to be removed from office…. but Jack is defending an assertion he never made, because the original assertion is unprovable and he got his feelings hurt when people rightfully pushed him on his open, public statements.

    1. That’s not what moving the goal posts is.

  18. “unidentified male”? Don’t you mean “spectacularly lucky dude”?

    1. Goolsbee’s gorgeous wife is from my hometown.

  19. Time to change the name from ‘Reason’ to ‘Conjecture’.

  20. Does Romney have a “dog” of a chance?

    muttsformitt.com

    FRESH AIR FOR AMERICA!

    get the gear at
    muttsformitt.spreadshirt.com

Please to post comments

Comments are closed.