Americans are being systematically misled about the true state of the U.S. economy by a mainstream news media owned by the same Wall Street predators hollowing out our faltering middle class.
“All is well,” we’re told, even as our neighbors lose their jobs, retail stores are shuttered by the dozens, and vacant homes are boarded up. No where is this more obvious than the misleading job creation articles culled from each month’s federal payrolls report.
Case in point, today’s headlines tell us that 145,000 jobs were created in December and wages rose by 2.9% over the same month a year earlier. But the real numbers for December are a net loss of 64,000 jobs and a net wage gain of just 0.8 of a percentage point.
December’s false positives are justified by a recurring sin of omission that misrepresents zero as breakeven for both job creation and wage gains. It has the same impact on the labor market as cheating in sports and makes our nation’s economic team look more succesful than it really is.
Here’s how the job creation and wage gain books are cooked:
Economic reporting teams at places like The New York Times, Bloomberg News, Reuters, The Wall Street Journal, and The Associated Press habitually omit the two numbers readers need to establish breakeven in the monthly payrolls report. They imply zero is breakeven instead.
The first omission involves the 209,000 additional jobseekers who joined the civilian labor force in December. These additions represent the true breakeven point for job creation. Not zero.
Any amount of December job creation that falls short of 209,000 is a net loss, which lifts the official unemployment rate. Anything more is a net gain which lowers it.
The number of new jobseekers added to the civilan labor force changes from month to month. When it spikes the unemployment rate perks up even in months when lots of jobs are supposedly being created.
Because using zero for breakeven for job creation is a cheat.
The only way 145,000 jobs were created in December is if the size of our civilian labor force was the same as the prior month. It wasn’t. It expanded by 209,000 workers, all of whom were looking for jobs, giving us a net loss of 64,000 jobs by this measure.
This is not rocket science. It’s grade school math: 209 minus 145 is 64. That’s how many jobs we lost in December after the 145,000 jobs created were subtracted from the additional 209,000 workers added to the civilian labor force.
See for yourself.
The number of entries is readily available in the second line of Table B, on page six of the 42 page payroll report, which is available on the U.S. Bureau of Labor Services website at https://lnkd.in/eKF8zte
The second missing number is the annual inflation rate for December, which comes out later this week. We need it to determine whether the 2.9% wage gain in the December payroll report really represents more money, which is only true if it exceeds inflaton.
The annual inflation rate for the 12 months ended in November was 2.1%, which is close enough for our purposes. This 12 month figure is unlikely to change a lot come December.
Once you subtract the 2.1% rate of inflation from the 2.9% wage gain recorded for December you get a real wage gain of 0.8%
This is a much smaller gain than the one reported to us. Luckily for us, it’s just enough to cover the taxes on the mythical gains we would have received in a fairytale world without inflation.
Meaning, take home wages didn’t amount to diddly in December after taxes and inflation. America’s exploited workers got nothing but a stocking full of corporate coal for Christmas.
This kind of exaggeration happens every month. The lies are unwittingly regurgitated by short-staffed community news operations around the nation.
A small daily newspaper like The Des Moines Register doesn’t have a real economics reporter any more or qualified editors. They pick up articles about things like job creation from financial wire services like Bloomberg and run them, without realizing they’re misleading their readers.
The worst part of the process is that the same flawed article which misleads a construction worker, computer programmer, lawyer, doctor or school teacher can actually inform a a financial professional who knows that breakeven is not zero for either monthly job creation or wage gains.
The same misleading article can tell a financial professional our struggling labor market is shrinking – at a time of unprecdented job destruction due to offshoring and automation – while convince the general public it’s booming.
So we’ve got that going for us.
You are being misled.