Trump and Labor Department Survey Claim U.S. Unemployment Rate Drop, but Miss September Hurricane Impact

U.S. unemployment rate
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Trump Says U.S. Employment is at Lowest in 16 Years. Is it True?

The most recent jobs report from the U.S. Bureau of Labor Statistics reveals that U.S. jobs lost in September numbered roughly 33,000–primarily due to Hurricanes Irma and Harvey, according to the survey–while the U.S. unemployment rate dropped to its lowest level since February of 2001. But despite President Donald Trump’s celebrating the Labor Department survey results on Twitter, the numbers reported may not tell the whole story.

The Trump tweet in question points to the stock market’s success since his election win and what is ostensibly the highest rate of employment for Americans in over a decade. But some have begun questioning the veracity and reliability of the September survey.

The U.S. unemployment rate, for instance, is one of the main points of contention. With both Florida and Texas being slammed by Hurricane Irma and Hurricane Harvey, respectively, the numbers are surprisingly small in terms of employment impact. The unemployment drop also doesn’t tell the whole story, as past numbers have reported hundreds of thousands of workers dropping out of the workforce who are then counted as employed, or at least not unemployed, according to the Labor Department.
While many thousands of those people leaving the workforce are likely to be retirees, the numbers do not add up when you take into account the amount of aging Americans versus the number of people leaving the workforce.
President Trump himself called attention to the problem during his campaign for the White House, even going as far as to say that real unemployment was closer to 30% and may even be as high as 42%. While that number is outlandish and almost certainly false, there is truth to the fact that many more Americans are leaving the workforce than are being considered when these surveys come out, creating the image of a perfectly functioning economy, when in fact warts abound.
The job growth drop is but another addition to the problem. The 33,000 jobs lost mark the first time jobs in the U.S. fell in seven years, although economists are largely crediting the storms for the decline and are therefore still mostly bullish on both the stock and jobs market. But it does show that September represented one of the worst months since the recessions when it comes to jobs in the U.S.
Despite the hurricanes contributing to the job losses, the numbers for the U.S. unemployment rate seem to point to hundreds of thousands of people being newly employed, with 906,000 more Americans having jobs. The Labor Department wrote that, “[t]here was no discernible effect on the national unemployment rate” from the hurricanes. But the numbers only showed a 331,000 reduction on unemployment, meaning that those hundreds of thousands of newly employed Americans needed to be some combination of people entering or reentering the workforce, again speaking to the millions of Americans unable to find full-employment or work at all but not counted as unemployed.
For instance, the survey showed that the number of people employed part-time for economic reasons did not shift much in September, coming in at 5.1 million.
On top of those millions of Americans dissatisfied with their current job arrangements, 1.6-million more Americans were considered marginally attached to the labor force, meaning they wanted jobs but hadn’t sought out opportunities in the four weeks preceding the survey

Why the September Survey is Not Reliable

There are several reasons as to why many are questioning the reliability of these numbers.

First, as illustrated above, the numbers fail to tell the whole story. With millions of Americans in search of employment opportunities but not being counted as unemployed due to the parameters of the survey, we’re seeing politicians tout gaudy numbers but fail to mention that for the many U.S. citizens, the picture is not quite so rosy.

Another concern with the survey is how reliable the census was during the relief effort in Texas and Florida. With both states being ravaged by massive storms in September, it’s safe to assume that door-to-door survey collection–the methodology of the jobs report–would be difficult to conduct.

While that’s certainly not enough to call the whole survey into question, there is legitimate concern as to just how accurate the collection was. For example, door-to-door survey taking would naturally only work with those who still have homes. Others who lost their place of residence due to the storm would be more likely to reside in areas more gravely affected by the hurricanes, and therefore also more likely to be facing a tougher employment situation.

While the overall survey is likely to be accurate in many of its broad strokes reports, there is room for error that could skew the jobs situation in the U.S. in a more optimistic direction, despite many current and potential problems going unaddressed or under-addressed in the economy.

Sources

Employment Situation Summary,” US Department of Labor Statistics, October 6, 2017.

Unemployment drop has nothing to do with hurricane season,” New York Post, October 7, 2017.

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Categories: Job Cuts, News

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