Labor statistics come under scrutiny

By J.T. Rushing, correspondent

WASHINGTON - It's inaccurate and unreliable - or is it? It's traditional, but it has outlived its usefulness - or has it? It belongs in the presidential race, which is less than three weeks away. Or does it?

The Bureau of Labor Statistics, a division of the Labor Department, in Washington earlier this month released numbers showing that the country's unemployment rate in September fell below 8 percent to 7.8 percent. That's the lowest figure of Barack Obama's presidency.

And it caused some supporters of Mitt Romney, the Republican presidential nominee, to cry foul. Romney surrogates said that the books were cooked, that the Labor Department couldn't be trusted, and that something seemed crooked. For his part, Romney himself said the improvement wasn't enough.

But the conspiracy theory hasn't taken off, likely because many economists and even some prominent Republicans don't buy it.

On Thursday, Iowa Sen. Chuck Grassley, a Republican and perhaps the Senate's most prominent watchdog over the Obama administration, said he doesn't believe it either. The 30-year senator is the top-ranking minority member of the chamber's Judiciary Committee and has peppered the administration with criticism for almost four years now.

“They would be stupid to cook the books, because the professional reputations of a lot of civil servants would be on the line,” Grassley told The Gazette. “And the reason I don't think it would be possible to do that is because there's enough whistle-blowers in government, somebody like me, that someone would find out about it.”

At the University of Iowa, economics professor John Solow also took aim and shot down the Romney campaign's theory about crooked numbers. Specifically, Solow noted that the Bureau of Labor Statistics analysts are non-political appointees and that they perform critically acclaimed research.

“I find that stuff kind of kooky. The suggestion that the BLS is screwing the numbers is largely on a par with the people who don't think the president is a U.S. citizen,” Solow told The Gazette. “If it's true, why haven't they been cooking the books for the past eight months?”

Part of the argument lies with how the Labor Department analyzes the country's unemployment rate.

A MATTER OF CHOICE

The most critical complaint is that the rate excludes U.S. citizens who are intentionally not looking for work - as much as 33 percent of the general population, according to the Labor Department. But Kerry Koonce, a spokeswoman for the Iowa Department of Workforce Development, said that has always been the case.

“There is a large percentage of the population that chooses not to be part of the work force,” Koonce said. “There's always an argument about this back and forth, but based on the formulas dictated by the Bureau of Labor Statistics, it's as accurate as it can be. But another thing to add is that the rate doesn't catch the underemployed. And there are a lot of people underemployed.”

Solow made the same point, noting that the rate doesn't include college students or retirees. Although many economists prefer using the percentage of the population that is unemployed, he said that would include such people and therefore be misleading.

“This is true for as long as they've collected the statistics. No one has ever hidden this,” he said.

“What the unemployment rate tells us is survey data,” Solow said. “And we don't really want to count the whole population.

“My 88-year-old father would be counted as unemployed, and he's retired. Or my 27-year-old son, who is in graduate school. We want to count the people who want to find work. Not every person who is unemployed is unhappy about it.”

The Bureau of Labor Statistics calculates the unemployment rate by household surveys, but even with that factor, the jump in jobs in September was remarkable. While the gain had stayed at about 160,000 new jobs each month, the September increase was almost 900,000.

Anika Khan, an economist for Wells Fargo, based in Charlotte, N.C., said that's no surprise because the numbers have historically varied widely. She said the overall trend during Obama's presidency shows the unemployment rate has declined, but that the labor market remains sluggish.

“It's always been very volatile on a month-to-month basis,” Khan said. “If we look at participation in the labor force, the overall trend has been a decline and we think that will continue. But we have an aging population and a lot of students in school, and a leveling-off of women in the workplace, so those are the things that will continue to weigh down the participation rate.”

IOWA'S RATE

Iowa has continued to stay ahead of the rest of the country in its own unemployment rate - the state had a rate of 5.2 percent unemployed in September, almost 2 percent below the national average even though there are still 90,000 unemployed Iowans, according to the state.

Koonce said this year's recession is more severe than most, because it seems to be affecting more industries beyond the state's bedrock industry of agriculture.

But Solow, who has lived in Iowa for 32 years, said agriculture is what is keeping the state's unemployment rate low. The industry is less dependent on a normal business cycle, and it has the benefit of producing something that all Iowans need - food.

“People can cut back on clothing or a new car or a vacation. But for all those type of cutbacks, people still eat,” Solow said.

“The ethanol industry has caused corn prices to be high. And you have a factor of supply and demand, even with the drought. A farmer may not have as much to sell, but he can sell it at a higher price.”