Government reporting tricks don’t create jobs, reducing tax and regulatory burdens will

The last official monthly unemployment report will be issued four days before the election on Friday, November 2. But can we really trust the government’s statistics?

The creative gyrations coming from the California state agency that sends unemployment claims data to the federal Bureau of Labor Statistics suggests that Americans ought to be skeptical of the last few pre-election jobs reports due from the government, both the weekly ones and the last monthly one.

The reason for the skepticism can be seen in the weekly unemployment report issued October 18, when a supposed glitch in California’s numbers pushed new claims for unemployment compensation to 388,000, the highest level in four months. This, after last week saw the lowest level of unemployment claims in more than four years — a report that had a direct bearing on the race for the White House as headlines proclaimed: “US weekly jobless claims plunge” (AFP), “Jobless claims hit four-year low confirming a brightening employment picture” (Examiner), “Weekly jobless claims at 4 1/2-year low” (Reuters).

There was only one problem: the claims dropped to a four-and-one-half year low based on the non-reporting of a “large state” that, a week later, was revealed to be California. This is especially interesting as The Wall Street Journal asked California if it was the non-reporting state, to which California’s Employment Development Department issued a strongly worded one-page denial calling the rumors of their non-reporting “bogus” and “irresponsible.”

So much for the truth from our public servants.

Now that the government’s rosy employment data appears to be falling apart under the weight of fact, the headlines have shifted. AP noted in an understated October 18 headline, “Weekly jobless claims drop proves to be short-lived.”

All of this matters, of course, because America’s unemployment statistics have become a central theme in the race for the White House. This causes every unemployment report to take on tremendous political significance. When the federal government reported a drop in the nation’s official unemployment rate from 8.1% to 7.8% on October 5, two days after the first presidential debate, a separate debate erupted over the report’s credibility.

Former GE CEO Jack Welch famously went on Twitter to speculate, “Unbelievable jobs numbers. these Chicago guys will do anything..can’t debate so change numbers.”

Mr. Welch was greeted by a critical firestorm. Six days later he took to the pages of The Wall Street Journal to defend his jobs report skepticism, writing:

Imagine a country where challenging the ruling authorities — questioning, say, a piece of data released by central headquarters — would result in mobs of administration sympathizers claiming you should feel “embarrassed” and labeling you a fool, or worse.

Soviet Russia perhaps? Communist China? Nope, that would be the United States right now, when a person (like me, for instance) suggests that a certain government datum (like the September unemployment rate of 7.8%) doesn’t make sense.

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. And that’s why I made a stink about it.

Welch further stated the obvious, that the economy would “need to be growing at breakneck speed for unemployment to drop to 7.8% from 8.3% in the course of two months.”