Phantom Jobs and Economic Recovery in America

Phantom Jobs and Economic Recovery in America – by Stephen Lendman

On May 6, headlines cheered the new jobs report, New York Times writer Motoko Rich headlining, “Payrolls Show Strong Growth but Jobless Rate Rises,” saying:

“For three straight months, the nation’s employers have delivered solid job growth, easing some concerns that the economy could be slowing.”’s Timothy Homan said:

At 244,000, “American employers in April added more jobs than forecast….indicating the world’s largest economy is weathering the impact of higher fuel prices.”

Wall Street Journal writer Sara Murray wrote:

“Job engine shifts to higher gear (as) companies cranked up hiring in April to the fastest pace in five years….”

In fact, labor force participation held steady at 64.2% for the fourth consecutive month, down from 66% in 2006. Moreover, economist Jack Rasmus estimates 25 million unemployed, a number showing downturn, not growth. He also explained that considerably more workers left the labor force than entered it, saying:

A recovering jobs market “does not experience that kind of massive number of discouraged workers leaving the labor force. Quite the opposite. A truly recovering labor market is characterized by large numbers of discouraged workers re-entering the labor force. Something else is going on here.”

In addition, about one-third of new hires are temporary or part-time, jobs paying two-thirds or less than normal pay with few or no benefits. Moreover, another one-fourth are temp agency hires, meaning around one-half of all jobs created are “low pay, no benefit” ones, showing a sick, not healthy economy.

At the same time, initial jobless claims hit an eight-month high, rising to 474,000 for the week ending April 30, the third increase in the last four weeks and a clear sign of job losses, not gains, so what to make of the Labor Department’s report. More on phantom jobs creation below.

Other reports also look dire. New Department of Agriculture data show 14.3% of Americans receiving food stamps, a record 44.2 million and rising. Moreover, US Census figures show over 47 million Americans in poverty, more than one in seven but way underestimated.

Even the Census Bureau admits that official thresholds were developed over 40 years ago. As a result, they omit:

— true rising inflation levels, notably food and energy currently;

— other expenses like child care, transportation, high tuition and medical expenses; and

— stagnant or falling incomes in recent years, as well as eroding benefits.

In addition, cost of living levels vary greatly around the country – among regions, between large and small cities, and between urban and rural areas.

For a family of four, the official poverty threshold is an annual $22,350 income, a figure far below reality. For example, a family of four in Peoria, IL needs $42,900 to be above poverty. In Chicago, it’s $49,000 and in New York $72,000.

The Bureau also excludes 2.4 million prisoners, elderly residents in nursing homes and other long-term care facilities, as well as students living at school, undocumented immigrants, itinerants, and families or individuals forced to double up for economic reasons. They’re, in fact, counted as a single higher-income household.

Last fall, according to David Johnson, the Bureau’s Housing and Household Economic Statistics Division head:

“If the poverty status of related subfamilies were determined by only their own income, their poverty would be 44.2%. When their poverty is determined based on the resources of all related household members, it is about 17%.”

Income and poverty estimates are also pre-tax, excluding non-cash benefits, partly employer-provided, but diminishing as they shift the cost burden to employees. However, disposable personal income, after income, payroll, sales, property, and other taxes reveals a far higher poverty level than Bureau figures, and a much graver crisis for growing millions sinking below the real poverty threshold.

Moreover, Blacks and Latinos fare nearly three times worse than whites, a shocking underreported reality as well as America’s eroding middle class. At the same time, a Deloitte Center for Financial Services report estimates the proportion of US millionaire households will reach 9% in 2011, a scandalous indictment of decades of wealth transfers to America’s super-rich already with too much.

Other disturbing data show record homelessness numbers, estimates ranging from 2.3 – 3.5 million Americans on any given night, needing refuge wherever they can find it or face life on city streets.

In addition, experts predict record numbers of home foreclosures in 2011 with about five million owners two or more months behind on mortgage payments. According to RealtyTrac’s Rick Sharga, one in every 45 households got foreclosure notices in 2010 when a record one million homes were lost. He estimates 1.2 million repossessed this year, another important sign of economic weakness.

Labor Department (BLS) Phantom Job Creation

Monthly BLS reports mask the weak job picture, including by saying:

“The confidence level for the monthly change in total employment is on the order of plus or minus 430,000 jobs.”

In other words, in good times, data may accurately or understate employment growth, but during today’s hard times (a Main Street depression), it’s mirror opposite.

Moreover, manipulation characterizes BLS calculations, including the so-called “birth-death model” estimate of net non-reported jobs from new businesses minus losses from others no longer operating. During expansions, the model works because start-ups exceed shut-downs. It doesn’t in recessions. Yet the BLS assumes employees from non-operating companies are still there. In addition, BLS adds 30,000 jobs monthly whether or not new companies exist.

Economist John Williams reverse engineers monthly employment numbers based on how calculated in 1980. He estimates the “death” side at about 200,000 per month and calls the “birth side” stillborn. As a result, BLS overstates monthly employment figures by 230,000, what later benchmark revisions show, a recent one erasing two million phantom jobs.

Moreover, as calculated, the U-3 headline number omits many people without jobs wanting work, including many long-term unemployed ones who stopped looking after fruitless months of trying. In addition, part-time workers wanting full-time jobs aren’t included. As a result, BLS produces meaningless headline numbers, concealing the true employment picture deliberately, especially in hard times to hide reality.

The more accurate U-6 figure is broader, including:

(1) “Marginally attached workers: people wanting jobs but not actively looking in the past 30 days, but have looked unsuccessfully in the last year.” This category also includes “discouraged workers” who completely gave up in frustration within, but not exceeding, the past 12 months.

(2) People looking for full-time work but forced to take part-time or temporary jobs to be employed.

John Williams provides the most reliable monthly data on his web site. He reports current U-3 unemployment at 9.0% and U-6 15.9%. He calculates the true figure at 22.3%, what he calls his “Official SGS Alternative Unemployment Rate” by adding uncounted long-term (one year or more) discouraged workers to BLS U-6 figures.

Like Williams, economist Jim Fitzgibbon calls the U-3 calculation “worthless,” adding, “the entire (BLS) report is seasonally adjusted to be positive, while the non-adjusted data is just awful.” That’s why BLS conceals it.

In fact, the latest jobs report showed virtually no gain and earlier in the year positive numbers concealed losses. At best, job creation is stillborn, not positive but don’t expect official Washington or media pundits to explain.

Stephen Lendman lives in Chicago and can be reached at Also visit his blog site at and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

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