Experts: Job Spike Mostly Part-timers, Home-Based Jobs

With almost exactly one month left till the election, the government reported Oct. 5 the unemployment rate plummeted to 7.8 percent in September. While media outlets like The New York Times called the number “unexpected good news for Obama,” both liberal and conservative economists were quick to tear it apart.

The labor force jumped in one of the two government employment surveys – “the government said the total number of workers employed surged by 873,000, the highest one-month jump in 29 years,” wrote The Wall Street Journal. The Journal’s forecast had predicted an increase to 8.2 percent.

Economist Peter Morici of the University of Maryland noted in his commentary that “the unemployment rate decreased to 7.8 percent, because the number of self-employed jumped dramatically.” How much? He told Business and Media Institute he put the ballpark number at 700,000 newly self-employed. Morici also said that they couldn’t have all been full-time jobs and more likely were engaged in part-time work such as freelancing.

He said that labor participation had declined a great deal since Obama took office and caused most of the “reduction in unemployment from its 10.0 percent peak in October 2009.” He pointed out that if the participation rate had remained the same unemployment would be 9.8 percent; 10.7 percent if using the rate from beginning of Obama’s term.

Dean Baker, co-director of the lefty Center for Economic and Policy Research, called the result “almost certainly a statistical fluke.” “It is common to have large monthly changes in the employment numbers that are not consistent with other economic data,” he added.

The Street.com
found other economic experts concerned about the increase in part-time work. “Daniel Alpert a managing partner of investment bank Westwood Capital noted the large benefit that part time workers gave to the unemployment rate. ‘Whoa, folks, stop the music,’ wrote Alpert, on Twitter. He noted a 582,000 increase in part time workers - a general negative – that pushed the unemployment rate lower. ‘The unemp. rate went down b/c of part time,’ wrote Alpert,” The Street reported.

That same story quoted Douglas Holtz-Eakin, a Romney campaign adviser and former CBO director who told Bloomberg TV viewers “The unemployment rate is just a fluke.” “A statistical anomaly,” according to Holtz-Eakin.

Romney adviser Kevin A. Hassett, director of economic-policy studies at the American Enterprise Institute, said the survey “portrays a September that was booming, far more so than could possibly be true given the other indicators.”

The BLS release showed a huge jump in part-time workers, and digging into the household survey data revealed 581,000 more people working part-time for economic reasons in September than in August (using seasonally adjusted data).

Liberal reaction to the numbers wasn’t just muted, it was almost non-existent. New York Times Pulitzer Prize winning economist Paul Krugman wrote nothing on the jobs number as of noon. Instead, he posted on Britain and what he called a “wonkish” piece about wages.

Julia A. Seymour
Julia A. Seymour
Julia A. Seymour is the Assistant Managing Editor for the MRC's Business and Media Institute.