A picture is worth a thousand words.
So, here’s a picture.
Fully expecting that the BLS will manage this week’s jobs and unemployment rate reports, I thought I’d peek at what Gallup is saying.
Well, the Gallup trend is up sharply since mid-July … up to 8.3%
My bet: BLS will find a way to report that the unemployment rate stayed constant at 8.2% in July.
We’ll see …
I’m ambivalent about Obama’s decision to, in effect, implement the Dream Act despite it’s rejection by Congress.
I’m ok with parts of it — like legalizing those who serve in the military – but I’m not that keen on presidents completely ignoring the Constitution.
Immigration politics aside, I’m interested in the statistics … specifically, the impact of Obama’s move on the BLS’ reported unemployment rates.
Most sources are estimating that just short of 1 million illegals fall into Obama’s stick-around policy — over 16 years old, younger than 30.
Those people now — by the stroke of Obama’s pen – qualify as “in the American labor force” … the denominator of the unemployment rate calculation.
Let’s do some simple math …
The BLS says that there are currently 155 million people in the labor force … according to the last BLS report, 142.3 million were employed … 12.7 million unemployed … for an 8.2% unemployment rate.
What happens when the 1 million newly minted legals get thrown into the statistical mix?
Worst case: if all are currently unemployed … then the unemployment rate jumps to 8.8% … 13.7 unemployed divided by 156 million in the labor force.
Best case: if only 11% are unemployed — the current UE rate for Hispanics … then the unemployment rate increases slightly to about 8.25% … 12.81 unemployed divided by 156 million in the labor force.
Most like (statistically): somewhere between the best and worst cases … probably a 25% unemployment rate for the new legals … bumping the UE rate by about .1/10th of a percentage point.
Most likely (politically): the BLS will “forget” to add the new legals to the labor force until, say, January 2013.
That’s the case that I’m betting on … watch the labor force numbers to see if I’m right … they should bump up a million when June numbers get reported … but they won’t!
Loyal readers know that I’m a bit skeptical re: the employment numbers that the BLS has been spitting out in recent months.
Two reasons: (1) Unemployment rates are diverging from the Gallup daily surveys, and (2) Seasonal adjustment factors are boosting the employment numbers.
First, the Gallup relationship …
Historically, Gallup’s mid-month unemployment rate has tracked closely to the BLS end-of-month rate.
Not so in February … Gallup reported 8% … BLS reported 8.2%.
Gallup’s mid-month rate for March was 8.9%.
Let’s see what the BLS says tomorrow.
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The 2nd number to watch is the the seasonal adjustment adder.
For the prior10 years, the BLS has seasonally adjusted February employment numbers upward by 1.1423%.
Last month, they upped the raw numbers by 1.1688%.
That’s a big difference when floated into the unemployment rate calculation.
The prior 10 year adjustment factor for March has been .6209 %.
If the seasonal adder is higher than that tomorrow … be suspicious.
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My bet: the unemployment rate will magically hang at 8.3% … .6% below the Gallup number.