Posted: 3:24 am
July 29, 2008
FINALLY, we should get some honest figures on the health of the nation's job market.
On Friday the Labor Department will report the July payroll survey and the month's unemployment rate.
Wall Street thinks that the nation lost another 75,000 jobs this month, with the headline unemployment rate rising to 5.6 percent.
Unemployment was at 5.5 percent in June, showing a tremendous jump from 5.0 percent in May.
And 62,000 jobs disappeared in June. In fact, the number of jobs in the US has declined every month this year.
But as I've been explaining in this column for years, the number of jobs that are lost or gained each month has a lot to do with tricky statistics.
Friday's number, while not perfect, will be the first monthly job report this year that isn't defiled by ridiculous assumptions.
But each month the Bureau of Labor Statistics, which keeps track of the nation's employment health, assumes that there are loads of newly formed companies that couldn't be reached by its phone surveys.
So the BLS guesses at how many jobs these newbies created. This assumption is called the Current Employment Statistics Birth/Death Ratio.
These crazy assumptions caused the economy to look a lot stronger than it probably was during the springtime.
Even though the economy lost jobs in March, April, May and June, the numbers weren't as big as the experts expected.
Those optimistic assumptions should almost disappear with Friday's number.
Last year the government added a modest 26,000 phony jobs to its count in July - far below, say, the 317,000 birth/death jobs tacked on in this past April.
So Friday's number - whether it's better or worse than expected - is, at least, going to be more honest.
That gets me to the misleading unemployment rate.
If you really want to know what percentage of the US workforce is out of work, struggling or underemployed, you need to look at something called the U-6 unemployment rate produced by - but never emphasized by - the government.
This includes people who are only working part time because they can't find full-time jobs.
The category also counts as unemployed some people who have given up looking for work because they became discouraged.
Last month U-6 stood at 9.9 percent - compared to the 5.5 percent unemployment rate you see in the press.
