Right-wing media are rushing to put a negative spin on newly released jobs numbers showing a drop in the unemployment rate and a net increase in jobs by parroting the discredited claim that government data show that "1.2 million people dropped out of the labor force" last month. In fact, as economic experts have explained, that number reflected an increase in population from 2010 Census figures and is not the result of how many people "dropped out" of the labor force last month.
After The Labor Department Reported January Employment Growth
Labor Department: Employment Rose By 243,000 Jobs In January And Unemployment Dropped To 8.3 Percent. From the Bureau of Labor Statistics:
Total nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment changed little over the month.
The unemployment rate declined by 0.2 percentage point in January to 8.3 percent; the rate has fallen by 0.8 point since August. [Bureau of Labor Statistics, 2/3/12]
NY Times: Two Million Jobs Added In Past Year. The New York Times' Economix blog reported that "[o]ver the last 12 months, the economy added nearly two million jobs, more than in any similar period since early 2007." [The New York Times, Economix, 2/3/12]
Financial Blog Zero Hedge Dismissed Employment Growth With Dubious Claim That "1.2 Million People Dropped Out Of The Labor Force"
Zero Hedge: "1.2 Million People Dropped Out Of The Labor Force In One Month!" A post on economics and finance blog Zero Hedge claimed that the Bureau of Labor Statistics report estimated that "1.2 million people dropped out of the labor force" in January. [Zero Hedge, 2/3/12]
But Experts Argue That The 1.2 Million Number Is Based On A Misreading Of The Jobs Report
Economic Journalist Barry Ritholtz: "The Fact Is 1 Million People Did Not Drop Out Of The Labor Force In January 2012." Economic journalist and Washington Post columnist Barry Ritholtz explained that those who are claiming that 1.2 million people dropped out of the labor force in January are misreading the Labor Department's jobs report:
So today following an otherwise pretty darn good jobs report, we get the usual perma-pessimists at Zero Hedge and Rick Santelli over at CNBC proclaiming that the report showed a drop of over 1 million people from the labor force in one month. Of course, as ususal, both Santelli and Zero Hedge have a real reading comprehension problem and completely missed that this million+ people isn't some new January phenomenon, but a result of the BLS using the 2010 census data to have more accurate data. In other words, the changes in the Household Survey to the various measures had taken place over the years prior to 2010, but for simplicity's sake, the BLS incorporates these changes into one month (which they clearly point out).
[T]he fact is 1 million people did not drop out of the labor force in January 2012. [The Big Picture, 2/3/12]
WSJ: Population Growth Didn't Affect Unemployment Rate. In a post analyzing the jobs report numbers, The Wall Street Journal's Real Time Economics blog explained:
Today's jobs report carries good news on both fronts. The unemployment rate fell, and the employment-population ratio rose. That means the improvement in the labor market is real -- people actually found jobs.
The employment gain wasn't immediately obvious to some observers because of a quirk in this month's report. Every January, the Labor Department readjusts its data to account for changes in the population. The tweaks are especially significant in years like this one that take into account a new decennial census.
This year, the population adjustment makes it look like the employment-population ratio didn't change from December to January. In reality, the ratio improved by 0.3 percentage points. The gains were just masked by the population adjustments.
Here's what happened: According to the Census Bureau, the civilian population grew by 1.5 million people in 2011. But the growth wasn't distributed evenly. Most of the growth came among people 55 and older and, to a lesser degree, by people 16-24 years old. Both groups are less likely to work than people in their mid-20s to early 50s. So the share of the population that's working is actually lower than previously believed. Taking that into account, the employment-population ratio went up. The unemployment rate wasn't affected.
"There was not a big increase in discouraged workers," economist Betsey Stevenson commented on Twitter. "What happened was Census found a bunch of old people we had assumed died." [The Wall Street Journal, 2/3/12]
Time: "The Labor Force Numbers Stayed Essentially The Same." Time reporter Massimo Calabresi wrote:
Some Obama opponents are struggling to find a cloud in the silver lining of January's jobs numbers, which estimated that there was a 243,000-job boost and a big drop in the unemployment rate, from 8.5% to 8.3%, last month. Their biggest gripe focuses on the size of the labor force: As the unemployment rate has trended down over the last few months, anti-Obama commentators have argued that the official percentage for those without jobs is deceptive because the Bureau of Labor Statistics doesn't count those who have stopped looking for work. In Friday's report, they found a sharp increase in that group: More than 1.2 million people joined the non-job seeking pool of working-age Americans last month.
The demographic adjustments had no effect on the unemployment rate, says Mary Bowler, the resident expert in these matters at the BLS. And when it comes to labor force estimates, the steep jump in the number of those not seeking work came entirely from the census adjustment, which added 1.25 million people to that group. If you take out the census adjustment, the labor force numbers stayed essentially the same, as reflected by the labor force participation rate of 63.7%. In other words, the spike in the number of people no longer looking for work is entirely the result of some people at the Labor Department adding numbers to their spread sheets rather than an actual observed shift anywhere in the real economy. [Time, 2/3/12]
Right-Wing Media Jumped On The Discredited Figure To Dismiss Jobs Report As "Corrupt"
Rush Limbaugh Cited The 1.2 Million Number To Argue That The Jobs Report Is "Corrupt." On his radio show, Rush Limbaugh cited Zero Hedge and claimed that "1.2 million people dropped out of the labor force in one month" to argue that the jobs numbers report is as "corrupt as it can be." [Premiere Radio Networks, The Rush Limbaugh Show, 2/3/12]
Sean Hannity Repeated The 1.2 Million Falsehood To Claim Lower Unemployment Rate Is "Phony." On his radio show, Sean Hannity stated: "It appears that the people not in the labor force exploded by an unprecedented record 1.2 million and that's not a typo. In other words, 1.2 million people dropped out of the labor force in one month." He then explained that what this shows is that the unemployment rate is a "phony number." Hannity added: "This jobs report has limited good news but phony numbers all around it." [Premiere Radio Networks, The Sean Hannity Show, 2/3/12]
Fox Nation Highlighted Limbaugh's Charge That Unemployment Rate Number Is "Corrupt." Fox Nation amplified Limbaugh's criticism of the jobs report using the headline: "Rush Slams 'Corrupt' Obama Jobs Stats":
[Fox Nation, 2/3/12]
Drudge: "Record 1.2M Fall Out Of Labor Force." The Drudge Report highlighted the misleading claim that 1.2 million people dropped out of the labor force:
[Drudge Report, 2/3/12]