Tags: Welch | Jobs | employment | Report

Jack Welch: I Was Right About Strange Jobs Report

Wednesday, 10 Oct 2012 08:05 AM

The government's September jobs report that revealed noted improvement in the labor market isn't accurate and is the product of subjective methodology, said former General Electric CEO Jack Welch.

The U.S. unemployment rate fell to 7.8 percent in September from 8.1 percent in August, as employers added a net 114,000 new jobs to their payrolls, while households reported that total employment rose by 873,000 in September, largely due to gains in part-time work, the Bureau of Labor Statistics (BLS) reported recently.

The dip in the headline unemployment rate surprised many analysts, and prompted Welch to suggest the numbers weren't accurate on his Twitter page.

Editor's Note:
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"Unbelievable jobs numbers..these Chicago guys will do anything..can't debate so change numbers," Welch said on his Twitter page, referring to President Barack Obama's tepid performance in the first presidential debate.

The statement sparked a wave of debates and fueled conspiracy theorists to accuse the Obama administration of fiddling with the jobs report to the president's advantage in an election year.

While stopping short of accusing the president of outright cooking the numbers, Welch followed up in a Wall Street Journal Op-Ed that he still believes the numbers were inaccurate.

"The possibility of subjectivity creeping into the process is so pervasive that the BLS's own 'Handbook of Methods' has a full page explaining the limitations of its data," Welch wrote.

Some questions used to gauge joblessness allow for highly ambiguous data.

"For instance, the range for part-time work falls between one hour and 34 hours a week. So, if an out-of-work accountant tells a census worker, 'I got one baby-sitting job this week just to cover my kid's bus fare, but I haven't been able to find anything else,' that could be recorded as being employed part time," Welch wrote.

"Bottom line: To suggest that the input to the BLS data-collection system is precise and bias-free is—well, let's just say, overstated."

Meanwhile, the economy is recovering but not to the point that it could push the unemployment rate down at the pace it fell in September.

"The economy is not in a free-fall. Oil and gas are strong, automotive is doing well and we seem to be seeing the beginning of a housing comeback," Welch wrote.

"But I doubt many of us know any businessperson who believes the economy is growing at breakneck speed, as it would have to be for unemployment to drop to 7.8 percent from 8.3 percent over the course of two months."

Officials at the BLS have rejected Welch's claims, pointing out that not only is the data compiled by career civil servants and not those with political interests, tinkering with the data is difficult.

"We have done a monthly survey since 1940 and the methods have broadly not changed," said Karen Kosanovich, an economist with the bureau, according to Reuters.

"Fiddling with the numbers, I don't know how that would be possible."

White House officials have also rejected Welch's claims.

"This is a methodology that's been used for decades. And it is insulting when you hear people just cavalierly say that somehow we're manipulating numbers," Labor Secretary Hilda Solis told CNN.

Debates to methodology aside, the number still reflects a weak economy, said former Labor Secretary Elaine Chao.

"The employment survey revealed that last month in September the economy produced about 114,000 net new jobs. That is still far below the 250,000 net new jobs which our economy needs to produce just to keep even with population growth," Chao told Newsmax TV.

Marked improvement needs to take place in all areas of the labor market before the economy resembles its pre-recession self, and not just an uptick in younger Americans finding part-time jobs.

"Many young people graduate in June, they take the summer off and they start to look for jobs in September," Chao said.

"Many of these jobs are temporary or part-time jobs, and that is very troubling because what it means is these young people from the ages of 22 to 34 or 36 are entering part-time jobs, and that is because they cannot find full-time jobs, and it speaks again to the lethargy of our economy and the sluggishness of our economy," Chao said.

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