Why the government’s job figures won’t add up

The charade continues this Friday.

That’s when the Labor Department will announce how many jobs it claims were lost in the US economy during December.

The number is essentially worthless to anyone who really wants to know what’s cooking in the job market. But it is worse than worthless — it’s harmful — to policymakers who are trying to determine what to do about things like interest rates and the latest incarnation of the stock market bubble.

For the record, Wall Street thinks that the department will report that no jobs were lost — zero — during December. This comes after only 11,000 jobs were reported lost in November, the first pleasant surprise in months for those who foolishly care about these statistics.

If December does end up with zero job losses — and don’t count on it — this would be the first time the labor market hasn’t had a monthly contraction since January 2008.

Please pay close attention because this is complicated.

But if I can explain it well enough you will know better than Federal Reserve Chairman Ben Bernanke himself why the American public is so glum about the employment situation even as Wall Street and Washington think the problem has been licked.

Here goes.

Whatever is announced this Friday — whether it’s zero loss of jobs, a gain or maybe even another decline — that figure will have been attained only after the Labor Department does some Class A razzmatazz on the numbers.

First, there will be invisible seasonal adjustments that will skew the figures.

Since so few jobs were created in December 2008, the Labor Department’s computers were probably expecting the same pattern in this latest Christmas season, meaning that few jobs would be created in 2009 as well.

So even a small increase in jobs last month compared with December 2008 could be magnified in the accounting into something much bigger.

As I said, it’s statistical razzmatazz.

And that one isn’t even the biggie.

Friday’s figure will also be altered by job growth that the Labor Department is pretending has occurred at newly formed companies. The department calls this its birth/death model and by itself this assumption could be more destructive to the US economy than any terrorist attack could ever be.

For instance, in December 2008 the Labor Department assumed that 60,000 jobs were created by infant companies that couldn’t be surveyed, and weren’t contacted, by its workers. Without that assumption, the job losses that month would have been worse than the almost incomprehensible figure of 681,000 that was publicly announced.

The trouble is, those extra 60,000 jobs don’t exist.

In fact, the Labor Department has already said that when it reports its next set of statistics on Feb. 4 it will reduce the number of jobs that it believes existed in this country from April 2007 through March 2008 by around 820,000.

And people inside Labor also admit that the department mistakenly believed these 820,000 jobs existed mostly because of incorrect assumptions by its birth/death model.

Now get this!

That 820,000 mistake only corrects the numbers as of last March.

The birth/death model since this past April has added an additional 900,000 jobs. And eventually those 900,000 jobs will probably also have to be extracted from the Labor Department’s count.

But it gets worse.

The Labor Department tells me that despite the huge corrections, it still believes its birth/death model is working well because it is tracking closely the Census Bureau’s quarterly surveys of employment and wages.

In other words, the Labor Department doesn’t think it needs to change its belief that small companies are popping up everywhere and creating large numbers of jobs.

So, here is what will happen next if the Labor Department doesn’t suddenly wake up.

Remember, it’s called the birth/death model. And while the Labor Department adds jobs 11 months a year, it also subtracts jobs, the “death” part, during one month.

And that month is January.

In January 2009, a stunning 356,000 jobs were removed from the overall count because of the birth/death model. That resulted in a much larger-than-expected loss of jobs during the first month of the Obama administration. The panic was palpable.

Without a change, the Labor Department will subtract a similarly large number of jobs this January. And when that month’s labor figures are reported on Feb. 4, watch out! The stock market will not like this.

The good news comes after that.

The birth/death model always adds jobs in the spring. And as I told you last year, that will make the economy look like it is pick ing up steam and will give Wall Street something to work with.

You now understand this better than Bernanke, who is starting to hint that interest rates must rise.

And he’s right for a number of reasons, but not because of any major improvement in the job market. john.crudele@nypost.com