The Hidden Grimness of the State Unemployment Numbers

The government's Bureau of Labor Statistics (BLS) has released the state by state unemployment figures for May 2011 and compared them to May 2010.  In the 15 states they reported a significant change in jobs, they reported lower unemployment rates.  Changes in jobs in the other 35 states were not significant according to the BLS and will not be discussed here.  A critical review of the numbers shows this interpretation of the unemployment situation to be the work of flim-flam artists. 

Perhaps this should not surprise us in view of the control over the Dept. of Labor exercised by labor unions and the partisanship widely on the loose in the Obama administration.  The reality of the state by state review here is a grim one, but one with some useful information for job seekers.  Of course this analysis is also important for anyone deceived by the impression that the jobs situation is slowly improving.  It is actually getting worse.  At the national level I showed this to be the case here, noting that there are 693,000 more missing jobs in May 2011 than there were in May 2010.  There is no job creation adequate to keep up with the population growth of the nation.

The BLS reported that 665,400 more people were employed in May 2011 compared to May 2010 in these 15 states.  They reported that 87,300 more people were employed in California in May 2011 than in May 2010.  They used seasonally adjusted job numbers, but that should not matter given that they were comparing a May to a May.  I decided to check whether the same result would be found using the Work Force numbers and the Unemployed numbers which were not seasonally adjusted.  Since the Work Force is the sum of the Employed and the Unemployed (as recognized by the BLS), one can subtract the Unemployed from the Work Force and find the seasonally unadjusted Employed numbers for each state.  One wonders why the Employed numbers are not given directly if one expects transparency.  Transparency, much promised by Obama, is the last thing one gets from Obama and his followers.

So, what do we find for the jobs added in California over the last year?  We find that there are 40,100 fewer people employed, not 87,300 more people employed.  The state of Washington is another for which positive change in net jobs is reported as 19,600, but there was actually a loss of 32,100 jobs from May to May!  Overall, in the 15 states the BLS says added 665,400 jobs, only 333,100 were actually added.  This is almost exactly half the reported number of jobs added.  Of the 15 states reported to have lower unemployment, only 3 created as many jobs as the BLS said they did.  Examine the numbers in the table below:

The next to the last column provides the change in the Civilian Labor Force.  In any case in which the number is negative, people have either given up looking for employment or they have left the state, presumably for employment or in the hope of employment elsewhere.  In 9 of the 15 states in which Obama's BLS has claimed an improvement in the unemployment rate, this number is negative.  The only large positive number belongs to the state of Texas.  Nebraska's positive number is significant given the small population of the state.  But, note that California lost 149,500 people in its workforce, which means the situation in California is particularly grim.  The loss of 58,500 people in the workforce in Washington and of 76,600 in Michigan are also very grim signs.  Illinois, Pennsylvania, and Oklahoma also had large losses.  For the 15 states that supposedly had improvements in their unemployment rates, there was a net reduction in the civilian labor force of 247,000 people. 

Of course this could mean our population is shrinking, but that is most unlikely.  What it means in net is that people have given up on finding a job and the BLS no longer counts them in the workforce.  If they are no longer in the workforce, then they do not count in the calculation of the unemployment rate.  State by state, it could mean that people simply moved out of a state.  But if this list really has all of the states in it with statistically significant changes in jobs and they are all reported as positive changes, then it would be very odd of people to migrate to those states which are statistically known not to be creating jobs.  No, it is clear that the effect is that the unemployed have lost all Hope under the regime of this most hyped Hope President.

At this point, you might be thinking that the Obama administration just exaggerated the job additions by a factor of two, but there was still a bit of improvement in the job situation.  If so, you have missed a very important consideration.  From 2000 to 2010, our population grew at an average rate of 0.94% a year.  Assuming that each state on our list of 15 significant job growth states according to the BLS grew at the national average, each of those states would have to add 0.0094 times the number of employed people in May 2010 just to provide the jobs needed to keep up with the growing population.  I calculated that number in the last column.  California needed 150,196 added jobs to tread water, but it lost 40,100 jobs to fall behind by 190,296 jobs.  The state of Washington needed to add a net of 30,042, but it lost 32,100 to fall behind by a total of 62,142 jobs.  Failures such as these are why the jobs situation for the young is particularly awful.


Only 6 of the 15 states the BLS told us had an improving unemployment situation have created more jobs than they needed to to stay even with expected population growth.  They are, with the number of jobs they added above the number needed to accommodate average population growth:

Ohio, 21,807 jobs
Oregon, 16,076 jobs
Texas, 9,439 jobs
Nebraska, 4,480 jobs
North Dakota, 1,418 jobs
Wyoming, 38 jobs

It should be noted that Wisconsin almost met its goal to keep up with normal population growth.

First of all, noting that we were missing 21,484,000 jobs in May 2011, these six states creating more jobs than they need to keep up with population growth actually have very few jobs to meet the demand for jobs.  In addition, these states have their own unemployed.  But, if you are able to relocate to a state where the job situation is not hopeless, you may want to consider these states.  The North Dakota and Wyoming job markets are very small, so you should go to one of the top four states on the list baring unusual job preferences and skills.  Ohio and Oregon are somewhat surprising.  Everyone knows that Texas has been a job creator, but once you discount the false claim by the BLS that Texas created 205,400 jobs from May to May with the actual number of 114,300 jobs, the Texas phenomena is reduced to its being one of the few states to simply keep up with expected average population growth in job creation.

Now you can appreciate how truly ludicrous it is for Obama and his administration and his Democrat allies to make the claim that they are making progress on reducing the horrific unemployment.  It is their determined anti-business and anti-wealth-creation mindset that has kept us from recovering from this Great Socialist Recession and kept business from hiring.  Obama and those who share his socialist viewpoint have made a lifetime point of not understanding business and economics because they believe creating money is immoral.  But, earning money by offering others the values they want in the private sector is both moral and necessary.  The results of the Obama vendetta against people earning a livelihood have been brutal to the General Welfare in the extreme.  Not surprisingly, they do not want us to understand just how brutal they have been.

We must make every effort to remember these painful facts throughout this coming election cycle and work hard at explaining the reality to others.  If we are not successful, Obama and his Democrat allies will continue to wreck havoc on the People of the United States.

The Real and Sad Unemployment Rate in December 2010

This is another of my many unemployment updates in my campaign to correct the very wrong impression given by the commonly quoted unemployment rate put out by the Bureau of Labor Statistics of the Department of Labor.  They also supply the facts from which a more realistic assessment can be made of the employment situation.  In this last decade, the real state of employment has broadly become worse with time.  The data we need to examine is given in the table below:

The numbers reported here in thousands or percentages are not seasonally adjusted.  The BLS keeps readjusting the seasonally adjusted numbers over a three month period after they first report them, but the unadjusted numbers are solid.  There is also less likelihood that any political games are being pulled with the raw numbers.

The BLS reported, as did the press and the news networks, that unemployment went down in December from a rate of 9.8% to 9.4%.  But in reality, the number of people actually employed fell by 256,000 people, while the population of working age people grew by 174,000 people.  The reported number of unemployed people fell by 285,000 people.  Since the number of people supposedly no longer interested in working fell by more than the reduction in the number of people who were working, the official unemployment rate fell.  This is very deceptive.  Extremely deceptive.

This kind of disastrously wrong impression is why I was compelled to find a new way to look at the unemployment statistics.  There is no way to use the standard approach to indicating the number of people who want to work except in good times when decent jobs are available to people to take.  From about 1997 to early 2000, many jobs were available.  Admittedly, this was at the height of what turned out to be the dot.com bubble.  Nonetheless, it does tell us that given the availability of good jobs, about 67.49% of the non-institutional work age population wants to work.  Using that knowledge as a criterion, we see that with our present work age population, which grows monthly, we needed 161,226,000 jobs in December.  Unfortunately, due to the huge and ever-growing interference of government over the last decade with the private sector economy, we actually had 22,067,000 fewer jobs than this.  These missing jobs increased by 373,000 jobs in December.  The real totally unemployed rate was 13.69%, not the reported 9.4% rate.  This is in no way the good news we were given by our highly trusted news media.  Even Fox News and the Wall Street Journal go along with the false news momentum in these cases.

The number of missing jobs in January 2000 was only 5,689,000 jobs, but by December 2005, this number had already increased to 10,710,000 jobs.  In December 2008, the missing jobs had increased to 15,287,000 jobs and the recession was recognized as having begun, though in reality, it had just accelerated as far as jobs go.  The worst month of the recession in terms of missing jobs was January 2010 when the missing jobs were at 14.41% and number of missing jobs was 23,029,000.  The number of missing jobs then decreased until July 2010, but has increased every month since then.

Large companies have generally reported good profits since then, but they have largely held onto their income since then and done little hiring, though expenditures on capital equipment have been somewhat better.  Small companies, which do most of the hiring in decent times, have not yet seen much improvement in incomes.  The demand for labor has continued to fall through December and more and more people have given up on finding jobs.

Drastic action to cut government spending, so that the massive transfer of wealth from the private sector to governments is greatly reduced, is absolutely necessary to decreasing the massive deficits, but also to decreasing the massive unemployment.  We need desperately to reign in the many costs of employment imposed on companies by the governments.  Huge reductions in the federal, state, and local government regulations that raise the cost of doing business are also absolutely necessary.  Regulations of businesses cost about 17.7% of U.S. national income.  Limitations of production and distorted management choices cost business another $1 trillion a year.  And the government itself spends about $61 billion a year to enforce the regulations.  This massive regulatory drag on the economy needs to be drastically reduced.

Thanks to Walter Donway for pointing out these costs of regulation figures to me.  They can be checked out here at the Center for Fiscal Accountability.