Economy’s Phantom Job Gains Are Based on Statistical
And More Fraud Is in the Works
By Paul Craig Roberts
July 07, 2014 "ICH"
can’t stop lying. Don’t be convinced by last
Thursday’s job report that it is your fault if you
don’t have a job. Those 288,000 jobs and 6.1%
unemployment rate are more fiction than reality.
analysis of the June Labor Data from the Bureau of
Labor Statistics, John Williams (www.ShadowStats.com)
wrote that the 288,000 June jobs and 6.1%
unemployment rate are “far removed from common
experience and underlying reality.” Payrolls were
overstated by “massive, hidden shifts in seasonal
adjustments,” and the Birth-Death model added the
usual phantom jobs.
reports that “the seasonal factors are changed each
and every month as part of the concurrent
seasonal-adjustment process, which is tantamount to
a fraud,” as the changes in the seasonal factors can
inflate the jobs number. While the headline numbers
always are on a new basis, the prior reporting is
not revised so as to be consistent.
unemployment rates are not comparable, so one
doesn’t know whether the official U.3 rate (the
headline rate that the financial press reports) went
up or down. Moreover, the rate does not count
discouraged workers who, unable to find a job, cease
looking. To be counted among the U.3 unemployed, the
person must have actively looked for work during the
four weeks prior to the survey. The U.3 rate
automatically declines as people who have been
unable to find jobs cease trying to find one and
thereby cease to be counted as unemployed.
There is a
second official measure of unemployment that
includes people who have been discouraged for less
than one year. That rate, known as U.6, is seldom
reported and is double the 6.1% rate.
there has been no official measure than includes
discouraged people who have not looked for a job for
more than a year. Including all discouraged workers
produces an unemployment rate that currently stands
at 23.1%, almost four times the rate that the
financial press reports.
can take away from this is the opposite of what the
presstitute media would have you believe. The
measured rate of unemployment can decline simply
because large numbers of the unemployed become
discouraged workers, cease looking for work, and
cease to be counted in the U.3 and U.6 measures of
the unemployment rate.
in the employment-population ratio from 63% prior to
the 2008 downturn to 59% today reflects the growth
in discouraged workers. Indeed, the ratio has not
recovered its previous level during the alleged
recovery, an indication that the recovery is an
illusion created by the understated measure of
inflation that is used to deflate nominal GDP
indication that there has been no recovery is that
Sentier Research’s index of real median household
income continued to decline for two years after the
alleged recovery began in June 2009. There has been
a slight upturn in real median household income
since June 2011, but income remains far below the
Birth-Death model adds an average of 62,000 jobs to
the reported payroll jobs numbers each month. This
arbitrary boost to the payroll jobs numbers is in
addition to the Bureau of Labor Statistics’
underlying assumption that unreported jobs lost to
business failures are matched by unreported new jobs
from new business startups, an assumption that does
not well fit an economy that fell into recession and
is unable to recover.
Williams concludes that in current BLS reporting,
“the aggregate average overstatement of employment
change easily exceeds 200,000 jobs per month.”
words, the economy did not gain 288,000 new jobs
last month. But let’s assume the economy did gain
288,000 jobs and exam where the claimed jobs are
reported to be.
alleged 288,000 new jobs, 16,000, or 5.5 percent are
in manufacturing, which is not very promising for
engineers and blue collar workers. Growth in goods
producing jobs has almost disappeared from the US
economy. As explained below, to alter this problem
the government is going to change definitions in
order to artificially inflate manufacturing jobs.
private services account for 82 percent of the
supposed new jobs. The jobs are found mainly in
non-tradable domestic services that pay little and
cannot be exported to help to close the large US
and retail trade account for 55,300 jobs. Do you
believe sales are this strong when retailers are
closing stores and when shopping malls are closing?
(most likely the paperwork of Obamacare) contributed
As so few
can purchase homes, “real estate rental and leasing”
contributed 8,500 jobs.
Professional and business services contributed
67,000 jobs, but 57% of these jobs were in
employment services, temporary help services, and
services to buildings and dwellings.
standby, education and health services, accounted
for 33,700 jobs consisting mainly of ambulatory
health care services jobs and social assistance jobs
of which three-quarters are in child day care
old standby, waitresses and bartenders, gave us
32,800 jobs, and amusements, gambling, and
recreation gave us 3,500 jobs.
government, principally education, gave us 22,000
are the jobs for university graduates? They are
practically non-existent. Think of all the MBAs, but
June had only 2,300 jobs for management of companies
the struggle to get into law and medical schools.
There’s no job payoff. June had jobs for 1,200 in
legal services, which includes receptionists and
para-legals. Where are all the law school graduates
physicians (mainly people who fill out the mandated
paperwork and comply with all the regulations, which
have multiplied under ObamaCare) hired 4,000 people.
Outpatient care centers hired 700 people. Nursing
care facilities hired 2,400 people. So where are the
jobs for the medical school graduates?
all the exaggerations in the jobs numbers of which
ShadowStats.com has informed us, just taking the
jobs as reported, what kind of economy do these jobs
indicate: a superpower whose pretensions are to
exercise hegemony over the world or an economy in
which opportunities are disappearing and incomes are
think that this jobs picture would be the same if
the government in Washington cared about you instead
of the mega-rich?
interesting numbers can be calculated from table A.9
in the BLS press release. John Williams advises that
the BLS is inconsistent in the methods it uses to
tabulate the data in table A.9 and that the data is
also afflicted by seasonal adjustment problems.
However, as the unemployment rate and payroll jobs
are reported regardless of their problems, we can
also report the BLS finding that in June 523,000
full-time jobs disappeared and 800,000 part time
Here, perhaps, we have yet another downside of the
misnamed Obama “Affordable Care Act.” Employers are
terminating full-time employment and replacing the
jobs with part-time employment in order to come in
under the 50-person full time employment that makes
employers responsible for fringe benefits such as
are already experiencing difficulties making ends
meet, despite the alleged “recovery.” If yet another
half million Americans have been forced onto
part-time pay with consequent loss of health care
and other benefits, consumer demand is further
compressed, with the consequence, unless hidden by
statistical trickery, of a 2nd quarter negative GDP
and thus officially the reappearance of recession.
the government do if a recession cannot be hidden?
If years of unprecedented money printing and
Keynesian fiscal deficits have not brought recovery,
what will bring recovery? How far down will US
living standards fall for the 99% in order that the
1% can become ever more mega-rich while Washington
wastes our diminishing substance exercising hegemony
over the world?
Washington lied to you about Saddam Hussein’s
weapons of mass destruction, Assad’s use of chemical
weapons, Russian invasion of Ukraine, Waco, and any
number of false flag or nonexistent attacks such as
Tonkin Gulf, Washington lies to you about jobs and
economic recovery. Don’t believe the spin that you
are unemployed because you are shiftless and prefer
government handouts to work. The government does not
want you to know that you are unemployed because the
corporations offshored American jobs to foreigners
and because economic policy only serves the
oversized banks and the one percent.
as the jobs and inflation numbers are rigged and the
financial markets are rigged,
the corrupt Obama regime is now
planning to rig US manufacturing and trade
statistics in order to bury all evidence of
offshoring’s adverse impact on our economy.
governments Economic Classification Policy Committee
has come up with a proposal to redefine fact as
fantasy in order to hide offshoring’s contribution
to the US trade deficit, artificially inflate the
number of US manufacturing jobs, and redefine
foreign-made manufactured products as US
manufactured products. For example, Apple iPhones
made in China and sold in Europe would be reported
as a US export of manufactured goods. Read Ben
Beachy’s important report on this blatant
statistical fraud in CounterPunch’s July 4th weekend
China will not agree that the Apple brand name means
that the phones are not Chinese production. If the
Obama regime succeeds with this fraud, the iPhones
would be counted twice, once by China and once by
the US, and the double-counting would exaggerate
For years I
have exposed the absurd claim that offshoring is
merely the operation of free trade, and I have
exposed the incompetent studies by such as Michael
Porter at Harvard and Matthew Slaughter at Dartmouth
that claimed to prove that the US was benefitting
from offshoring its manufacturing. My book published
in 2012 in Germany and in 2013 in the US, The
Failure of Laissez Faire Capitalism and Economic
Dissolution of the West, proves that offshoring
has dismantled the ladders of upward mobility that
made the US an opportunity society and is
responsible for the decline in US economic growth.
The lost jobs and decline in the middle class has
contributed to the rise in income inequality, the
destruction of tax base for cities and states, and
loss of population in America’s once great
most part economists have turned a blind eye.
Economists serve the globalists. It pays them well.
corruption in present-day America is total.
Psychologists and anthropologists serve war and
torture. Economists serve globalism and US financial
hegemony. Physicists and chemists serve the war
industries. Physicists and computer geeks serve NSA.
The media serves the government and the
corporations. The political parties serve the six
powerful private interest groups that rule the
serves truth and liberty.
that within ten years truth and liberty will be
forbidden words uttered only by “domestic
extremists” who are a threat that must be
exterminated without due process of law.
left us. We now have the tyranny of the Orwellian
state that rules, not by the ballot box and
Constitution, but by force and propaganda.
Paul Craig Roberts was Assistant Secretary of the
Treasury for Economic Policy and associate editor of
the Wall Street Journal. He was columnist for
Business Week, Scripps Howard News Service, and
Creators Syndicate. He has had many university
appointments. His internet columns have attracted a
worldwide following. Roberts' latest books are
The Failure of Laissez Faire Capitalism and Economic
Dissolution of the West and
How America Was Lost.