Government Unemployment and Jobs Numbers Misleading and Deceptive
According to the US Bureau of Labor Statistics, new claims for unemployment fell to 601,000 last week. As bad as that number is, it is down from the prior week’s new claims of 625,000. There are currently 6.82 million people collecting unemployment benefits nationwide. That is a record number but it doesn’t tell the entire story. Unemployment numbers are far worse that those reported, and the Obama administration’s claim that it has created 150,000 new jobs through its so-called stimulus package is nothing but a rather insulting snow job being fed to taxpayers.
The official overall unemployment number is now 9.2%. In some states it is considerably higher. But when you include people who have given up trying to find a job and those who are under-employed, the number exceeds 16%.
To put that in perspective, one only needs to look at the unemployment rate of the Great Depression. While many people will tell you that 25% of people were out of work at the height of the depression, that number was not hit until 1933; four years after the Depression started. By the end of 1930, just one year after the start of the Depression stood at 8.7%. By the end of 1931, it had soared to 15.9%. We’re beyond that number today if you include the second group of unemployed mentioned above.
As bad as things are, most economists believe that unemployment numbers will continue to rise throughout the rest of this year. The official number is expected to go over 10% by the beginning of next year.
It is no wonder that with this kind of news, the Obama administration is trying to focus on the bright side. But they are trying to seize media attention by claiming (a) that job losses have slowed and (b) that the stimulus package passed earlier this year has created or stabilized 150,000 jobs. Let’s take a look at those two claims.
Last week’s jobs report showed that private sector jobs decreased by 345,000. The number that had been expected was actually 565,000 fewer jobs. Good news right? Well, wait a minute. Now you may be asking yourself, “If new claims for unemployment were up by 601,000, why are companies claiming that they only reduced their payroll by 345,000?” I’m glad you asked.
As it turns out, the 345,000 number is being manipulated by the government. They use an index that they have created called the Birth-Death Model. In short, this model does not take into account job losses due to the “death” of a company. It assumes that new jobs will be created by the “birth” of new companies and that the rate of company “births” will be greater than the rate of company “deaths”. How many people do you know that have started a new business in the past six months and who are also hiring? The model is a sham and it accounts for almost all of the difference between the 345,000 number reported and the 565,000 number that was expected.
What this really tells us is that virtually everyone who filed an unemployment claim did so almost immediately after being laid off and that the 601,000 new claims are a much better indicator of how the economy is doing.
As for the 150,000 jobs that the Stimulus Package has created or stabilized, even if it were true it would be a joke. 150,000 is less than the number of new unemployment claims filed in any two days last week. The stimulus package alone will cost taxpayers more than $1 Trillion and the administration claims that it will save or stabilize 750,000 jobs. That amounts to a cost of $1.33 Million per job! I don’t know about you, but I want one of those jobs. If it turns out that we only create or stabilize 150,000 jobs, the cost jumps to $6.66 Million per job! They should hold a lottery to see who gets hired. It’s absolutely crazy but even that is not the sad part. The saddest thing is that the administration has to manipulate its data – remember the Birth-Death Model – to even get close to these numbers.
Mark Twain was right when he said, “There are lies, damned lies and statistics.” Plain and simple, the American people are being lied to so that the politicians in Washington and every state capital city retain the ability to tax and spend like there is no tomorrow. They think that if you believe that their spending of your money is creating jobs, you’ll go along with it. Unfortunately even if they are not right about anything else, they are probably right about that.
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