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Forget zombies: Phantom jobs are really scary



John Crudele

I’m still waiting for a reasonable explanation from the Labor Department on why it decided that so many brand-new businesses were suddenly creating so many new jobs in July.

If you missed it, I analyzed Labor’s latest employment numbers last Saturday and found that its total of 163,000 new jobs for July included 52,000 phantom jobs.

The phantom jobs, contained under Labor’s somewhat arcane and usually overlooked Birth/Death Model, are nothing new. The Birth/Death Model allows Washington to guess at the number of jobs created or lost in the crevices of society where they are hard to prove.

Since they are guesses, I believe the guesstimate on phantom jobs needs to be watched.

Here are the numbers, and I will let you decide.

You see, phantom job numbers can vary a lot. In April, 206,000 phantom jobs were created, with 204,000 added in May and 124,000 in June. In fact, 400,000 of the total jobs created this year were phantom jobs.

So far, so good.

But the 52,000 figure for July was very unusual. In July, 2011, Labor subtracted 18,000 phantom jobs; the prior July saw 38,000 phantom jobs deducted. In July 2009 — you guessed it — 10,000 phantom jobs disappeared.

In fact, you can go all the way back to when the Birth/Death Model began in 2000 and you won’t see a figure anywhere close to the 52,000 jobs added to last Friday’s numbers.

“The Birth/Death factor for this month was the largest July factor since the inception of the model,” said a Labor spokesman. He said the department is now getting the data that goes into the model quicker — on a quarterly basis — and that resulted in the anomaly.

All economic figures get refined over time. And there will be numerous changes made to these employment figures, including numbers in September that could very well change the whole employment picture.

But revisions never get the kind of attention that the original economic releases get. So my question remains: Why, with the economy looking so weak, is Labor suddenly so optimistic about people creating new businesses and hiring workers?

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Oh, and by the way . . .

In case you think this is a partisan issue, President Nixon — a Republican — once tried to get people in Labor to simply change employment figures he didn’t like. That story was told to me and others by someone who was there.

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This shouldn’t shock anyone who reads my column: The US Treasury Department’s inspector general for tax administration, J. Russell George, said last week that the IRS could lose $21 billion to identity thieves over the next five years.


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