Was the Latest Jobs Report Too Good to Be True?

If something sounds too good to be true, more often than not it isn’t. This seemed to be the case for the latest U.S. jobs report, which saw the unemployment rate unexpectedly drop on a surprise jobs gain in May. After people discovered a note in the Bureau of Labor Statistics’ official release, acknowledging a “misclassification error” that resulted in the reported unemployment rate being lower than it actually is, the hashtag #misclassificationerror started popping up on Twitter, with many people accusing the Trump administration of manipulating the numbers to paint a rosy picture of a bleak reality.

And while it’s true that the BLS acknowledged that the actual unemployment rate was likely 3 percentage points higher than the reported rate of 13.3 percent in May, the same error occurred in March and April, when the accurate unemployment rate was estimated to be 0.9 and 4.8 percentage points higher than the reported one. So yes, the actual unemployment rate may be worse than Friday’s headlines suggest, but the trend remains positive, as our chart illustrates. Based on the BLS’s estimates adjusted for the misclassification error, the unemployment rate dropped from 19.5 percent in April to 16.4 percent in May.

Considering how transparent the BLS handled the misclassification error from the start, it seems highly unlikely that any data was intentionally misrepresented. In its latest press release, the BLS explained the mistake as follows:

"In the household survey, individuals are classified as employed, unemployed, or not in the labor force based on their answers to a series of questions about their activities during the survey reference week (May 10th through May 16th). 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. 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."