Tasteful Photo: Courtesy Jesse's Cafe Americain

We have discussed the phoniness of the U3 measure of unemployment. We have discussed the "marginally attached" worker not being counted as unemployed by U3 when their unemployment benefits run out... even though they are obviously still unemployed by U-Reality measure...

We have discussed the Birth/Death Ratio model used by the Bureau of Labor Statistics before. The BLS invented this model to account for jobs created by the Births and Deaths of small businesses that add or subtract employment (mostly add) that are supposedly missed by the BLS monthly surveys.

The BLS claims these jobs are added, yet the only hard data the BLS uses is payroll and payroll tax data, which they choose to ignore or give less weight to. After all if the IRS is collecting payroll tax payments monthly for businesses with payrolls over $50k of payroll and quarterly for businesses under $50k in payroll... why believe that kind of hard data on payroll expansion?

On October 2, 2009, the BLS admitted it had overstated job creation by 824,000 jobs mostly in the first quarter 2009. According to Bloomberg:

U.S. Job Losses May Be Even Larger, Model Breaks Down (Update1)

"About 824,000 more jobs may be subtracted from the payroll count for the 12 months through last March when the figures are officially revised early next year, a Labor Department report showed today. The revision would be the biggest since at least 1991."

From our pal Bill the Brain at Calculated Risk:

"Note: The total jobs lost does not include the preliminary benchmark payroll revision of minus 824,000 jobs. (This is the preliminary estimate of the annual revision that will be announced early in 2010)."

From the Brilliant Jesse at Jesse's Cafe Americain:

A Reader Asks "How Did 558,000 People Lose Their Jobs When Only 190,000 Jobs Were Lost?"

"The most obvious reason for the discrepancy is that job creation in the US seems to be centered in the smaller business and the self-employed areas in recent years. These sectors are not polled by the BLS and their impact would only be obtained by the Household Survey's interviews.

The BLS does have a way to account for this called the "Birth Death Model" which is supposed to estimate jobs created by smaller businesses. That model is a bit of a joke actually since it almost always follows the same pattern of adding jobs, with two big corrections in January and July of each year when it will do the least damage to the headline number. Any model that does not reflect the job declines that started in 2007 can most certainly be called a statistical joke. Small business is not immune to business cycles"

In other words the 824,000 phantom jobs that don't exist won't be subtracted from the employment numbers and put back on the unemployment numbers where they belong until February 2010.

So, let us do it for them:

BLS says there are 15.7 million unemployed by U3 at 10.2% unemployment rate... 

So simple math tells us 15.7 at 10.2% means the work force being counted is 153.9 million, although that seems high to me...

Oh yeah, the Alzheimer's puppet Reagan added military personnel to civilian employment in 1982 to dilute unemployment percentage by increasing the labor force by several million and lie about the unemployment rate in the Reagan '82 recession... anyway...

So we add back the 824,000 unemployed that the BLS shaved off with their imaginary B/D Ratio:

We get   15.7 + .824 = 16.5 million unemployed.

16.5 / 153.9  =  10.7% by U3.

Based on 153.9 million in the work force as above, by U3, I come up with 10.7% unemployment.

Now what say you Mr. Change? Fancy Nancy? Harry "Spineless" Reid? Timmay G? Bennie Bernank-ster? Fat Larry?