AN UNEMPLOYMENT STORY WASHINGTON WON'T RELEASE
By JOHN CRUDELE
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June 5, 2003 -- THERE were 313,000 fewer jobs in the U.S. last year than the government originally believed.
But you won't see that disastrous number in tomorrow's report on the job market for May.
Missing jobs will be inconspicuously removed with an overall adjustment to the labor force - something Washington calls its annual "benchmark" revision.
More likely you'll only see an official drop in the number of jobs of between 20,000 and 50,000.
Bad enough, but nothing that'll send stock prices reeling.
There are already over 500,000 jobs lost in just the last three months of this year. Investors had better hope Wall Street doesn't look too closely at the new job numbers.
I told you on Tuesday how the government will start "seasonally" adjusting its job figures each and every month - 12 seasons a year. And I explained that this enormous change in methodology would throw comparisons off and drive the experts crazy.
Today's column will explain why the job market feels a lot worse than the feds say it is.
Start with the 313,000 jobs that never existed. And the income that those 313,000 people were expected to have earned also never existed. The government discovered its error when it compared federal numbers with those being produced by the states.
But Washington says the size of these benchmark revisions will be reduced after it starts seasonally adjusting its figures each month.
I don't think so - because of another trick the Bureau of Labor Statistics is pulling.
Included in each month's jobs figures are estimates of jobs that the government believes are being created by new companies it can't prove exist.
This "plug" used to be called, of all things, the "bias factor."
In the old days, the "bias factor" never took jobs out of the economy - it only added them by accounting solely for new companies the government assumed it wasn't counting, instead of counting the bankrupt ones that were quietly disappearing and taking jobs with them.
Over time, bias factors added about as many jobs as Washington had to quietly remove in the annual benchmark revision.
This year the government has changed this "bias factor" - but only a little bit.
Nowadays this method can result in a reduction of jobs from the economy as it did last January when 156,000 "bias" jobs were taken out of the count.
But in the last three months, the government has been assuming job growth from these invisible companies.
In February, 63,000 of these mystery jobs were added; 115,000 were added in March and 176,000 in April.
I'm guessing that May will also be an add.
Too bad the unemployed can't get one of these non-existent jobs. That would make the economy a lot better - at least in everyone's imagination.
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