Print Edition

  Email News Updates

Unemployment: What’s behind the latest BLS numbers

By Norman Poltenson


On Feb. 3, the U.S. Bureau of Labor Statistics (BLS) released its monthly employment report, which was greeted as good news.
The numbers showed a net increase of 243,000 jobs, 108,000 above the consensus forecast. As a consequence, the unemployment rate dropped from 8.5 percent to 8.3 percent. The BLS also revised its November and December figures upward to reflect an additional 60,000 jobs not previously recorded.

The good news also included a slight increase in the average hours worked weekly and a modest wage increase. Private-sector growth posted 257,000 jobs broadly distributed, which included 50,000 new manufacturing jobs, 21,000 construction jobs, and 176,000 service-sector positions in areas like accounting, bookkeeping, architecture, engineering, hospitality, and health care.

Jay Carney, the White House press secretary, wasted no time claiming that the employment growth was evidence that President Barack Obama’s economic policies were working. The Christian Science Monitor said the White House was doing “cartwheels” over the positive numbers.

Buried in the report, however, were some trends that received little attention. First was the labor-force participation rate, which hit a 28-year low of 63.7 percent. This percentage, which reflects the number of American adults who are active in the labor force (employed or looking for work), has slid 2.3 percentage points just since 2008. This number held steady despite a rise in the employment-population ratio. Second, 1.2 million people disappeared from the labor force just in January, a number four times higher than in December 2011. 

Third, the BLS revised the baseline numbers in January 2012, based on final 2010 census figures which showed a 1.5 million person increase in the nation’s population than was previously assumed. Why didn’t the participation rate increase? Fourth, buried in the report was the long-term unemployment number (27 weeks or more), which remained constant and accounted for 42.9 percent of the unemployed or 5.5 million Americans. Fifth, the number of part-time employees who sought full-time employment held steady at 8.2 million. Sixth, the number of persons marginally attached to the labor force (looking for work but not within the previous four weeks) was unchanged at 2.8 million.

Reviewing the data made me think of my grammar-school teacher who taught us about numerators and denominators. She stressed how easy it was to raise or lower the results depending on the changes to each. The BLS formula for unemployment is simple: divide the unemployed job-seekers by the total labor force (“civilian, non-institutional population 16 years and older”). In January 2012, the numerator — unemployed job-seekers — decreased precipitously while the denominator held steady. Voila, the percentage of unemployed dropped.

But did the January unemployment numbers reflect good news or did they simply reflect discouraged job-seekers who gave up in the last four weeks? The non-partisan Congressional Budget Office calculates that if the labor-participation rate had remained constant in January, the real unemployment rate would be 9.55 percent. CEO Charles Biderman says his firm’s analysis of actual IRS tax receipts shows job growth in January of only 44,000 net jobs.

The BLS numbers are encouraging, but I would restrain my jubilation that the economy is ramping up quickly or that it has a solid foundation. Employers in general are still cautious about investing in new hires when faced with a host of political and economic uncertainties. Save the cartwheels until the employment picture is supported by the facts.    


Norman Poltenson is publisher of The Central New York Business Journal. Contact him at

Thank You For Visiting