The jobs report: another opportunity to shake our confidence in the government

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.

WW2 propaganda
True then and now


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.

From Zero Hedge: Birth Death model
Zero Hedge, 5 August 2014


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.

Nonfarm Employment


For More Information

See all posts about Information & disinformation, in the new media & the old.

Other posts about Zero Hedge:

  1. Another example of the “it’s on the Internet so it must be true” fail: Zero Hedge, 14 May 2010
  2. We are ignorant because we enjoy being lied to. Today we look at lies about the US debt., 8 August 2011



8 thoughts on “The jobs report: another opportunity to shake our confidence in the government”

  1. It has always seemed to me that the number of new business startups locally(reflected in the dba fillings published in the newspaper) was higher when the big companies where laying off large numbers. So I would take a reduction in the number of these startups as an indication that the large employers are hiring or at least not laying off as many as before. So if startups are down it may be evidence of an improving economy.

    My observation locally is that startups are stronger than ever and we also seem to have a fairly strong employment market, which may say something about an increase in entreprenuerial desire.

    1. Doug,

      Thanks for the link.

      These accusations are used because they are effective way to control debate among sheep, marginalizing debate.

      * You believe the Vietnam War will end badly? You are a commie-sympathizer.

      * You believe our invasions and occupations of Afghanistan and Iraq will end badly? You are a terror-sympathizer.

      * You rely on the IPCC rather than the activists who say its”too conservative” — and that climate change will destroy humanity and our pets? Your are a “denier.”

      Orwell nailed it. When a people decay, public discourse becomes chanting of “two legs bad, four legs good” — drowning out all debate.

  2. The Zero Hedge twaddle is part of the peculiar new mania for “debunking” official government statistics. The site shadowstats carries this to absurd extremes, essentially claiming that the government makes up numbers for inflation and GDP growth and durable goods manufacturing wholesale, the way the Soviets did under Stalin, when important statistics were just invented. This certainly did occur under the former Soviet Union, but there’s no evidence it’s happening in America in 2014.

    This fanatical denial of reality seems part and parcel of the conservative/libertarian determination to deny facts at every level. Global warming? A hoax perpetrated by pointy-headed liberals! America’s military is losing the war in Afhganistan? Propaganda by weak-kneed Democrats! The world is running out of oil? Pessimistic con job by limp-wristed liberals, all we need to do is drill, baby, drill! Vaccines actually work by and large without side effects? Lies told by doctors who are in cahoots with evil black-helicopter UN overlords! And so on. People wind up sealing themselves inside a bell jar of epistemic closure which prevents uncomfortable facts and inconvenient logic from entering the conservative/libertarian preserve.

    This results in bizarre spectacles like prominent nobel-mentioned economists (Robert Lucas, I’m looking at YOU) confidently predicting runaway Zaire-style inflation after the Fed’s quarterly easing, but in reality no inflation occurs. On the contrary, Europe is now sinking into DEflation, and knowledgeable economists like Krugmand and Brad Delong are now citing research that the U.S. economy is heading in the direction of deflation, rather than inflation.

    The denial of reality appears to have started during the Reagan maladministration, when secretary of the interior James Watt declared that forest conservation was unnecessary because the Rapture would occur before the human race had any chance to use of our natural resources. The reality-denial shifted into high gear during George W. Bush’s Reign of Error, as exemplified by that remarkable interview with an “unnamed Bush official” about the “reality-based community”:

    The aide said that guys like me were “in what we call the reality-based community,” which he defined as people who “believe that solutions emerge from your judicious study of discernible reality.” … “That’s not the way the world really works anymore,” he continued. “We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality—judiciously, as you will—we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors…and you, all of you, will be left to just study what we do.”

    Source: “Faith, Certainty, and the Presidency of George W. Bush,” The New York Times, 17 October 2004.

  3. Maybe less new businesses are starting up because of the risks on not having health insurance or any unemployment to fall-back on if the small business fails? In Europe, many countries have universal health insurance and unemployment benefits for failed entrepreneurs. Sounds like a case for stronger government programs.

  4. Jobs report mask fact most jobs are low wage jobs. Also a lot of people have drooped out of labor force. Essentially what was true in South is now becoming national norm, in effect a poorer nation.
    New South Battles Old Poverty as Right-to-Work Promises Fade
    Most jobs created in this recovery are low-wage, study finds
    Recovery Has Created Far More Low-Wage Jobs Than Better-Paid Ones
    The low wage jobs explosion
    America’s Low-Paying Recovery: More Jobs Than Ever, Worse Wages
    How the recession turned middle-class jobs into low-wage jobs

    “In March, the unemployment rate — the fraction of the labor force that is without work — held steady at 6.7 percent. However, while that figure has steadily declined over the last few months from the 7.5 percent rate recorded in March of last year, it hides a great number of the labor market’s problems. “When the recession began, 66 percent of the working-age population was part of the labor force. Participation dropped, as it normally does in a recession, but then kept dropping in the recovery,” explained Federal Reserve Chair Janet Yellen in a late March speech. “It now stands at 63 percent, the same level as in 1978, when a much smaller share of women were in the workforce. Lower participation could mean that the 6.7 percent unemployment rate is overstating the progress in the labor market.” To be exact, in March, the labor force participation rate stood at 63.2 percent, while the employment to population ratio was 58.9 percent.”

    Read more:
    Did the Obama Administration Approach the Jobs Recovery Wrong?

  5. Who have they been asking? Th is after all a low wage dead end job recovery?
    Why So Many American Workers Lack Ambition

    Meanwhile better keep in mind crime will rise with such jobs.
    Want More Crime with That Burger?
    Good jobs are proven to reduce crime, yet much of the economy’s recent growth is due to dead-end jobs with low wages and no benefits.

    And things are not looking bright
    Bigger Profits, Less Hiring: Main Street’s Future

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