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AP Plays Fast and Loose with Jobless Numbers

The Associated Press is misleading its readers when reporting on job losses.

by
Tom Blumer

Bio

July 31, 2008 - 10:30 am

Even casual followers of news about the U.S. labor market during the past five months “know” that the economy has lost a lot of jobs.

Those who have read or heard excerpts or snippets from dispatches written by the Associated Press’s Jeannine Aversa during that time (chances are good that they have, because of the wide distribution of AP’s reporting) also “know” that employers have been “slashing” jobs and handing out stacks of “pink slips.”

February’s Employment Situation Report (ESR) from the Bureau of Labor Statistics (BLS) that the economy had lost 63,000 jobs inspired Aversa (bolds are mine throughout this column) to write that:

Dangerous cracks in the nation’s job market are deepening. Employers slashed jobs by the largest amount in five years …

After the March ESR, Aversa told us that:

Workers’ pink slips stacked ever higher in March as jittery employers slashed 80,000 jobs …

When the April ESR initially showed a lower-than-expected 20,000 jobs lost, Aversa wrote:

Businesses are handing out pink slips as they cope with an economy that is teetering on the edge of a recession, or possibly in one already.

For May’s ESR, which showed another 49,000 jobs lost, she switched her focus to the unemployment rate:

Pink slips piled up and jobs disappeared into thin air in May as the nation’s unemployment rate zoomed to 5.5 percent in the biggest one-month jump in decades.

Help-wanted signs are vanishing along with jobs …

After yet another reported reduction in June, this time by 62,000 jobs, Aversa reached the peak of her 2008 histrionics:

… [There is] a storm of pink slips drenching this year’s July Fourth holiday for more than 60,000 Americans … leaving thousands more worried about the future.

Indeed, there’s no denying that from February through June (after subsequent revisions), the BLS has reported that the economy lost 362,000 jobs:

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That’s not good at all. But you would think from Aversa’s accumulated five months of overheated reporting that bodies of the hapless, helpless unemployed are strewn everywhere.

Clearly, that’s not the case. But why is that?

What if I told you that Aversa’s “slashing” and “pink slip” assertions are not only exaggerated, but false?

BLS, in the left box below, estimates that the economy actually added 2,712,000 jobs from February through June:

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How can that be? Here’s how.

You see, the primary job pickup or loss number BLS reports is “seasonally adjusted” (the box on the right). Seasonal adjustment is a perfectly valid and useful statistical technique for averaging out reported results in situations where actual month-to-month changes vary widely. The labor market is one of those situations.

But as you can see from the not seasonally adjusted figures in the box on the left, the monthly job increases during February through June of this year, while positive, have been substantially less than those seen in 2005, 2006, and 2007. After the statistical smoothing done during the seasonal adjustment process, these less-than-stellar performances during 2008 have caused BLS to report seasonally adjusted job losses.

On a seasonally adjusted basis, after an all-time record of 52 consecutive positive months, the economy has indeed lost jobs for six months in a row. Analysts are predicting that this job-loss streak will reach seven when BLS releases its July ESR Friday morning.

But please note: What obviously has not occurred on an overall basis is the “slashing,” “stacking of pink slips,” and “vanishing jobs” Jeannine Aversa has obsessed over for the past five months. Seen over that period of time, the difference between reality and the AP reporter’s gloomy portrayals could not be more stark.

As Friday’s report looms, you can see from the not seasonally adjusted chart above that July has historically been a month when the economy sheds a lot of jobs. The vast majority of this occurs in the “Local Government Education” category. In other words, even though most teachers and other school workers choose to receive their pay over 12 months, they aren’t actually working during the summer, and are reported that way.

Though it’s not expected, if July’s overall job loss is less than it has typically been, BLS may actually report an increase in seasonally adjusted jobs.

Aversa’s reporting has been disgraceful. She has repeatedly misrepresented seasonally adjusted results as what is actually occurring on the ground. In the past five months, she and her wire service have misled readers, listeners, and viewers of news outlets that use its information to believe that a collective 300,000-plus fewer people are working. But the government estimates that over 2.7 million more people had jobs in June than did five months earlier. Again, this is not good enough in comparison to prior years. But it is what it is, not what Jeannine Aversa and her editors say it is.

That this 3 million-job gap between perception and reality exists, complete with demonstrably false reports of “pink slips” strewn everywhere, is nothing short of journalistic malpractice — and yet another reason why the near monopoly the self-described “Essential Global News Network” has over initial event reporting must somehow end.

Along with having a decades-long career in accounting, finance, training and development, Tom Blumer has written for several national online publications primarily on business, economics, politics and media bias. He has had his own blog, BizzyBlog.com, since 2005, and has been a PJM contributor since 2008.
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