On Faking U.S. Job Growth, the Labor Department Exceeds Itself

In a LaRouchePAC national webcast of Nov. 6, EIR‘s Jeffrey Steinberg challenged the U.S. Labor Department’s report, which had just appeared that day, of large job growth in October. The Labor Department, Steinberg charged, constantly and falsely claims creation of employment based on its computer model which merely imputes “new startups” which produce job growth — when in fact, “new closedowns” have been outnumbering “new startups” since 2009 after the financial crash. The CEO of Gallup polling agency, Jim Clifton, has insistently challenged the Labor Department for doing this, since Gallup has data showing that the number of U.S. small businesses has declined, net, over that period.

Subsequently the Labor Department’s Bureau of Labor Statistics (BLS) published, in a Nov. 18 release, its backup for the computer model, based on what it calls “Business Employment Dynamics (BED)” for the first quarter 2015, as follows:

“From December 2014 to March 2015, gross job gains from opening and expanding private sector establishments were 6.9 million, … gross job losses from closing and contracting private sector establishments were 6.7 million. The difference between the number of gross job gains and the number of gross job losses yielded a net employment gain of 226,000 jobs in the private sector during the first quarter of 2015. (See tables A, 1, and 3.)”

Thus BLS was saying that their year-later surveying and tabulating of actual startups and failures is a real world check — and confirmation, a in first quarter 2015 — of the often-suspect new employment claim projected by their computers.

But then they added this: “Data in this release incorporate annual revisions to the BED series. Annual revisions are published each year with the release of first quarter data. These revisions cover the last four quarters…. Additionally, all historical BED series back to third quarter 1992 have been revised for both seasonally adjusted and not seasonally adjusted series, to incorporate an administrative scope change.”

And the revision was: “These revisions are primarily due to the reclassification of a number of establishments from private households (NAICS 814110) to services for the elderly and persons with disabilities (NAICS 624120). Private households are not within the scope of BED and, as a result, those establishments impacted by this industry reclassification are now within scope.”

I.e., BLS at the start of 2015, converted private households whose members are taking care of someone elderly or disabled, into small business employers, retroactively to its 1992 data!

In the real world, China leads in new business startups, having reached 1.6 million of them in 2014, double the number in 2010, according to a London global consulting firm.