Reading the recent jobs reports I was reminded of a quote from Mark Twain and possibly the British Prime Minister, Benjamin Disraeli. It goes like this:
There are three kinds of lies: lies, damned lies and statistics.
ADP released its jobs report for the month of August. It reported 201,000 jobs were created in the month of August. Great, I thought to myself.
The Bureau of Labor Statistics released its jobs report for the month of August. Their statistics showed:
Total nonfarm payroll employment rose by 96,000 in August.
That BLS report for August also said unemployment dropped by .2%.
Sounds good, right? Then they ruined it with this:
Both the civilian labor force (154.6 million) and the labor force participation rate (63.5 percent) declined in August.
How does labor force participation rate decline and the unemployment rate decline in the same month?
How do you subtract and end up adding? How does labor force participation rate decline in the same month that unemployment numbers drop?
Here's where we get back to the original quote of lies, damn lies and statistics. The unemployment rate reflects only those who file for unemployment benefits. If you file, you are considered unemployed. If you don't, say if your benefits have run out, well then you're not unemployed. So you can be unemployed but not counted as unemployed. Instead, you are part of the labor force non-participation rate. That's a rate no one talks about.
Back to ADP's jobs report, I have a few questions:
- Who created all those extra jobs? 114,000 to be exact.
- How did they do it?
- Why were their numbers not included in the BLS report?
- Do they even use the same criteria to define a job?
- Why was their report, a bit more positive but not nearly positive enough, buried in the news about jobs last week?
Could you run a company with confusing, conflicting reports like these? Our country is no more a company than its companies are citizens, my friends. But you get my point.
- How do you find a solution to a key challenge if you refuse to share a common definition of that challenge, the terms used to discuss it and the metrics used to measure your progress, or its lack in the case of our economy?
- What if you refuse to measure and report statistics in a consistent manner across the company?
- What if you just refuse to share all the numbers with the other departments in your company?
Well, then you have an economy like we have and a series of monthly jobs reports that collectively appear to be lies, damn lies and statistics. But, we just don't know which is which.
I regularly miss things, obvious and sublime. What am I missing here?