Did 1.2 Million People Fall Out of the Labor Force in a Month? Umm, NO!

You may have seen this article from "financial blog" Zerohedge, and the rants of CNBC's Rick Santelli making the rounds among whackos of all political stripes, claiming that in one month, from December 2011 to January 2012, more than a million people dropped off the labor force.

What are they basing this on? Population estimate adjustments. See, every year, the Census Bureau makes new adjustments to our population, which changes the estimates on the exact number of people in the population, in the labor force, etc. So in short, the population was adjusted thusly: according to the BLS report for this month (increase from 2011 to 2012): non-institutional, over-16 population increased by about 1.5 million, and persons not in labor force by 1.2 million. Ergo, zomg, 1.2 million people fell out of the labor force in one month!!!!!

Actually, although the data shows up like that in this month's report, it actually has nothing to do with that month. It has to do with population data being readjusted. It means there are 1.2 million more people not in the labor force than previously estimated in last year's numbers. Oh, and the adjustments apply to December:

To gauge the impact on the labor force data, the Bureau of Labor Statistics uses special tabulations of December data that incorporate the new population controls. When applied to December 2011, the updated controls increased the estimated size of the civilian noninstitutional population 16 years and over by 1,510,000, the civilian labor force by 258,000, employment by 216,000, unemployment by 42,000, and persons not in the labor force by 1,252,000. The total unemployment rate was not affected. The labor force participation rate and the employment-population ratio were each reduced by 0.3 percentage point.