Regular readers of this space know about the BLS and all the neat nuances that go along with the data. I wrote a five part series in July on How Americans Live using Bureau of Labor Statistics data. (It wasn’t a very popular series because it wasn’t a popular topic. A few of you liked it.)

And then Jack Welch stepped in it this week. He made news.

Whether your a Tastycrat or a Fingerlican, as analytics folks, you have to be intrigued by what Jack Welch is saying and how he’s thinking.

His second tweet on the topic appeared to suggest that somehow Obama had something to do with modifying the BLS Unemployment report, so as to make the unemployment rate appear to be 7.8%, below the crappy 8.0% Fingerlican talking point.

In other words, somethings awry. It has to be, right? How else do you explain a…trend?

Jack wrote for the WSJ:

“The possibility of subjectivity creeping into the process is so pervasive that the BLS’s own “Handbook of Methods” has a full page explaining the limitations of its data, including how non-sampling errors get made, from “misinterpretation of the questions” to “errors made in the estimations of missing data.”

Bottom line: To suggest that the input to the BLS data-collection system is precise and bias-free is—well, let’s just say, overstated.”

Doesn’t Jack sound familiar?

When confronted with a representation of reality that doesn’t make sense, he looks for a reason, any reason, to reject the representation. Seems natural. But note how he does it.

First, The BLS has a handbook of methods. It is extremely extensive. That, alone, shouldn’t be a reason to create doubt. That’s a good thing.

Second, I don’t believe anybody is suggesting that the BLS data-collection system is precise or bias-free. How could it be? It is makes use of a survey methodology. Sure, it’s a huge sample. But it isn’t without bias and it isn’t absolutely precise. However, as far as indicators go, the BLS rivals most commercial systems. That doesn’t automatically mean that the figures are wrong. It’s just a straw-man.

He goes on:

“These three statistics—the labor-force participation rate, the growth in government workers, and overall job growth, all multidecade records achieved over the past two months—have to raise some eyebrows. There were no economists, liberal or conservative, predicting that unemployment in September would drop below 8%.”

So…thirdly, just because it’s unexpected means that it’s impossible? Unexpected things happen. They even in happen in business.

The BLS has consistently reported unemployment, which has an extremely specific definition, as above 8% for almost three years now. I understand that it’s surprising that the BLS is reporting it as being below 8%. It is possible that it will be revised upwards. However, I also understand that Jack might not understand what the unemployment rate really means according to a specific BLS definition, especially in the context of the term participation rate. I get that he’s tripping up on two definitions, and, that it forms some sort of system in his mind. But what if the definitions don’t square up with the way he thinks of them?

It wouldn’t surprise me.

I don’t care about the political dimension of this. Who cares?

However, Jack’s public musing helps us all understand how one of America’s former top executive thinks about numbers, trends, bias, forecasts, and legitimacy.

And that’s absolutely invaluable.

Thanks Jack. Keep sharing. This is useful.


I’m Christopher Berry.
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