The New York Post’s John Crudele has had it with the bogus guesstimates embedded in our employment statistics:
Each month Washington adds many thousands of jobs that it believes – but can’t prove – are being created by newly formed companies.
The logic behind this calculation – which is called the birth/death model – is as simple as it is extraordinary: even in a horrible job market and during a credit crunch as we have today, Washington believes courageous entrepreneurs are forming businesses and hiring people.
The October report – the one that reported the 240,000 loss of jobs – includes a guess that 71,000 of these uncountable, new-company jobs were created.
Included in those 71,000 made-up jobs are 7,000 that were supposed to have been created in construction and 13,000 in “financial activities.”
Come on! Are we really supposed to believe that a total of 20,000 jobs were suddenly created by construction and financial services companies, despite the fact that both those industries are mired in a severe recession.
Here’s a tip for Washington: now that a new president has been picked you can ease off the BS pedal.
But here’s the sham-squared part of this column.
An economist at the labour Department admitted – and this really is news to me – that the 71,000 fake birth/death jobs are only the “residual” estimate. The bigger part, 70 per cent in fact, of this guesstimate is baked into the larger calculation, in other words the one that came up with the 240,000 lost jobs.
How big would the overall job losses have been without the baked-in estimate for new companies being formed?
My source at the labour Department says that number can’t be determined. It’s sorta like trying to find the egg whites after the cake is already out of the oven.
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