It is widely regarded as the most important barometer of them all, and fittingly, the monthly jobs report gets more attention and more coverage than almost all other economic data combined. Unfortunately, it is also broken.
That's right. For all its stature, the payroll report (which will be released Friday) has a major flaw — and it's a doozy. The headline unemployment rate is essentially a bunch of bunk.
The current 8.2% figure you hear about so often is wildly inaccurate and doesn't fairly reflect the true state of the nation's labor force. It's a deficiency that Wall Street-types have long adjusted for with a wink-wink sort of acceptance, knowing full well that the so-called "U-3" headline number is actually a quagmire of exclusions and adjustments that under-reports the real situation by as much as 50%.
"It's simply a matter of Congress saying, 'We're not going to use this number. We're going to use the other numbers that you've calculated that we think are more representative of what the unemployment situation really looks like in this country,'" says Congressman Duncan Hunter in the attached video. He points out that changing the calculation wouldn't cost a thing, since the data is already available.
It's a problem that he and a growing number of lawmakers want to fix, and it's why the California Republican has sponsored the Real Unemployment Calculation Act — a legislative fix that would require the Department of Labor to get real about what it tells the American people.Read More »from The Unemployment Rate Is a Farce That Needs Fixing: Rep. Duncan Hunter