It is widely regarded as the most important barometer of them all, and fittingly, the monthly jobs report gets more attention and more coverage than almost all other economic data combined.
Unfortunately, it is also broken.
That's right. For all its stature, the payroll report (which will be released Friday) has a major flaw - and it's a doozy. The headline unemployment rate is essentially a bunch of bunk.
The current 8.2% figure you hear about so often is wildly inaccurate and doesn't fairly reflect the true state of the nation's labor force. It's a deficiency that Wall Street-types have long adjusted for with a wink-wink sort of acceptance, knowing full well that the so-called "U-3" headline number is actually a quagmire of exclusions and adjustments that under-reports the real situation by as much as 50%.
"It's simply a matter of Congress saying, 'We're not going to use this number. We're going to use the other numbers that you've calculated that we think are more representative of what the unemployment situation really looks like in this country,'" says Congressman Duncan Hunter in the attached video. He points out that changing the calculation wouldn't cost a thing, since the data is already available.
It's a problem that he and a growing number of lawmakers want to fix, and it's why the California Republican has sponsored the Real Unemployment Calculation Act - a legislative fix that would require the Department of Labor to get real about what it tells the American people.
In fact, unbeknownst to most people, the Bureau of Labor Statistics (BLS) tabulates not one but six different unemployment rates, ranging from U-1 to U6 (4.2% to 14.9%).
Hunter's bill would make the U5 result the new official unemployment rate through what he calls "a little magic along with the math." According to the BLS website, the U-5 rate includes "discouraged workers, plus all other persons marginally attached to the labor force." Other carve-outs include categories such as "underemployed" and "part-time for economic reasons," as well as the roughly 87 million people who have dropped out of the labor force altogether. That final fact alone has cut the so-called labor participation rate to 63.8% - the lowest it has been in 30 years.
"It makes everybody look bad," Hunter says. "This isn't about the President or the Republican Party or the Democratic Party. It's about the American people knowing what the number is, and it being a true representation of what we see in everyday life."
While Hunter is the first to admit there's no perfect method or number, he argues that we at least ought to "ballpark it right, and I think we're pretty far off."