I do not buy the BLS numbers, but not for the same reasons as Jack Welch. He seems to think that drop in the unemployment rate was part of an Obama administration led conspiracy to fudge the numbers right before the election.
I think the 7.8% unemployment rate is an accurate and honest reflection of the data available to the Department of Labor. The rate would have been computed the same whichever party was in power.
However, this number sucks and tells us little about the labor market. It doesn’t show us the quality of jobs people are taking. This month’s large drop was mainly driven by the growth of part-time jobs with low wages and no benefits.
The number also excludes people who haven’t looked for a job in over a month. Just because a worker is discouraged doesn’t mean we should not account for his misery. If you consider a broader unemployment rate, the U6, you’ll see that it is still high and didn’t change during September.
Here is an explanation of this alternate rate from portalseven.com
The U6 unemployment rate counts not only people without work seeking full-time employment (the more familiar U-3 rate), but also counts “marginally attached workers and those working part-time for economic reasons.” Note that some of these part-time workers counted as employed by U-3 could be working as little as an hour a week. And the “marginally attached workers” include those who have gotten discouraged and stopped looking, but still want to work. The age considered for this calculation is 16 years and over.
Here is an historical chart of the U6:
As you can see, there has been an improvement here since 2010, but we are nowhere near the levels of the aughts. Also, u6 was unchanged in September, because many of those people getting part-time work wanted full-time jobs instead.
Numbers are tricky. When I was a child, batting average was the single most important statistic in judging the performance of a hitter. Over the years this has changed and more interesting derivative statistics have replaced batting average for knowledgeable fans. On base and slugging percentages, OPS+ and WAR have become crucial in evaluating players, and they work. The best players of all-time scored highly in these new statistics.
The fans were actually way ahead of the professional talking heads, journalists and ex-jocks, in making this change. The media will continue to report the unemployment rate as being 7.8%, but now you know better. Let the talking heads argue about this meaningless number while you learn about the true state of the labor market using the U6.