
The May jobs report had “misclassification error,” underreported by 3 points - epistasis
https://www.washingtonpost.com/business/2020/06/05/may-2020-jobs-report-misclassification-error/
======
xoxoy
The whole market smells suspect. It’s an orgy of Fed induced moral hazard
where something so misleading could rally the market which had already
recovered to near all time highs.

I suspect a lot of the surprise had to do with businesses recalling furloughed
workers to essentially do nothing to quality for PPP loan forgiveness.

So in reality this likely is just showing PPP working as intended. The bigger
question is if demand is still depressed on reopening if these companies will
just have to lay off the employees anyway once the loan is forgiven.

the other thing is the initial wave of laid off workers was heavily in service
and healthcare which were most impacted by lockdowns, so makes sense those
would return on reopening. Bigger question is if there will be a second wave
of layoffs for white collar workers due to persistently depressed demand even
on reopening.

~~~
bredren
I know for a fact this is occurring. Employers need employees to book at least
X hours to get the loan/grant.

But there isn’t nearly that amount of work needed. So they are asking
employees to report the high numbers anyway.

This effectively shifted unemployment insurance benefits to business benefits
that are still sponsoring (at least in part) zero utility.

It’s a great smokescreen. And fwiw, it is probably a better Posture to have
workers “ready to go” should there be something for them to do.

But make no mistake this is not business as usual. It is more like a shell
game for stats and monetary distribution.

------
ImaCake
The relevant section from the actual report is arguably clearer than the WaPo
article:

| However, there was also a large number of workers who were classified as
employed but | | absent from work. As was the case in March and April,
household survey interviewers | | were instructed to classify employed persons
absent from work due to coronavirus- | | related business closures as
unemployed on temporary layoff. However, it is apparent | | that not all such
workers were so classified. BLS and the Census Bureau are | | investigating
why this misclassification error continues to occur and are taking | |
additional steps to address the issue. | | | | If the workers who were
recorded as employed but absent from work due to "other | | reasons" (over and
above the number absent for other reasons in a typical May) had | | been
classified as unemployed on temporary layoff, the overall unemployment rate |
| would have been about 3 percentage points higher than reported (on a not
seasonally | | adjusted basis). However, according to usual practice, the data
from the household | | survey are accepted as recorded. To maintain data
integrity, no ad hoc actions are | | taken to reclassify survey responses.

Link found in that WaPo article, so credit due for that:
[https://www.bls.gov/news.release/empsit.nr0.htm](https://www.bls.gov/news.release/empsit.nr0.htm)

------
smitty1e
It's always interesting to check ShadowStats
[http://www.shadowstats.com/alternate_data/unemployment-
chart...](http://www.shadowstats.com/alternate_data/unemployment-charts) in
this context.

------
foobarbazetc
Whoops!

So was the April report, with the exact same error.

~~~
coderintherye
As was March. They have been cooking the books for 3 months now:
[https://www.thestreet.com/mishtalk/economics/new-
unemploymen...](https://www.thestreet.com/mishtalk/economics/new-unemployment-
claims-top-2-million-for-10-straight-weeks)

~~~
djannzjkzxn
It’s weird to describe it as cooking the books when they are being completely
transparent about the issue that is occurring. If they wanted to cook the
books all they had to do was leave out the disclaimer.

------
nkurz
Non-paywalled version here: [http://archive.is/VceLj](http://archive.is/VceLj)

Excerpting some key paragraphs:

\---

When the U.S. government’s official jobs report for May came out on Friday, it
included a note at the bottom saying there had been a major “error” indicating
that the unemployment rate likely should be higher than the widely reported
13.3 percent rate.

The special note said that if this “misclassification error” had not occurred,
the “overall unemployment rate would have been about 3 percentage points
higher than reported,” meaning the unemployment rate would be about 16.3
percent for May.

...

Some took this as a sign that President Trump or one of his staffers may have
tinkered with the data to make it look better, especially since most
forecasters predicted the unemployment rate would be close to 20 percent in
May, up from 14.7 percent in April. But economists and former BLS leaders from
across the political strongly dismissed that idea.

...

Economists say the BLS was trying to be as transparent as possible about how
hard it is to collect real-time data during a pandemic. The BLS admitted that
some people who should have been classified as “temporarily unemployed” during
the shutdown were instead misclassified as employed but “absent” from work for
“other reasons.”

...

This problem started in March when there was a big jump in people claiming
they were temporarily “absent” from work for “other reasons.” The BLS noticed
this and flagged it right away. In March, the BLS said the unemployment rate
likely should have been 5.4 percent, instead of the official 4.4 percent rate.
In April, the BLS said the real unemployment rate was likely about 19.7
percent, not 14.7 percent.

Economists said the big takeaway is that it’s hard to collect real-time data
during a pandemic and that while the unemployment rate remains high — likely
more than 16 percent — it has declined a little from April.

...

Instead of focusing on possible Trump interference, many economists wish
people would focus on the fact that 21 million Americans are currently
unemployed and over 2 million have permanently lost their jobs.

The situation remains dire, they say, even after a few jobs returned in May as
the economy reopened.

\---

Given that the NASDAQ hit an all-time high today (!) based largely on the
unemployment number being better than expected, one wonders how the market
will react to the correction on Monday.

~~~
usaar333
The correction was in the original report; the markets already considered it.

~~~
hannasanarion
Market traders don't read the report, they just see the headline and get
excited.

People ascribe way too much wisdom to stock traders. Remember back in March
when everybody was buying buckets of stock in the _wrong company called Zoom_?
Zoom the Chinese parts manufacturer's price went up 2000% before the SEC
forced it to be delisted because that's the only way to stop the lemmings on
Wall Street.

~~~
tw1912112
umm, people who move millions of dollars are quite sophisticated. I am sure
the retail investors like me don't dissect the report, but we hardly move the
market. Institutional investors aren't as sloppy as me.

~~~
ImaCake
Sometimes they are. But there are definitely companies that analyse the shit
out of every piece of data they can get their hands on. I think part of the
problem is that getting things "right" is just really really hard.

~~~
tw1912112
I am sure there are such investors, but our companies are already crossing a
trillion dollar market cap, you need to have a few billion dollars to move
market significantly. As the amount increases, so does the due dilligence.

