Claim that Unemployment Figures Were Cooked Not so “Ludicrous” After All?

When the September unemployment figures were announced a month before the presidential election as having miraculously declined to below 8% for the first time since the current administration started, more than a few speculated that there may have been some book-cooking in the back room.

In response, Labor Secretary Hilda Solis, said she was “insulted” by the notion that her department might have fudged the numbers, and that any such contention was “ludicrous”:

“I’m insulted when I hear that, because we have a very professional civil service organization where you have top, top economists,” Solis said on CNBC.

“These are our best trained and best skilled individuals working at the BLS. It’s really ludicrous to hear that kind of statement.”

Well, maybe not so much.

The Labor Department the following week reported that weekly jobless claims had fallen by 30,000 to 339,000, their lowest level since February 2008, and the media quickly broadcast that good news as well.

However, Labor soon revealed that “one major state” had failed to “fully document” its jobless claims. Speculation focused on California, but the California State “Employment Development” Department (now there’s a misnomer—in fact, its primary function is to dole out unemployment pay) “strongly denied” the charge:

“Reports that California failed to fully report data to the U.S. Department of Labor, as required, are incorrect and irresponsible,” California Employment Development Department director Pam Harris said in a statement last week.

Yesterday, the feds fessed up. Yes, it’s true: California had under-reported jobless claims, and this week’s are now 46,000 higher, for a total of 388,000 new claims.

The agency in charge of reporting the data to the feds—qqqthe California Labor & Workforce Development Agency—qqqis headed by a political appointee, appointed by Democratic governor Jerry Brown: Marty Morgenstern.

According to campaign disclosure records, Morgenstern donated $4,600—qqqthe maximum amount allowed by law—qqqto the 2008 Obama camapaign, beginning with a $1,000 contribution to Obama for America in February 2008. Morgenstern followed up that donation with a $1,300 contribution in June, and then a $2,300 payout in early September.

On all three disclosures, Morgenstern indicated that he was either “not employed” or “retired.”

“Top, top economists,” indeed. I’ll take mine Austrian.

Mary L. G. Theroux is Senior Vice President of the Independent Institute. Having received her A.B. in economics from Stanford University, she is Managing Director of Lightning Ventures, L.P., a San Francisco Bay Area investment firm, former Chairman of the Board of Advisors for the Salvation Army of both San Francisco and Alameda County, and Vice President of the C.S. Lewis Society of California.
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