News Column

Jobless Rate Drops to 7.8 Percent, Fanning Political Flames

Oct. 9, 2012

Hugh R. Morley, The Record (Hackensack, N.J.)

Job interview

Labor figures released Friday indicated lackluster job growth in September, but another report showed unemployment falling to the lowest level since January 2009, which could give a boost to President Obama's reelection effort.

Employers added 114,000 jobs and joblessness fell to 7.8 percent in September, the lowest level since the president took office, declining from 8.1 percent in August.

The U.S. Department of Labor revised the employment figures for July and August, adding 86,000 jobs to the previously reported figures, which suggested that the economy is stronger than initially believed.

Still, the monthly average employment increase of about 145,000 jobs in the last three months is barely enough to keep up with the flow of new workers into the workforce. And the report included an increase of 600,000 people who are in part-time employment because they can't find a full-time job. That is often taken as a sign that employers are too worried about the economy to take on full-time employees.

The jobs report is prepared under tight security each month by a relatively obscure government agency -- the Bureau of Labor Statistics -- without any oversight or input from the White House.

But that didn't stop skeptics from challenging the sudden drop in the unemployment rate only a month before Election Day. Jack Welch, the former General Electric Co. chief executive officer, accused the Obama administration of manipulating the employment data for political gain.

Heavily guarded

The administration denied the allegation as baseless and defended the bureau's report. Eight days before the unemployment rate is made public, the bureau's office suite goes into lockdown. Tom Nardone, a 36-year veteran at the agency who oversees preparation of the report, keeps crucial papers in a safe in his office.

A big reason for the security has nothing to do with politics. The data could move financial markets if they were released early.

The jobs figures, coming five weeks before the Nov. 6 election, were immediately seized on by Obama and Republican Party challenger Mitt Romney as campaign fodder.

Romney, noting that millions of people are out of work, dismissed the fall in the jobless rate, saying it "is not what a real recovery looks like."

Obama, seeing a chance to revitalize a campaign stunned by his weak debate performance Wednesday, said the jobs figures show his policies are working, "a reminder that this country has come too far to turn back now."

Political analysts said voters generally don't track employment figures very closely, and tend to judge the economy by what they see for themselves -- as shown by an increase in the consumer confidence index. But the figures would nevertheless help Obama somewhat, they said.

The drop in the jobless rate gave stocks a boost in the morning, but the gains didn't last. The market closed mixed, with the Dow Jones industrial average up slightly but other indexes posting small losses.

Patrick Murray, director of Monmouth University Polling Institute, said the jobs figures will prompt the media to frame the story as a sign the economy is improving, especially because the jobless rate fell below 8 percent. That's key because no president has been reelected with unemployment above 8 percent since the Great Depression.

Unemployment had been higher than 8 percent since February 2009, the longest stretch since 1948.

"It'll be a positive story, and a positive story is good for the incumbent," said Murray.

Ben Dworkin, director of the Rebovich Institute for New Jersey Politics at Rider University in Lawrenceville, said the figures likely wouldn't change voting patterns much because most voters have already decided.

Still, Dworkin said, the fall in the jobless figure may help Obama, and the figures are "especially good for the president's supporters who are looking for good news after a lousy debate performance."

The employment figure is based on a survey of employer payrolls, or "establishments," and the unemployment rate is compiled with data obtained in a phone survey of people at home, or "households."

Because the employment and unemployment figures are culled from data obtained in two separate surveys, it's not unusual for them to suggest two differing pictures of the economy -- as in this month in which the jobless rate suggests a rapidly improving economy and employment figures indicating minimal growth. Over the long term, however, they tend to reflect a similar picture of the economy.

The household survey showed total employment rose by 873,000 in September, after falling the previous two months. Although declines in the jobless rate sometimes reflect a weakening economy -- as job-seekers give up looking for work because they see no chance of finding a job -- that dynamic did not push the rate down in the September report. Instead, unemployment fell by 456,000, as employment rose.

Adam Sample, metro market manager at the Paramus office Robert Half International, the employment agency, said the surge in part-time workers reflected what his office is seeing, especially in demand for financial, information technology and accounting workers.

"We are seeing a relative increase across the board in demand," he said. "That speaks to the decrease in the unemployment rate."

Overall good news

Economists said the overall report, while weak in some areas, offers good news for the labor market.

"On the unemployment side, it indicates that we are making clear progress," said Joel Naroff, president of Naroff Economic Advisors in Holland, Pa. Naroff added that the numbers are volatile and should be treated "cautiously."

"The exact magnitude is not the point, the direction is clear," he said, noting that unemployment has fallen from 8.9 percent a year ago. "The labor market is getting better."

Bernard Baumohl, chief global economist at The Economic Outlook Group in Princeton, said the figures show a "dichotomy," in which the economy is growing at a "very lethargic 1.3 percent," but the jobs report shows that employers are hiring.

"Clearly, something is going on in the labor market," he said, and suggested that the economy may be at a turning point. "We could be seeing, from this point, on a steady improvement in hiring between now and through 2013."

This article contains material from The Associated Press and Bloomberg News.



Source: (c)2012 The Record (Hackensack, N.J.) Distributed by MCT Information Services


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