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Monday, June 8, 2020

No, the Jobs Report Wasn’t Rigged. Here’s What Happened. - The New York Times

When the Labor Department reported on Friday that employers had added jobs in May and that the unemployment rate had unexpectedly fallen, economists were surprised.

Others had a different reaction: suspicion.

Social media sites over the weekend lit up with posts, some from Democratic politicians, saying the jobs numbers were misleading at best and possibly manipulated. “The trump folks fudged the figures,” Howard Dean, the former Vermont governor and Democratic national chairman, said on Twitter.

For many, those suspicions seemed confirmed by a note, deep within the report, saying some workers had been improperly counted as employed rather than unemployed. If those workers had been classified correctly, the unemployment rate would have been about 16.4 percent in May, rather than the official rate of 13.3 percent (although it still would have been lower than in April).

But economists across the political spectrum say it would be all but impossible to manipulate the jobs numbers undetected. And while there is no question that the speed and severity of the economic collapse has made gathering and interpreting economic data unusually difficult, they say the Bureau of Labor Statistics — the Labor Department office that produces the jobs report — has done an admirable job both ensuring that the numbers are reliable and publicly identifying potential issues.

“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.”

Moreover, Mr. Furman said, the essence of Friday’s jobs report is the same regardless of the classification issue: The unemployment rate fell somewhat in May from the previous month, but remains higher than at any other point since the Great Depression.

Here are some of the basics behind the numbers.

In its report on Friday, the Bureau of Labor Statistics identified what it called a “misclassification error,” in which some people were mistakenly characterized as employed rather than unemployed. The same issue showed up in data from March and April.

To understand what happened, it helps to know a bit about how the jobs figures are calculated.

The unemployment rate and related statistics are based on a monthly survey of about 60,000 households. Interviewers, who work for the Census Bureau, ask respondents a series of questions about their activity the previous week to figure out whether they should count as employed, unemployed or out of the labor force entirely.

When the coronavirus pandemic began, the Bureau of Labor Statistics decided that anyone who wasn’t working because of virus-related business closings should count as unemployed, with or without a formal layoff notice. But starting in March, the agency noticed that an unusual number of people were being counted as “employed but absent from work” — a category meant to reflect vacation, family leave or other temporary absences.

The bureau estimates that this issue probably affected about five million people in May. If all the potentially misclassified people had been counted as unemployed, the jobless rate would have been about a point higher in March, five points higher in April and three points higher in May.

It’s worth noting that the May report’s other surprising number — a gain of 2.5 million jobs — was based on a separate survey of businesses, and was therefore unaffected by the classification issue.

It isn’t clear why people are still being misclassified three months into the pandemic. The bureau says it and the Census Bureau are “investigating why this misclassification error continues to occur and are taking additional steps to address the issue.”

But Erica Groshen, a Cornell University economist who ran the Bureau of Labor Statistics under Mr. Obama, said it was not surprising that a survey intended to measure the ordinary fluctuations in the job market might struggle to capture the nuances of a pandemic-driven shutdown of a vast portion of the economy.

And once the survey has been completed, the agency is extremely reluctant to make any changes, Ms. Groshen said — in part because doing so would invite charges that the agency was massaging the numbers for political or other reasons.

“That would open up a Pandora’s box of ‘Why don’t you adjust for this or that,’” she said. Instead, she said, the agency highlights unusual issues in the data, allowing economists and other observers to adjust the numbers as they see fit.

“That’s part of the transparency that they’ve built into the process,” she said.

The pandemic has made it more difficult for the government to reach households and businesses to conduct surveys, in part because in-person interviews are suspended. The response rate in the survey of households was 67 percent in May, compared with 83 percent in February, before most of the pandemic-related shutdowns.

The Bureau of Labor Statistics said it was “still able to obtain estimates that met our standards for accuracy and reliability,” but economists say the numbers may be less reliable than usual.

Virus-related disruptions could skew the data in other ways. They have thrown off typical seasonal patterns of hiring and firing, which are ordinarily factored into the results, and have scrambled usual assumptions about how many businesses are being formed or shutting down permanently.

Economists overwhelmingly expected Friday’s report to show a loss of jobs and an increase in the unemployment rate. But that shouldn’t necessarily sow suspicion.

For one thing, economists are notoriously bad at predicting turning points in the economy. They didn’t see the 2008-9 recession coming until it had begun.

The Coronavirus Outbreak

  • Frequently Asked Questions and Advice

    Updated June 5, 2020

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How many people have lost their jobs due to coronavirus in the U.S.?

      The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.

    • Will protests set off a second viral wave of coronavirus?

      Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.

    • How do we start exercising again without hurting ourselves after months of lockdown?

      Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.

    • My state is reopening. Is it safe to go out?

      States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • Should I wear a mask?

      The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

In this case, economists thought that job losses continued in May largely because millions of people were filing for unemployment benefits. The data released on Friday agreed: It showed that job losses were elevated in May.

But what unemployment claims didn’t capture was that a significant number of businesses were beginning to rehire workers as the economy reopened, including employers doing so to meet the terms of loans received under the federal Payroll Protection Program. That rehiring went undetected in part because employers didn’t have to post the jobs publicly — they just had to call back workers from layoff or furlough.

“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. He noted that data from private sources, such as air travel and restaurant bookings, began to improve in mid-April, which is consistent with the modest rebound shown in the jobs report.

This isn’t the first time that prominent people have questioned the jobs numbers. In 2012, Jack Welch, the former General Electric chief, implied that “Chicago guys” in the Obama administration had rigged a jobs report to help the president win re-election. As a presidential candidate in 2016, Donald Trump called the unemployment rate, then at 5 percent, “one of the biggest hoaxes in American modern politics.”

But as my colleague Patricia Cohen wrote at the time, there are many protections in place to ensure that the jobs numbers and other economic indicators are kept free of politics. And Ms. Groshen and other economists said they had seen no evidence that has changed under Mr. Trump.

“I have seen no red flags, anything to suggest that the numbers are rigged,” Ms. Groshen said.

The Bureau of Labor Statistics is headed by a political appointee, currently William W. Beach, who previously served as a Republican Senate staff member and an economist at the conservative Heritage Foundation. But the rest of the bureau is staffed by career employees, many predating the Trump administration.

Ms. Groshen and other economists say those employees, whom she called “the most dedicated data nerds on the face of the earth,” would raise alarms if they saw signs of political interference. And there is virtually no way the numbers could be changed without their noticing, she said.

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No, the Jobs Report Wasn’t Rigged. Here’s What Happened. - The New York Times
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