So much news, so little time...
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GRAPHIC - Hope You Enjoyed That Pizza
Snow in Summer
For Your "Health"
Cashless - Threat to Freedom
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Bye Bye 40 and 60
End of Car Chases?
Kill the Password
Today's sound bite report says that employment increased by 160,000 jobs in June and the unemployment rate remains at 7.6%.
More detailed reports tell us that part-time jobs increased by 360,000 while full-time jobs decreased by 240,000. Don't you think it should be news that a quarter-million Americans lost their full-time jobs last month?
Anyone who's worked with numbers understands that rounding differences happen. What's harder to understand is how to arrive at an increase of 120,000 jobs using the full-time/part-time detail and 160,000 jobs in total. No matter how you look at it, a 40,000 job difference is a significant percentage.
The Bureau of Labor Statistics (BLS) does state in the fine print that different series use different seasonal adjustment factors and don't necessarily add up to the totals.
So what can the actual, non-seasonally adjusted number tell us? You may want to sit down for this news.
In our real world, employment increased by 409,000 jobs. That's a big increase. Wonder why it's not being reported?
Of the 409k increase, 779k went to teenagers aged 16-19. Notice anything?
Let me do the math for you - there were 370,000 adults (20 and older) that lost their jobs last month.
Based on 2012 population estimates this translates to a teenage population the size of Fort Worth, TX were hired, while adults who lost their jobs equates to a city the size of New Orleans, LA.
Could you imagine a mainstream reporter reporting more than a third of a million adults lost their jobs to teenagers last month? They probably wouldn't get invited to the White House anymore.
If you've taken a statistics course, you'll understand that seasonal adjustments sometimes produces unexpected results. What you are about to see may leave you scratching your head. Remember, it's the government - don't try to apply logic.
We've seen the seasonally adjusted data told us we lost 240k full-time jobs and gained 360k part-time jobs. The actual unadjusted numbers say we gained 757k full time jobs and lost 347k part-time jobs!!!
So with companies switching employees to part-time to avoid Obamacare mandates, we gained three-quarters of a million full time jobs. Shouldn't this be a leading headline?
Likewise, the part-time number is in the opposite direction as well, showing less part-time positions last month.
Now let's put the unadjusted data into full focus:
Last month, teenagers found 779,000 jobs while 370,000 adults lost their jobs. Full-time positions increased 757,000 and part-time positions decreased by 347,000.
The link to the employment report data is below. Be careful not to step in the Fosbenorbb.
BLS Data Link
I don't follow mainstream unemployment reporting as they just read the "press release" saying how wonderful the (U-3) employment numbers are.
Normally a couple of days after the release, I'll read about the tens or hundreds of thousands of people the government has declared to "no longer be in the labor force" thus allowing for the improvement in the unemployment rate.
This month was different.
The workweek for non-farm employees decreased by two tenths (0.2) hours in April. The article said this was the equivalent of losing 718,620 jobs.
But that number was based on math and logic errors.
Using the employed figure of 143,724,000 and multiplying that by 0.2 hours is the loss of 28,744,800 hours.
The author divided that number by a 40 hour week to arrive at the 718,620 jobs.
There are two problems with that number. First, the average work week is down to 34.4 hours. The other issue is comparing a week to a month.
First we'll convert those 28,744,800 lost hours to an average work week. April had 22 Monday to Friday business days, so we divide by 22 and then multiply by 5 to get a work week's number of hours. That's 28,744,800 / 22 * 5 = 6,532,909 hours.
Since the average work week is now 34.4, the equivalent number of jobs lost is 189,910 (6,532,909 / 34.4).
Not quite as impressive a headline as losing over 700k jobs, but it's still more of a loss than a gain. The official report said we gained 165k jobs when we lost 190k jobs' worth of pay. The net effect would be a loss of 35k jobs for April.
Here at The Financial State of the Union we've learned:
1. Never take a government report at face value - check the details.
2. Never assume the numbers are correct - check the math.
3. Always be on the lookout for bad assumptions or comparisons - in this case comparing a week to a month.
John R. Ragan, Captain, USAFR (Ret), MBA, MS - your guide on our journey through The Financial State of the Union