Unemployment claims are up by 14,000 this week, adding a touch more uncertainty to the Bush Administration's claims that all is right with the economy. Now, before anyone gets hot and bothered my reporting what might amount to a one week blip, and "of course new claims will rise due to post-holiday season layoffs", let's remember that the DOL already compensates for such factors in it's seasonal adjustments. In fact, from what I remember from previous delvings back into the DOL archives, the factor is generally always 190+ or more in early January, meaning that the number of claims included in the statistics are nearly half as much as actually reported, due to the "seasonal adjustment." Although the topic of seasonal adjustment of uninsurance claims was broached a few weeks ago by Dave Johnson on Seeing the Forest, I'm pretty comfortable that the seasonal adjustments are not being rigged. Not that I think upper level Bushies are incapable of stooping to such actions, but, to be honest, they really don't need to at this point. A number of labor-related factors which play into the UI claims numbers are breaking the Administration's way already, namely long-term unemployment in relation to seasonal higher, the latter factor the general reason for the high statistical factor during January.
See, most states have employment tenure requirements for eligibility for unemployment insurance; essentially, you need to have worked a set number of hours and or made a base income, generally in the four out of five quarters prior to and including the quarter of layoff. During periods of low long-term unemployment, even workers in seasonal jobs may have enough hours or income from previous jobs in those relevant quarters. However, in periods of high long-term employment, many of those taking seasonal work haven't worked for some time, or only part-time, and so may not meet the income eligibility requirements.
In addition, most employers of seasonal workers know how the systems works, and will make sure their hiring and layoffs do not carry over to more than one quarter, hence, the large surge of layoffs just before the New Year, e.g., start of a new quarter. If they want to be really cruel, they'll give those workers just a few hours in the new quarter, but not enough to reach the necessary base amount.
Since we are currently in a period with the highest long-term unemployment in many decades, a significant number of the seasonal workers currently being laid off will never even apply for unemployment benefits. In addition, these untold numbers dilute the seasonal factors for unemployment claims, since in previous low long-term unemployment years, these workers would have been counted, and are part of the rationale behind the high January factor.
Ironically, these seasonal workers who will never submit first time claims will have been counted in Decembers household and industry surveys, and thus will factor into what one might suspect to be a decrease in the month's unemployment rate and increase in jobs, all due out tomorrow. On the other hand, however, their numbers may also show up in the January report. By then, however, I suspect the BLS will have figured out some way of "adjusting" the numbers.
Update: Amazing how AP is happy to inject haphard speculation into it's news report:
Meanwhile, the Labor Department reported new claims for unemployment benefits increased last week following three straight weeks of declines. New applications filed for unemployment insurance rose to 353,000, an increase of 14,000 for the week ending Jan. 3. That compared to 339,000 new applications in the previous week, when claims were at their lowest level since January 2001.The increase could have resulted in part from filings by people who took temporary holiday season jobs, but the Labor Department did not cite any special factors.
Clearly, whoever AP has working the DOL desk this morning doesn't have a clue as to fact that the goverment already adjusts for season factors; hence the reason that only an increase of 14,000 was reported, versus the actual increase of 30,431 new lucky duckies.
Illuminating
Posted by: Damfa at January 8, 2004 11:19 AM