BLS On Unemployment Figures: We Know We Were Wrong – We Were Just Kidding… Just Kidding!

If the workers who
were recorded
as
employed
but
absent from work
due to
“other reasons”
(over and above the number absent for other reasons in a typical May)
had been classified
as
unemployed on temporary layoff,
the overall unemployment rate
would have been
about
3 percentage points higher than reported
(on a not seasonally adjusted basis).
However,
according to usual practice,
the data from the household survey
are
accepted as recorded.
To maintain data integrity,
no ad hoc actions are taken
to reclassify survey responses.

Below is the full image of their addendum on the report “THE EMPLOYMENT SITUATION — MAY 2020,” which may be found on the BLS website as linked here.

The pertinent part is the final paragraph, which is pasted above, and appears in red.There you have it.

The United States Bureau of Labor Statistics has OFFICIALLY STATED that the Present Unemployment Rate is THREE POINTS HIGHER than officially stated.

They noted also that in the three preceding months of March, April, and May 2020, that responses to the monthly survey were down -9.5%, -12.6%, and -15.1% correspondingly to the month, from last year for the preceding 12 months, and averaged.

Th agency noted also that “BLS and our partners at the Census Bureau take the misclassification error very seriously, and we’re taking additional steps to address the problem.”

Part of the problem, as they note, is with classification.

In a lengthy explainer, the agency wrote that, “In May, 8.4 million workers were classified as employed with a job but not at work during the survey reference week (not seasonally adjusted). Although lower than the 11.5 million not at work in April, this measure remains about twice the typical level at this time of the year. This likely reflects the impact of the coronavirus pandemic.”

Their explanation of “with a job but not at work” is apparently integrated into the idea of going to a central, or common location to work (such as at an office building, or factory site), and of that they wrote in part that, “BLS tabulates data on employed people not at work whose main reason for being absent was vacation, own illness, childcare problems, other family or personal obligations, labor dispute, bad weather, maternity or paternity leave, school or training, civic or military duty, and other reasons. Vacation and a person’s own illness are typically the most common reasons people are not at work.”

In other words, EVEN THOUGH some people were WORKING AT/FROM HOME, because they were not at a central, or common location (as they had been previously), they were considered as being “not at work,” and therefore, for statistical purposes, unemployed… at least temporarily.

And because no one had a crystal ball (where can you buy one of those things, eh?), and therefore could not say, tell, or know with any degree of certainty when the circumstances or situation would change -and- because they had no guidance from their employers, they could not say when, or if, they would “return to work,” as in, when they would once again, fight traffic to go to a central, or common location, to work.

There’s little question that the novel coronavirus COVID-19 has changed, the way we work, and will similarly affect the way data is collected, particularly and especially as it relates to employment/unemployment.

The agency also wrote that “BLS staff determined that, as in April, the vast majority of household survey data series had significant outliers in May. Therefore, BLS staff made adjustments to the models used in seasonal adjustment processing to better account for these outliers.”

The United States Census Bureau is the agency tasked with conducting the monthly surveys, and their justifications are partially explained as follows:

“If someone who usually works full time (35 hours or more per week) reports working 1 to 34 hours during the survey reference week, interviewers ask them the main reason why they worked less than 35 hours. If a person says they were under quarantine or self-isolating due to health concerns, interviewers were instructed to select “own illness, injury, or medical problem.” For people who were not ill or quarantined but say that their hours were reduced “because of the coronavirus,” interviewers were instructed to select “slack work or business conditions.” An example would be “the store cut back hours during the coronavirus.”

“For those who do not work at all during the survey reference week, if a person says they were under quarantine or self-isolating due to health concerns, interviewers were instructed to select “own illness, injury, or medical problem.” For people who were not ill or quarantined but say that they did not work last week “because of the coronavirus,” interviewers were instructed to select “on layoff (temporary or indefinite).” Examples include “I work at a sports arena and everything is postponed” or “the restaurant closed for now because of the coronavirus.”

“To be classified as unemployed on temporary layoff, a person has either been given a date to return to work by their employer or expects to be recalled to their job within 6 months. (They must also be available to return to work if recalled.) Additional guidance was also provided to household survey interviewers regarding the question “Have you been given any indication that you will be recalled to work within the next 6 months?” If, because of the coronavirus, a person is uncertain when they will be able to return to work and thus is unsure how to answer the question, interviewers were instructed to enter a response of “yes,” rather than “don’t know.” This would allow the individual to be included among the unemployed on temporary layoff. In light of the uncertainty of circumstances related to the pandemic, this unusual step was taken as part of an attempt to classify people who were effectively laid off due to pandemic-related closures among the unemployed on temporary layoff.”

Read their “why we did it this way” remarks.

It’s 15 pages long.

You may read their “official” statement on the BLS site at:
https://www.bls.gov/cps/employment-situation-covid19-faq-may-2020.pdf
-or-
on this site here:
Frequently asked questions: The impact of the coronavirus (COVID-19) pandemic on The Employment Situation for May 2020

But again, the BOTTOM LINE is this:

The OFFICIAL Unemployment Rate is “3 percentage points higher than reported.”

There were at least TWO news gathering/reporting organizations to make note of the BLS’ erroneous findings:
1.) Washington Monthly, by Contributing Writer Robert J. Shapiro, who owns the private consultancy firm of Soneon and is a Senior Fellow at the McDonough School of Business at Georgetown University, and;
2.) The Washington Post, by Heather Long, whose credentials include a Master’s in Financial Economics and Medieval Literature from Oxford as a Rhodes Scholar.

It remains to be seen if any others will catch on to the BLS’s problem.