October Jobs Report: A Real Insight Into the Numbers
Before reacting to any jobs numbers, people should realize that there are two surveys used for depicting unemployment trends (I just learned this myself, thanks to a colleague, Mark Price). The household survey and the establishment survey are both used to give a snapshot view of the employment trends in the nation.
On Friday, the Department of Labor released jobs numbers showing that 171,000 new jobs were added in the country. However, the unemployment rate rose (from 7.8% to 7.9%) and those people actively seeking work grew to 578,000.
Back to the surveys: household survey is for households. It’s asking information of people to see if they are actively seeking work; the establishment survey asks employers how many workers are on their payrolls. Compared during short periods of time they can go in different directions, but over a long period of time they will reflect what’s really happening in the economy.
So what does this all mean? Well, for me it means both presidential candidates must take a closer look at the economy.
Surveys, as we know, tell close to what is happening in the economy, but not the full story. According to an article by CNN, Obama entered office with a 10% unemployment rating. Today that rating is 7.9%.
A few things might have happened to tell the story. People might have decided not to enter the labor force (actively seeking employment). These people could have retired early, lived off savings, or just gave up all hope. Another thing that could have happened is companies were able to add more jobs, but compared to job losses it does not add the aggressive speed the economy needs.
Companies actually added 184,000 jobs, but there were about 13,000 job cuts by federal, state, and local governments. (Quick arithmetic: 184,000 - 13,000 = 171,000). According to USA Today, the most recent government loss of 13,000 jobs is the biggest amount of government job loss since June and reductions in government jobs have hampered the jobs recovery the past two years.
President Barack Obama and former Governor Mitt Romney need to both deduce what the job numbers really mean (not how to flip numbers and aggregate data to reflect a pretty picture) and how they will add and keep jobs in the economy.