business news in context, analysis with attitude

The Washington Post reports that the Bureau of Labor Statistics has conceded that there has been a "misclassification error" in how it has assessed unemployment numbers that meant the numbers actually were worse than stated.

A note on last week's unemployment report 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. But that would still be an improvement from an unemployment rate of about 19.7 percent for April, applying the same standards."

The story goes on to point out that "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.'

"The 'other reason' category is normally used for people on vacation, serving jury duty or taking leave to care for a child or relative. These are typically situations where the worker decides to take leave. But in this unusual pandemic circumstance, the 'other reason' category was applied to some people staying at home and waiting to be called back."

KC's View:

The best news about the Post story is that it says "economists and former BLS leaders from across the political spectrum strongly dismissed" any suggestion that there was political tinkering with the number.  They said that it is 100 percent impossible for such a thing to happen.

Which is reassuring, and should put any conspiracy theories about this to rest.