I don't think that would have anything to do with the number of jobs created, which was still high.

All this discussion of the participation rate is beside the point. If there is a large number of un- or under-employed workers out there in November, as seems likely, then the BLS could put out a 7.9% unemployment figure and it wouldn't matter in the election. Those out-of-work citizens are not going to say "I haven't found a job for X months, but look at the unemployment number! I'm voting Obama!"

Re: "retirement of the baby boomers"

It's more complicated than that because a large percentage are forced retirements. E.g. big layoff, then a reconstitution with younger, cheaper workers. And if the boomers are scientists or engineers, the reconstitution is with immigrant H-1B's while all Americans get kicked to the curb.

BTW, about raising the Social Security retirement age. If you think finding a job at 50+ is hard, try finding one when your 60. With tanked 401K's and real estate prices in the toilet, the boomers will be sweating bullets.

Here is the link to John Williams' shadowstats.com: External Link  It provides a look at what the government numbers would look like if all the changes to the various calculations had not been altered (make that cooked) since 1980 to make the results more "politically palatable."
Note that the unemployment rate would be in the mid 20% range—that is 1930’s depression era unemployment. But due to the “heuristic/seasonal/algorithm” changes the numbers look a whole lot better. Gee—wonder if politicians have anything to do with that? Point is—if you are constantly changing how a calculation is calculated—it no longer provides comparable information. Consequently, trying to make business or government decisions becomes a crap shoot. That is where we are today.
We have statistics out the wazoo---problem is—they have become almost useless in trying to plan for the future because they have been changed so many times since 1980. The U3 unemployment data which Obama and talking heads in the MSM are touting—really provides a skewed picture---good for Obama’s reelection—but really doesn’t help the poor schlubs who are out of work. U6 which stands at 15.1% gives a slightly more accurate number—yet it still leaves out the really long term unemployed who have given up! The real number which John William’s calculates using 1930s methodology puts unemployment around 24%---three times the “Ministry of Truth” number of 8.3%. So you tell me with food stamps at an all-time high (close to that 24% unemployment number) and welfare rolls bulging—which number is closer to the truth? Methinks the 24% is closer.

The problem with that analysis is that people simply don't need to be employed like they were in the 1930s. First, most people didn't have retirement, and worked until they died. Women didn't work as much, and weren't counted in the work force, but today they do work, and counting them by 1930's methodology itself skews the results.

In terms of hours of labor, many of the things we would need to survive cost much less, so we have to work less for them.

The problem isn't adjusting the numbers, it's how the numbers are adjusted, when they are adjusted, and the lack of transparency.

For example, it would be more interesting if they regressed 3 years using the 2010 census numbers, and then matched that graph to determine the new information. Either unemployment would then be revised downward over the past 5 years, or this week's numbers would end up higher, pulled up by a baseline change.

Because 1.2 million people didn't just dissappear last month. If they didn't exist, they didn't exist last year either, and those numbers should be changed as well.

Personally, I think the number that is most useful is the total employment number, and with it the percent of total employment by population. Assuming the population doesn't need more or less employment over a period under study (the need for employment doesn't change that quickly, so although the need for employment in 1930 is lots different than today, it isn't from 2005 to 2012), so by looking at that percentage, you could compare easily.

We might find that in 2000, 55% were employed, and in 2012, only 50% are employed. That would be a useful measure, and show how far we have to go.

On a last note -- people know how they feel. Will Obama have any better luck than George Sr. did, arguing that the economy is getting better when people still feel that it isn't?

The Gallup survey isn't quite as rosy as the BLS report, particularly as it relates to underemployment. FWIW...

External Link 

I'm not a conservative, but I want to offer a word of advice to conservatives, anyway: don't open up a line of business in proving that a recovery isn't happening. It won't pay. You will merely prove that you don't want a recovery until and unless it correlates with your own pet theories. It will make you sound cranky. There's a powerful force out there called "reversion to the mean." It is likely to produce some kind of recovery regardless of anyone's politics.

Here's an explanation I wrote earlier elsewhere. People need to realize that there isn't a shadow conspiracy lurking around every corner.

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To answer your other question, it's not so much a misrepresentation of sorts (at least, when the BLS compiles the reports) than it is an attempt to engage a multitude of factors that affect unemployment and the nature of certain types of employment. And then, it's a matter of taking the raw data and compiling it down into a usable form.

U3 is the official unemployment rate (not just for us, but it's also defined by the ILO - International Labor Organization of the UN). It records only those who are (a) without employment and (b) have been actively looking for employment during a duration over four weeks.

Some make the mistake of directly comparing U3 to U4 or even U5/6 (U4 being the most common, AKA discouraged workers). Don't do that as they're apples and oranges - and they have been for years. Yes, U6 is higher. But here's the problem with how everyone points to it: every single time, they do so by prefacing their protests with the words "this (U6) is the REAL unemployment rate!" It's not; it's merely a different one.

There is a wealth of data to be analyzed in alternative unemployment rates. But that data cannot simply be used in comparisons against other metrics without acknowledging that such comparisons are, by their very nature, meaningless and incapable of being made in a statistically valid manner.

But in any case, people making a big deal about the "1.2 million drop" out of nowhere in the labor force participation rate are wrong. Primarily, this is a factor of population and demographic changes as a result of new census data. The report notes:

... Although the total unemployment rate was unaffected, the labor force participation rate and the employment-population ratio were each reduced by 0.3 percentage point. This was because the population increase was primarily among persons 55 and older and, to a lesser degree, persons 16 to 24 years of age. Both these age groups have lower levels of labor force participation than the general population. ...

Such adjustments are necessary every so often. While you could no doubt easily forego them, doing so only means you're then working off of inaccurate data.

For the most part, the drops in labor force participation rates are mostly secular shifts attributable to changes in demographics and the behavioral shifts that entails (in short, as you age, the likelihood of your work decreases significantly around the 60-64 age group).

In this case, BLS estimates of the working age population increased 1.7 million. Of that increase, approximately 500k were said to be included in the working age population whereas the other 1.2 million (for reasons above and others) were not.

As for the idea of the Obama administration actively manipulating BLS data, it's pretty much just your average run of the mill conspiracy theory. Ignoring for the fact whether or not they even could do it, almost any attempt to do so would be almost instantly recognizable as such. The whole "jobs created or saved" thing? That was bogus and put out by the WH itself. BLS data? Nope. Such manipulation on even a minor scale would be all too obvious to even the most cursory of glances.

Economically, there's no denying the shallowness of this recovery nor, for that matter, its decrepit pace. But there has been job growth (though there are questions of whether or not it can continue at the pace it has the past few months). Politically, making an issue of changes in statistical data such as population growth is a non-starter even if they weren't based on erroneous conclusions: you'd have an easier time convincing voters the sky isn't blue.

In the end, the most damning arguments against Obama's handling of the economy are structural. Some job growth, regardless of policies was to be expected: not even Obama could screw it up that much. But that doesn't change the fact that, based on clear historical data, the recovery to date is not only slower, but significantly shallower as well. And unlike Obama's claims that things would have been worse without him, such arguments are easier to make and don't rely on incredibly complex, but failed, models.

In the cyclical sense, the uncertainties are wrecking havoc on decision-making and the economy in general as a result. In the structural sense, the effects of increased spending in the short-term and rapid growth of the regulatory burden are going to be with us for years, if not generations.

Here is a fairly uncomplicated analysis that doesnt require the reader get knee deep in the numbers to understand.

External Link 

I wont go so far as to suggest the numbers are cooked but can sure agree we see some rather convenient adjustments so far as seasonal adjustments and the like.

The report is here

External Link 

My basic complaint is with the seasonal adjustment that often distorts things so basic as direction. And yes we in the private sector do about the same thing accounting for a planned plant shutdown...the notion is to smooth out the effects of an unusual month.
But never do we play a reader perception game.

At this site we see unadjusted new claims for all weeks. Id invite anyone to survey the historic data (link at the bottom of report) and tell me things are improving to the degree suggested by an 8.3 rate. Look at the last two months particularly and make a case the reduction yesterday is accurate.

External Link 

Unadjusted (actual) new unemployment claims weekly (source BLS site)

12/3 528,793
12/10 435,863
12/17 421,103
12/24 497,689
12.31 540,057
1/7 646,219
1/14 535,442
1/21 416,880
1/28 415,094