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How many jobless? Unemployment rate questions persist

A week after the Bureau of Labor Statistics reported a surprisingly low 7.8 percent unemployment rate, critics are still raising questions about the figure.

Jobless claims dropped 30,000 to a four-year low of 339,000. While the market initially rallied, the decline was primarily due to a large state failing to accurately report their claims, not gains in hiring.

“Coupled with last week’s payrolls report, it is also likely to fuel perception that labor market figures in general can’t be trusted,” CNBC reported.

The controversy over unemployment numbers came to a head last Friday when former General Electric CEO Jack Welch tweeted out his disbelief in the unemployment rate, implying that Obama’s “Chicago guys” cooked the books to make the president look better following a poor debate performance.

Welch followed up with an op-ed in the Wall Street Journal Wednesday that defended his claims.

“Unfortunately for those who would like me to pipe down, the 7.8% unemployment figure released by the Bureau of Labor Statistics (BLS) last week is downright implausible,” he wrote. “And that’s why I made a stink about it,”  standing by his claim that something is suspect with the politicized unemployment rate.

California Republican Rep. Duncan Hunter believes it’s a longer-term problem that the most recent BLS report.

In March, Hunter sponsored legislation to change the calculation of the unemployment rate. The bill, titled “Real Unemployment Calculation Act”, is co-sponsored by 27 other Republicans, including Minnesota Republican Rep. Michele Bachmann, California Republican Rep. Darrel Issa, and Maine Democratic Rep. Michael Michaud.

“The problem, as I see it, is the growing group of Americans who are left out of the official unemployment rate,” Congressman Hunter told The Daily Caller News Foundation in an email. “If we are serious about understanding the full unemployment situation, and adjusting our response by what we know, then we need to pay attention to a figure that accounts for anyone out of a job, not just those who are actively looking for work.”

Hunter wrote a letter to the chairman of the House Education and the Workforce Committee Tuesday making the case for his bill.

“It is critical that leaders in government and the American people have the most accurate and reliable information to make informed judgments about the future,” the letter says.

“My concern is that the official U3 rate, now at 7.8 percent, carelessly disregards a core group of jobless Americans who are ready and willing to work, but simply gave up their searches because they are too discouraged for different reasons.”

The U3 number is the primary number used amongst the media when discussing the unemployment rate, however the number does not include discouraged workers who are no longer seeking employment, or the underemployed, people worker below their skill set.

The U6 number includes these subsets, and was reported at 14.7 for September, nearly double the U3 rate.

“The latest report of 7.8 is accurate for who is covered under that rate, but it’s a fact that a large population of Americans who are out of work aren’t included in that number,” Hunter told TheDC News Foundation.

The chief economist of Gallup raised a similar concern last week, as The Daily Caller News Foundation reported.

“This surge in hiring seems surprisingly large given the current economy,” Jacobe wrote. “The obvious conclusion is that a new employment measure is needed,” he added later.

House Government Oversight Committee Chairman Darrel Issa told Gretta Van Susteren Thursday night that he is concerned over the BLS numbers and interested in doing a Congressional hearing over the matter.

“…the way it’s being done with the constant revisions, significant revision, tells us that it’s not as an exact a science as it needs to be and there’s got to be a better way to get those numbers or don’t put them out if they’re going to be wrong by as much as half a point,” Issa said.

According to the New York Post, the definition of “unemployed” changed in 1994 under the Clinton administration.

“If someone said they weren’t even looking for a job because they were too discouraged, that pre-1994 person was considered unemployed and included in the figures. The Clinton administration decided that unemployed people couldn’t be discouraged — and not job-hunting — for more than 12 months. If a person hadn’t searched for a year he was simply not included in the U-6 or other measures of joblessness,” John Crudele reported.

“[T]he latest unemployment report raises interest in both the method for calculation, the accuracy of the process for determining unemployment and the correlation to coinciding data,” Congressman Hunter’s letter says, concluding with a recommendation to “begin evaluating the methods and factors that are currently used to calculate monthly unemployment in order to determine Whether existing practices produce the most accurate and reliable information or if there are ways to improve the process for calculation and reporting.”

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