Huge Discrepancies Cast Doubt On the Better Than Expected Jobs Report
Unemployment Rate Calculation
The unemployment rate is calculated by dividing the number of unemployed by the civilian labor force.
Unemployment Rate = 13.550 million / 160.838 million = 8.42%
Note that the reported headline jobs number today (+1.4 million) has nothing to do with anything. That is the establishment report number.
The number of employed (+3.756 million) does play into the calculation, but indirectly, as the labor force denominator.
Labor Force vs Employment
Note that employment rose by 3.756 million but the Labor Force only rose by 968,000. The impact of this discrepancy actually boosts the unemployment rate, but only by a tiny amount.
It's the numerator that matters. The numerator should match continuing claims. It doesn't.
The BLS reference week is the week that contains the 13th of the month. That is the week of August 9-15.
- Continued claims for the week ending August 15 was 14.492 million as per the BLS.
- Yet, the BLS also says the number of unemployed for that week was 13.550 million.
14.492 million is the extreme lower bound we should see for the number of unemployed.
State claims only include those eligible for state unemployment insurance.
Missing From Continued Claims Number
- Gig workers
- Those who have not worked long enough to qualify for state benefit requirements
- Those who have maxed out the number of weeks the states allow
Primary PUA Claims
Primary PUA claims for the reference week were 13.57 million, an increase of 2.6 Million.
PUA picks up all 4 categories missing from Continued Claims. But it also picks up some number of part-time workers.
But at least some of those 13.57 million did not work at all.
For the sake of argument, assume a mere 3.0 million of these workers did not work at all.
Unemployment Rate = (14.942 Million + 3.0 Million) / 160.838 Labor Force = 11.16%
I discussed other discrepancies in my Jobs report earlier today.
- Involuntary Part-Time Work: -871,000 to 7,572,000
- Voluntary Part-Time Work: +838,000 to 18,630,000
- Total Part-Time Work: +991,000 to 24,973,000
- Total Full-Time Work: +2,837,000 to 122,369,000
Part-Time Reporting Silliness
- The net of voluntary vs involuntary part-time work is -33,000.
- Total part-time work rose by 991,000
Don't try to make sense of those numbers as they never add up. I list them as reported.
For details please see Jobs Report Much Better Than Expected, But Is It Believable?
On top of this mess is a BLS methodology change that artificially lowered the number of initial and continued claims starting yesterday.
For discussion, please see Unemployment Claims Improve But It's a Manipulation Mirage.
I suppose it is possible for the claims revision to be correct, but that still does not account for all the gig etc. workers on Pandemic Assistance that are genuinely unemployed.
Conclusion - Garbage
My conclusion is today's unemployment rate numbers are total garbage.