Freedomnomics

Article published Friday, April 6, 2012 at Fox News.

Team Obama and the phantom jobs that never were

By John R. Lott, Jr.

Call it the phantom jobs that never were. Prior to the rather anemic 120,000 jobs created in March, the media has been going on and on about the over 200,000 jobs that have been created over the previous three months, the actual number of jobs was falling – yes, that is right, falling, dropping by an average of about 290,500 per month. The number of people working in March was fewer than the number of people working when Obama became president in January 2009 and essentially unchanged when the recovery started in June 2009.

There are two ways of measuring the number of jobs: a survey of households and a survey of employers. But no matter how you measure it, the answer is the same: there has been no job growth under Obama.

But you won’t hear this depressing information on the news because everyone reports what are called the “seasonally adjusted” employment numbers, not the actual number of jobs.

Seasonal adjustments normally make sense. At certain time of the year, such as before and after Christmas, there are swings in the number of people employed. We use so-called “seasonal adjustments” to separate the normal temporary ups and downs in the employment number from more permanent trends. So if there were 2.7 million fewer jobs in January this year than there were in December, the “seasonal adjustments” compare the change in employment this past January to what normally happens at that time every year.

The Bureau of Labor Statistics does not disclose its exact “seasonal adjustment” method, but their adjustments put most weight on recent years. But this means that there were such large job losses over the last few years that even relatively normal January job loss of 2.7 million looks good. Thus, a 2.7 million-job loss this past January produces a larger “seasonally adjusted” 275,000 increase in jobs, but five years ago the same 2.7 million loss would have probably produced an adjusted number closer to zero.

One way to do your own “seasonal adjustment” is to compare the same month across years. January this year had either 492,000 or 1.26 million fewer jobs than existed in January 2009 depending on whether one uses the Household or Employer job surveys, respectively.

The figures at the top of the page show how the number of jobs has changed in this recovery compared to the averages for the six other recoveries since 1970. Recoveries after more severe recessions tend to have much bigger percentage increase in jobs. Thirty-four months into the other recoveries saw an average 7 percent growth in jobs using the “seasonally adjusted” numbers (a 10 percent increase in jobs after severe recessions and just a 2 percent increase after mild ones). But the current recovery has produced by far the least number of jobs of any recovery – slightly less than a 2 percent increase.

The numbers are much worse if one looks at the actual number of jobs. In that comparison the job growth in past recoveries are larger and the current recovery actually still has essentially zero job growth (0.4%). So the “seasonally adjusted” numbers make this recovery look bad, but not quite as bad as previous recoveries. But that is an illusion based on how the numbers are “seasonally adjusted.”

Media reports have probably unintentionally distorted the economic news. It is hard to blame them given the numbers that they have relied on in the past no longer work as well with this unusually bad recovery. Yet, it is the real number of jobs that counts, not statistically created ones.

John R. Lott Jr. is a FOXNews.com contributor. He is an economist and co-author of "Debacle: Obama's War on Jobs and Growth and What We Can Do Now to Regain Our Future.".

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