About Those 2.9 Million Jobs Lost In January...
Much has been said about the January Non-farm payrolls number, which rose by 113K on expectations of a 180K increase, most of which has been focused on the US atmospheric conditions during the winter. There is a problem with those numbers: they don't really exist (as for the non-impact of "the weather" on jobs weshowed previously that the number of people "not at work due to weather" as calculated by the BLS itself. this winter was lower than 2008, 2009, 2010, 2011 and 2012 - so much for historic winter weather).
So what really happened in January?
For the real answer we have to go to the BLS'non-seasonally adjusted data series. It is here that we find that in January, some 2.870 million real, actual jobs were lost, not gained. Putting this further in perspective, the number of NSA jobs losses in January 2014 was greater than in January of 2013, 2012, 2011 and tied that of 2010. In fact only during the peak of the depression in January 2009 was there a greater NSA drop in the first month of the year when 3.691 million jobs were lost.
So how does a loss of 2.9 million jobs become a "gain" of 113K jobs in the same month? Simple: through the magic of seasonal adjustments.
Incidentally, for all those confused, it is these same seasonal adjustments that at least on paper, are supposed to account for such things as seasons, and, well, weather. Only sometimes they apparently don't, like right now. Which is also the reason why one can completely ignore the entire seasonal adjustment process because one after another economist is lining up to inform anyone caring to listen that the seasonal adjustment number is actually not adjusted enough.
Below we break down which jobs comprised the 2.9 million jobs lost when ignoring the ARIMA fudge factors.
On one hand the transition from 137.386 million seasonally adjusted December jobs to 137.499 million seasonally adjusted January jobs is simple: just add 113K jobs.
On the other, the one has to consider that the actual number of January 2014 jobs was a far lower 135.396 million jobs. Furthermore, one has to recall that his unadjusted number is the one impacted by the monthly Birth-Death adjustment. For those who don't recall this nuance, here is the BLS' explanation of this incremental adjustment factor to the final number:
There is an unavoidable lag between an establishment opening for business and its appearance on the sample frame making it available for sampling. Because new firm births generate a portion of employment growth each month, non-sampling methods must be used to estimate this growth.Earlier research indicated that while both the business birth and death portions of total employment are generally significant, the net contribution is relatively small and stable. To account for this net birth/death portion of total employment, BLS uses an estimation procedure with two components: the first component excludes employment losses due to business deaths from sample-based estimation in order to offset the missing employment gains from business births. This is incorporated into the sample-based estimate procedure by simply not reflecting sample units going out of business, but imputing to them the same trend as the other firms in the sample. This step accounts for most of the birth and death employment.The second component is an ARIMA time series model designed to estimate the residual birth/death employment not accounted for by the imputation. The historical time series used to create and test the ARIMA model was derived from the UI universe micro level database, and reflects the actual residual of births and deaths over the past five years. This ARIMA model was originally applied once a year using new data to calculate the net birth/death forecasts. Effective with the release of preliminary January 2011 employment estimates in February 2011, BLS began updating the Current Employment Statistics (CES) net birth/death model component of the estimation process more frequently, generating birth/death factors on a quarterly basis instead of annually.The net birth/death model component figures are unique to each month and exhibit a seasonal pattern that can result in negative adjustments in some months. These models do not attempt to correct for any other potential error sources in the CES estimates such as sampling error or design limitations. Note that the net birth/death figures are not seasonally adjusted, and are applied to the not seasonally adjusted monthly employment estimates to derive the final CES employment estimates.
Simple enough, right. Anyway, in January the Birth-Death adjustment resulted in a further 307K jobs being subtracted from the final NSA number as an intermediate adjustment step.
So what happened next? Instead of explaining, we'd rather show it:
While there are numerous other intermediary "transformational" steps designed precisely to obfuscate and baffle with BS, the bottom line is that through the magic of the BLS' statistical gimmickry, a NSA change of -2,870K, impacted by a further -307K "Birth/Deaths" (or -3,177K total), became a positive 113K change in the seasonally adjusted jobs series, or a total "seasonal adjustment" factor of 3.290 million!
And here, keep in mind, that the Wall Street estimate for a payroll "beat" was the addition of 180K. Of course, in keeping with the above "seasonal" transformation, what this means is that instead of having added a total of 3.290 million "statistical" jobs, the Bureau simply had to bump up the "fudge factor" to 3.357K or over, to match or beat the expectations. The difference between the 3.290MM and 3.357MM numbers? 2%.
Which begs the question: why did whatever prompted the BLS to add just under 3.3 million "excel" jobs, not also prompt them to add another 57K jobs to the final adjustment number which was a minute fraction of the total fudge factor, and beat Wall Street estimates, reincarnating the narrative that the US economy is now back in "escape velocity" mode, it is "self-sustaining" and all those other spins and stories serious economists tell themselves to justify that QE has worked? Unless, it was specifically the intention of the BLS to not give such an impression.
Whether the reason was precisely to give the Fed the loophole it needs to taper the taper in a few weeks time when the latest "economic recovery" thesis crashes and burns, will be uncovered over the next several months.
Finally, for all those same very serious economists who lament the impact of the weather on the Establishment survey, and yet point to the surge in the Household Survey which "added" 638K seasonally-adjusted jobs, the unadjusted change there was a drop of 403K jobs. So there's that.
WaPo Praises The Joy Of Being "Untethered" And "Unleashed" From A Job, The "Freedom" Of Unemployment
Now that the full court press to refute the findings of the CBO report which, as we reported, confirmed what was largely known - that as a result of Obamacare, the strapped US economy will have even fewer workers as millions will fall back on welfare state entitlements which make hard work obsolete - has failed, it is time for the propaganda to take a different track: one where not having a job, and in fact losing it due to Obamacare, is hailed as an act of nobility. Sure enough, here comes one of the administration's favorites, the Bezos Times, with "They quit their jobs, thanks to health-care law" which does largely as its name suggests: highlights just how "enabling" and "liberating" Obamacare is for one's life, once a person is no longer burdened by something as trivial as a job.
No, we aren't kidding:
Count Polly Lower among those who quit their jobs because of the health-care law.It happened in September, when her boss abruptly changed her job description. She went from doing payroll, which she liked, to working on her boss’s schedule, which she loathed. At another time, she might have had to grit her teeth and accept the new position because she needed the health benefits.But with the health-care law soon to take effect, she simply resigned — and hasn’t looked back.“It was wonderful. It was very freeing,” said Lower, 56, of Bourbon, Ind., who is now babysitting her 5-year-old granddaughter full time. With the help of federal subsidies that kicked in Jan. 1, she is paying less than $500 a month for health coverage for herself and her husband.
One really can't make this up - it appears that in America's creeping transition to a socialist paradise, the new American dream is living on "Federal subsidies" (paid for by taxpayers) and government welfare. It gets better:
The White House and its allies argue that the government has a role in addressing a failure of the health-insurance market: the high prices and coverage restrictions that have kept health coverage out of reach for so many people. Like Social Security, which provides a safety net so people can retire, the health law may have the effect of leading some Americans to stop working, they say. But they called the impact positive, arguing that people have for too long been stuck in jobs that are a poor fit or that they dislike, simply for the benefits. While some people may make the calculation to just work less to keep more generous benefits, many will use their time to do something more productive, such as start their own business or take care of family members, advocates of the new law say.“What the White House wants you to think is, if a person chooses to make less income, they must be doing something that makes them better off,” said former Congressional Budget Office director Douglas Holtz-Eakin, now president of the American Action Forum, a conservative policy group. “What conservatives would have you ask is, is it an appropriate use of someone else’s money to put you in that position to choose?”The CBO acknowledged that there could be some positive economic impacts from unleashing people from their jobs but concluded that there was no good way to quantify that, and therefore left the number out.
Incidentally, "unleashing people from their jobs" may be the punchline of 2014. And why not, everything else is rapidly going to bizarro socialist hell. Actually, here is another punchline candidate: "tethered to a job":
Lower acknowledged that it has been harder to make ends meet without a steady paycheck. But she said there is no way to quantify the peace of mind she feels, now that she isn’t tethered to a job she hates and can help her daughter, a single mother who works full time, with child care.Lower expected to miss her job. “It was definitely a scary move to make,” she said. “I’m a person who likes routine, and there definitely was an adjustment period.”But upon reflection, she said, “I’ve adjusted well.”
We hate to break it to you, but "adjusting" to living on the welfare of others, while beinguntethered, and unleashed from the tyranny of working (hard) and paying taxes is not exactly training for the Ironman Triathlon. Also, the final outcome when the entire population becomes untethered and unleashed is rather unpleasant - just see every socialist paradise in history.
However, what is becoming clear is that slowly but surely, the entire process of labor and being employed is increasingly cast in a negative light: something which is not exactly surprising. At least not to our readers, because, sadly, we were once again just over a year ahead of the prevailing sentiment when, in November of 2012, we wrote "When Work Is Punished: The Tragedy Of America's Welfare State" when we said that "for increasingly more it is now more lucrative - in the form of actual disposable income - to sit, do nothing, and collect various welfare entitlements, than to work. This is graphically, and very painfully confirmed, in the below chart from Gary Alexander, Secretary of Public Welfare, Commonwealth of Pennsylvania (a state best known for its broke capital Harrisburg). As quantified, and explained by Alexander, "the single mom is better off earnings gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045." That was then. Now we can add Obamacare... which will further help America's now almost extinct middle class get even more untethered and unleashed.
Of course, it is up to the likes of the BezosWashington Post to make it appear that this is all not only perfectly normal, but noble and dignified.
Alas, as smarter people than us have pointed out, being untethered and unleashed only works as long as the system has other people's money to distribute to those who chose not to work and pay taxes. Once said money runs out , complete social collapse and revolution usually follows.
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