The California conspiracy: The convoluted path to unemployment rate disbelief

Those who can't accept a 7.8 percent unemployment rate add details to their conspiracy theory

October 16, 2012

Immediately after the Bureau of Labor Statistics reported that the nation's unemployment rate dropped to 7.8 percent in September, conservatives started attacking the agency for producing figures that sounded a little too convenient for the Obama administration. The most prominent doubter was former GE chairman Jack Welch, who tweeted shortly after the announcement, "Unbelievable jobs numbers..these Chicago guys will do anything..can’t debate so change numbers." But he was hardly alone.

Now the conspiracy theorists are abuzz on the web with an explanation of exactly how they think the books were cooked: The BLS numbers, they claim, did not include California because the nation's most populous state failed to report its data in time.

That is, of course, preposterous. The unemployment rate is calculated based on a monthly survey of 60,000 households called the Current Population Survey. It asks how many members of the household are employed and how many are looking for work. The states have no role in the process whatsoever.

The confusion appears to stem from the misinterpretation of an item published last week by Henry Blodget, the CEO and editor of Business Insider, a business and tech news website. He wrote a series of posts on Thursday about a surprisingly good report from BLS that initial jobless claims had dropped to 339,000 from 369,000 a week before. Early reporting indicated that the drop was mostly due to unexpectedly low numbers from a single, large state.

Later in the day, Mr. Blodget reported on an interview he had with an unnamed BLS analyst who said it appeared that California was the culprit and that it might not have processed all of its claims in time for the reporting deadline.

Both the California labor department and BLS later said that wasn't true and that the state had reported all of its data, though California's numbers for the week were particularly good. (State officials credited a strengthening economy and unusually good weather, which may have delayed normal seasonal effects on employment patterns.)

It is possible that what happened in California was a mere statistical fluctuation that will be ironed out by higher numbers in subsequent weeks, or it could be the start of a trend. It's impossible to know from one data point. But, as Mr. Blodget later reported, even if California's data had been at a more normal level, the national jobless claims still would have declined somewhat.

The bottom line, though, is this: The national jobless claims data did include California, and the 7.8 percent unemployment rate is unrelated to the jobless claims report. So the idea that the 7.8 percent rate doesn't include California is wrong on every level.

--Andrew A. Green

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