The May Jobs Report Isn't Rigged. Here Are the Details.
On Friday, the Labor Department reported that employers had added jobs in May, surprising some and drawing suspicion from others, according to the New York Times.
Democratic politicians went to social media claiming the jobs numbers were misleading and manipulating. “The trump folks fudged the figures,” Howard Dean, the former Vermont governor, and Democratic national chairman, said on Twitter. However, nonpartisan economists stated that it would be almost impossible to manipulate jobs numbers without discovery. “The B.L.S. acted with enormous integrity and transparency,” said Jason Furman, a Harvard economist who led the Council of Economic Advisers under President Barack Obama. “If anything, it’s another example of how honest and by the book they are.”
Skepticism arose because the report had a note stating that there was a “misclassification error,” where some were mistakenly marked as employed instead of unemployed. However, the note was present in the March and April jobs reports as well. The issue arose because people are being counted as "employed but absent from work" rather than unemployed. This issue has been happing since the economic fallout began and affected about 5 million people in May. This had nothing to do with the 2.5 million jobs added in May that was based on a separate survey.
The issue still isn't fixed and the Census Bureau is still “investigating why this misclassification error continues to occur and are taking additional steps to address the issue.” Erica Groshen, a Cornell University economist who ran the Bureau of Labor Statistics under Mr. Obama, said that it was not surprising given how quickly individuals became unemployed amid the crisis. Once the survey is completed, the agency is reluctant to make changes since they might start rumors that they are "fudging" the numbers.
“That would open up a Pandora’s box of ‘Why don’t you adjust for this or that,’” she said. Instead the agency leaves notes that provide more detail for discrepancies in the numbers. “That’s part of the transparency that they’ve built into the process,” she said.
Furthermore, the pandemic has made it difficult for the agency to efficiently survey households about their employment status. The response rate of surveys in May was 67 percent, down from 83 percent in February. The Bureau of Labor Statistics believes it is “still able to obtain estimates that met our standards for accuracy and reliability,” but economists believe the lack of respondents makes the data less reliable than usual.
Most economists expected the report to show a loss of jobs and an increase in the unemployment rate. However, economists don't have the best track record when it comes to predicting turning points in the economy. Economists didn't see the Great Recession coming until it had already begun. Economists did not discover that businesses were reopening and rehiring people. The rehiring went undetected because employers didn't have to post the jobs publicly. “The numbers are real — I just think we got blindsided because we got too focused on claims,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The jobs report has been questioned in the past, but economists have seen no evidence that there has been any political interference in the records. “I have seen no red flags, anything to suggest that the numbers are rigged,” Ms. Groshen said.