Unemployment Rate Higher Than Originally Reported Due To ‘Misclassification Error,’ Still Lower Than Predicted

The unemployment rate for May was much lower than forecasters predicted, even though it should have been obvious that as the economy was allowed to reopen following the coronavirus shutdown, unemployment would drop.

On Friday, the Bureau of Labor Statistics revealed the unemployment rate had dropped to 13.3% for the end of May, The Daily Wire previously reported. The drop shocked media outlets, who seemed to be disappointed that the number didn’t surge to 20% as predicted by Dow Jones experts.

A special note attached to the jobs report, however, indicated a “misclassification error” resulted in a lower unemployment rate than what should have been reported. The BLS classifies households according to “their answers to a series of questions about their activities during the survey reference week.”

“Workers who indicate they were not working during the entire survey reference week and expect to be recalled to their jobs should be classified as unemployed on temporary layoff. In May, a large number of persons were classified as unemployed on temporary layoff,” the bureau reported.

Here’s where the misclassification error occurred:

However, there was also a large number of workers who were classified as employed but absent from work. As was the case in March and April, household survey interviewers were instructed to classify employed persons absent from work due to coronavirus-related business closures as unemployed on temporary layoff. However, it is apparent that not all such workers were so classified. BLS and the Census Bureau are why this misclassification error continues to occur and are taking steps to address the issue.

Had the error not occurred, the unemployment rate would be “about 3 percentage points higher than reported (on a not seasonally adjusted basis),” or about 16.3%. The BLS will not change the reported unemployment rate, it said. The data would be accepted as record, which is standard practice for the bureau.

Jason Furman, former President Barack Obama’s top economist, tweeted that there was zero chance that someone in the Trump administration fiddled with BLS numbers to make the economy look better.

“You can 100% discount the possibility that Trump got to the BLS. Not 98% discount, not 99.9% discount, but 100% discount,” Furman tweeted. “BLS has 2,400 career staff of enormous integrity and one political appointee with no scope to change this number.”

The Washington Post reported that this misclassification error has occurred since March due to how people described their work status as the country shut down over coronavirus fears.

“The BLS noticed this and flagged it right away. In March, the BLS said the unemployment rate likely should have been 5.4 percent, instead of the official 4.4 percent rate. In April, the BLS said the real unemployment rate was likely about 19.7 percent, not 14.7 percent,” the Post reported.

Even if accounting for the misclassifications, the unemployment rate dropped by three percentage points in May.