Taking the L out of BLS

‘L’ as in legitimate which can’t be applied to the numbers released yesterday at 8:30 am in the unemployment report that started off with this paragraph:

Total nonfarm payrollemployment rose by 2.5 million in May, and the unemployment rate declined to 13.3 percent, the U.S. Bureau of Labor Statistics reported today. These improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it. In May, employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade. By contrast, employment in government continued to decline sharply.

That’s about as far as most media look which allowed for this to go on two hours later:
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Let’s look at page 6 of that 42 page report:

In the household survey, individuals are classified as employed, unemployed, or not in the labor force based on their answers to a series of questions about their activities during the survey reference week (May 10th through May 16th). Workers who indicate they were not working during the entire survey reference week and expect to be recalled to their jobs should be classified as unemployed on temporary layoff. In May, a large number of persons were classified as unemployed on temporary layoff.

However, there was also a large number of workers who were classified as employed but absent from work. As was the case in March and April, household survey interviewers were instructed to classify employed persons absent from work due to coronavirus-related business closures as unemployed on temporary layoff. However, it is apparent that not all such workers were so classified. BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address the issue.

If the workers who were recorded as employed but absent from work due to “other reasons” (over and above the number absent for other reasons in a typical May) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been about 3 percentage points higher than reported (on a not seasonally adjusted basis). However, according to usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.

The Washington Post noticed* but was stumped as to why it happened.

My guess is that this was planned before the month started to manufacture ‘good’ news for a going-away photo-op prior to summer vacations for the Trump team. Next month the May numbers will be revised to 16.3% and someone in the administration will provide marching orders to BLS to think up something else that gets the June number to tick down from there. At least that’s how it’s done with public pension numbers in New Jersey where the numbers people get told what to shoot for.

For those ‘experts’ who did not get to page 6 of the BS report:
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* When the U.S. government’s official jobs report for May came out on Friday, it included a note at the bottom saying there had been a major “error” indicating that the unemployment rate likely should be higher than the widely reported 13.3 percent rate.

The special note said that if this “misclassification error” had not occurred, the “overall unemployment rate would have been about 3 percentage points higher than reported,” meaning the unemployment rate would be about 16.3 percent for May.

The Bureau of Labor Statistics, the agency that puts out the monthly jobs reports, said it was working to fix the problem.

“BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address the issue,” said a note at the bottom of the Bureau of Labor Statistics report.

Some took this as a sign that President Trump or one of his staffers may have tinkered with the data to make it look better, especially since most forecasters predicted the unemployment rate would be close to 20 percent in May, up from 14.7 percent in April. But economists and former BLS leaders from across the political spectrum strongly dismissed that idea.

“You can 100% discount the possibility that Trump got to the BLS. Not 98% discount, not 99.9% discount, but 100% discount,” tweeted Jason Furman, the former top economist for former president Barack Obama. “BLS has 2,400 career staff of enormous integrity and one political appointee with no scope to change this number.”

Economists say the BLS was trying to be as transparent as possible about how hard it is to collect real-time data during a pandemic. The BLS admitted that some people who should have been classified as “temporarily unemployed” during the shutdown were instead misclassified as employed but “absent” from work for “other reasons.”

The “other reason” category is normally used for people on vacation, serving jury duty or taking leave to care for a child or relative. These are typically situations where the worker decides to take leave. But in this unusual pandemic circumstance, the “other reason” category was applied to some people staying at home and waiting to be called back.

This problem started in March when there was a big jump in people claiming they were temporarily “absent” from work for “other reasons.” The BLS noticed this and flagged it right away. In March, the BLS said the unemployment rate likely should have been 5.4 percent, instead of the official 4.4 percent rate. In April, the BLS said the real unemployment rate was likely about 19.7 percent, not 14.7 percent.

Economists said the big takeaway is that it’s hard to collect real-time data during a pandemic and that while the unemployment rate remains high — likely more than 16 percent — it has declined a little from April.

The unemployment rate comes from a survey where Census workers ask about 60,000 households questions about whether they are working or looking for a job the week of May 10 to 16.

One of the first questions that gets asked is did the person do any work “for pay or profit?” There are then 45 pages of follow up questions that come after that. One of those questions asks if someone was “temporarily absent” from the job and why that absence occurred. One of the responses is “other.”

The BLS instructed surveyors to try to figure out if someone was absent because of the pandemic and, if so, to classify them as on “temporary layoff,” meaning they would count in the unemployment data. But some people continued to insist they were just “absent” from work during the pandemic, and the BLS has a policy of not changing people’s answers once they are recorded. It’s how the BLS protects again bias or data manipulation.

Former staffers said it’s unusual that the BLS was not able to correct this problem faster.

“It’s surprising the BLS couldn’t come up with fixes to make this work in May,” said Erica Groshen, the former BLS commissioner under Obama. But, she adds, “This is a very unusual situation. There are lots of field staff who had a tried and true way of asking questions and they were doing what they were used to doing.”

The only political appointee at the BLS is the commissioner, who, Groshen said, does not have access to the data and only sees the finalized report.

“The commissioner never sees the job report before it is final. As commissioner, I did not have access to the underlying data,” Groshen said. “This is a highly automated process.”

Instead of focusing on possible Trump interference, many economists wish people would focus on the fact that 21 million Americans are currently unemployed and over 2 million have permanently lost their jobs.

The situation remains dire, they say, even after a few jobs returned in May as the economy reopened.

11 responses to this post.

  1. Posted by boscoe on June 6, 2020 at 1:14 pm

    Good pickup Mr. Bury. It sure got lost in the mainstream media coverage (except for the Washington Post story you quoted). I found the reported numbers to be surprising if not dubious, but I didn’t follow all of the BLS survey intricacies. I don’t agree with your conspiracy theory about why this happened, however. While I wouldn’t put anything past the Trump Administration sleazebags, the BLS employment survey is widely regarded as being shielded from political interference. I think the difficulty of accurately reporting and recording employment status during the COVID pandemic (what with all the furloughs, temp layoffs waiting for recall, etc.) is to blame. I do agree with you that the unemployment numbers will be revised upward retroactively but Trump already got his sound bite in. As in, “George (Floyd) must be happy today that the economy is back on track.”

    There’s another technical issue that plays into this. The government unemployment figures only consider people who are counted as being in the labor force to begin with. Thus, children and retired folks are not counted as unemployed. That makes sense. But folks who have lost their jobs but are not actively seeking employment are also not counted as unemployed because they are not considered to be in the workforce. It’s like a Catch-22. There could very well have been people laid off (not furloughed but actually fired) who were not actively seeking work during the BLS survey week because they were receiving government unemployment benefits at the time. Those people would not count as unemployed in the BLS survey.

    Reply

    • The idea of surveying 60,000 people each month to figure out who is unemployed is bogus. Payroll withholding is reported monthly and we know who is getting unemployment. Seems like an easy calculation – 40 million over 200 million and you have 20%. The only reason to do it the way the BLS is doing it is to be able to manipulate the narrative and it has been getting more blatant with each administration. And after 3.5 years of of Trump people getting jobs within the BLS there had to be at least a few who would have risen high enough to conspire to give the boss the numbers he wanted.

      Reply

      • Posted by Tough Love on June 6, 2020 at 2:28 pm

        Interesting ……….. I wonder how many BLS employees conduct those 60K surveys (and if they are the same employees each month), and how many of them have been hired in the last 3.5 (Trump Administration) years.

        Reply

      • Posted by boscoe on June 6, 2020 at 3:26 pm

        Perhaps this will help: https://blogs.bls.gov/blog/

        If it doesn’t fit into your conspiratorial view of almost everything, so be it.

        Reply

        • Posted by Tough Love on June 6, 2020 at 3:40 pm

          Inquisitive, not conspiratorial.

          Perhaps you should be more inquisitive. More knowledge is always a “+”.

          Reply

          • Posted by boscoe on June 6, 2020 at 6:56 pm

            You have it backward TL. An inquisitive person is someone who will wade through obscure web pages like the one I highlighted, to find the obscure reasons why certain things happen in certain ways. That’s what leads to “knowledge.” A conspiratorial person will look at every event through the same lens: someone is lying, someone is cheating, there’s some plot involved. Here’s a hint: not all things are nefarious, not all things are full of intrigue. Some are just what they are.

          • Posted by Tough Love on June 6, 2020 at 7:26 pm

            boscoe,

            You’re barking up the wrong tree.

      • Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on June 9, 2020 at 11:12 am

        The idea of surveying 60,000 people each month to figure out who is unemployed is bogus.
        If the are alleging they do this by personal contact, either in person or by phone, it is total bullshit. 60K?? No F’ing way …

        Reply

    • Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on June 7, 2020 at 11:22 pm

      Yep, the PoPo are the real criminals in America, them and all public employees.

      Reply

  2. […] « Taking the L out of BLS […]

    Reply

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