Summary: Today we look at lies about the jobs report from Zero Hedge. These are part of a larger campaign to destroy our confidence in the government as a means of collective action, leaving us isolated and weak.
Conservatives have long waged a campaign to weaken our confidence in unions and government, the only organizations that can resist the 1%. Alone, as individuals, we’re pawns So they’re using their agents to separate us, as shepherds’ dogs work sheep, with a propaganda barrage on us of immense size. Instead of explosives, it consists of ideas — myths and misinformation. Too overwhelming for rebuttals, our only hope lies in skepticism.
Our gullibility is their greatest advantage, but we can do better
These stories comes from sources providing an artfully arranged combination of information and misinformation (like worms on fishhooks). Few do it better than Zero Hedge, which mixes information from valuable sources with misinformation and outright fiction. Today we look at one example, Zero Hedge’s myths about the Bureau of Labor Statistics.
“4 Million Fewer Jobs: How The BLS Massively Overestimated US Job Creation”
Zero Hedge, 5 August 2014 — Opening:
“When it comes to the all-important monthly payrolls number which sets the tone for risk over the next month, one of the biggest variables in the BLS’ “estimate” (because all jobs numbers are that: statistical estimates) of US jobs is the monthly birth-death adjustment. What this monthly fudge factor is, in a nutshell, is the BLS’ estimation for how many new businesses are created over the period offset by older “dying” businesses, leading to incremental jobs that are only polled by the BLS with a substantial lag. Here is how the BLS explains this adjustment: …”
This is correct, as is the following excerpt they provide from the BLS website. They then add their special mixture of fact and fiction.
The latest proof of just how broken the economy has become, and serves as a big flashing red question mark about just how massively overestimated job creation is due to a wildly erroneous birth/death estimator, comes from a research report by the Brookings Institution titled: “The Other Aging of America: The Increasing Dominance of Older Firms.”
This study, one of several by Brookings about this important trend, shows the decline in entrepreneurship in the US economy. ZH quotes:
Perhaps more striking, our research showed that the decline in new firm formation rates had occurred in every U.S. state and nearly every metropolitan area, in each broad industry group, and in all firm size classes … the rate of new firm formations fell significantly during this period — occurring because the number of new firms being formed each year (numerator) didn’t keep pace with the growth in the stock of total firms in the economy (denominator).
Zero Hedge then assumes the BLS has not accounted for this (guessing), and draws a dramatic conclusion (their bold):
… if indeed this declining dynamism is “contributing to the decline in entrepreneurship as well” then the whole premise behind the birth/death adjustment, or rather the “Birth” contribution … goes out of the window.
… here is the bottom line: since Lehman, or starting in 2009, the Birth/Death adjustment alone has added over 3.5 million jobs. Or rather “jobs”, because these are not actual jobs – these are BLS estimates for how many jobs newly-formed businesses have created based purely on statistical estimations and hypotheses that the US economy in 2014 is as it was in 1960. Which means that the traditional dynamics used behind the Birth and Death adjustment are now merely Dead, and US employment is overestimated by as much as three and a half million jobs!
This also means that any boasts by Obama about “solid US economic growth” under his regime, and that all those jobs lost since Lehman have allegedly since been recovered, are nothing but even more lies.
This is big news. They even added the standard GOP refrain of “Obama lies”. But false; it’s ignorance on stilts. Note the last sentence from the BLS page about the birth/death adjustment, from which ZH quoted at the start of their article:
The table below shows the net birth/death model adjustment used in the published CES estimates since the establishment of the most recent benchmark level for March 2013.
What is this “benchmarking”? The ZH writer obviously didn’t ask the BLS. Or even look, as BLS provides a clear explanation. Each month their Establishment survey (CES) estimates non-farm employment. Once per year, in February (the January report), they benchmark the CES for the previous March using the Quarterly Census of Employment and Wages (QCEW) data, based on State Unemployment Insurance tax records.
For example, the benchmark revision that was released in February 2013 replaced the March 2012 estimate with the benchmark level, increasing the employment level for that month by 424,000. To wedge this adjustment over the prior year, 1/12 of the difference was added to April 2011, 2/12s to May and so forth, through February 2012 which received 11/12s of the difference. Employment for March 2011 had been set to a benchmark amount in the prior year and was not revised with the March 2012 benchmark.
This replaces the employment survey results AND the birth/death factors with more accurate data from tax filings. So the numbers in the ZH graph for 2007 – 2012 have been superseded. There are no 3.5 million phantom jobs from 5 years of cumulative errors in the birth-death adjustments. These are as imaginary as the estimates of high inflation from Shadowstats. Conservatives, you’re being conned.
This small exercise shows why the Right is winning. It’s easy to manufacture these simple appealing myths, launch them, and watch them go viral. It’s far more difficult to chase them down and disprove them. The Left uses similar methods (though not as extensively) for a good reason: they work. When we become more skeptical, no longer relying on those who lie to us, then Left and Right will change.
About the August jobs report
August was weak for jobs and wages, but monthly economic data is too noisy for concern. Its key significance was to dash hopes — again — of the long-awaited acceleration of US economic growth. Without faster growth in jobs (now running under 2%) and real wages (flat) the economy remains weak. Flat real wage growth also disproved (again) claims by corporations of widespread skills shortages — from which only more cheap labor from abroad can save us!
The YoY SA changes — smoother than the MoM numbers — show 3 years of steady growth in jobs, but at rates slower than in good years before 2000.
For More Information
See all posts about Information & disinformation, in the new media & the old.
Other posts about Zero Hedge:
- Another example of the “it’s on the Internet so it must be true” fail: Zero Hedge, 14 May 2010
- We are ignorant because we enjoy being lied to. Today we look at lies about the US debt., 8 August 2011