Do we really know what the unemployment rate is?

Trump supporters constantly throw out the current low unemployment rate as proof that Donald Trump is doing a great job.

But back when he was running for President, Trump accused the Obama administration of putting out a fake unemployment rate in order to improve its image. So that’s a thing that Trump believes happens. Trump has also gone on record numerous times with his belief that things reported in the news are faked. And he has frequently made false claims about the size of things like illegal voters and how many people attend his rallies. And he’s surrounded himself with people who have shown a willingness to do whatever is needed to advance Trump.

So when the Trump administration reports that the unemployment rate is 3.7% and 134,000 new jobs were created, is there any independent way to verify those numbers? Or are we just supposed to trust that the Trump administration is reporting accurate numbers because of their personal integrity? Is there any way you can check and tell whether the national unemployment rate is 3.7% or 7.3%?

I’m pretty sure that if the Trump administration were putting pressure on the Bureau of Labor Statistics to report inaccurate data, there would be no shortage of whistleblowers from within the BLS.

Not much point in arguing about unemployment rates while overall wages are still stagnating and buying power is liable to only get worse due to the ill-advised trade war(s).

How many people in the bureau actually see the raw data? A lot of the people in the bureau aren’t involved in producing the report. Even the people who are collecting the data only see their own data; they don’t know what the data other people collected says. The number of people who have access to all of the collected data is probably a pretty small number.

The way people generally try to muddle up unemployment numbers is to use different indicies which may include/exclude different classes of people. The indicies tend to go up and down together, so it really doesn’t matter too much which one you use, so long as you always compare the same type to each other.

But one is quite a lot larger than the other and so is better for scare tactics. So when Obama says that during his term Unemployment went down from a high of 10% in November 2009 to 4.9% at the end of his term a fifty percent drop, Trump can complain that if you use the U6 unemployment it was still at a whopping 9.4%. But under that measure the Unemployment rate was 17.1% in November 2009 so still about a 50% drop.

Now that Trump is in charge, the U6 has been banished from the lexicon, and I’m sure that He’ll try to switch to the U1 or U2.

But they could probably pick up the fact that something is fishy about the numbers. There are a lot of different numbers that travel together and are collected from different sources, and probably swapped back and forth between different groups several times, mostly by low-medium level bureaucrats who have been at the job through multiple administrations and aren’t particularly vested in the numbers turning one way or the other.

Now if they start looking bad, I’m sure Trump will claim that they are being faked by the deep state.

Although FWIW, U6 is relatively low too.

He may have been trying to look at our workforce participation rate during the campaign, but I can’t say I was paying much attention to his “arguments”.

For another perspective see John Williams Shadow Unemployment rate (currently 21%):

He says:

For example a factory worker who had a nice job in rural America and the company moved the jobs to Mexico. He withdrew from the labor force and is often drunk or on opiates. This person is not unemployed according to the government definition.

That’s the same guy who publishes an inflation rate that is currently at 10% year over year. His site is a hoot.