Saturday, September 20, 2008

Ohio unemployment: numbers vs. percentage

The media was awash yesterday with the news that Ohio's August unemployment rate of 7.4% was the highest it's been since 1992.

EGAD!!! It's all Bush's fault!
NO - it's that Democrat Strickland!

But the reality of the situation is a bit different when you take a look at the details and not just just the headlines and the spin.

The unemployment rate is a reflection of the number of people unemployed divided by the total estimated number of people in the labor force and then multiplied by 100 to get the percentage.

And percentages can be deceiving.

If you have 100 people available to work and 20 of them are out of work, your unemployment rate is 20%. If you have 1000 people available to work and 50 of them are not working, your unemployment rate is 5%. Obviously, if you're comparing only percentages, it would seem that the 20% rate was much worse, even though fewer people are unemployed.

So it is with Ohio's rate. The number of people unemployed in August in Ohio was, according to the Ohio Department of Job and Family Services, 445,000. If you look at their historical records, that's actually 38% less than the record number of 715,200 unemployed in December 1982.

We had fewer people unemployed in August 2008 than we did in December 1982.

But, because we have fewer people in the workforce these days, the percentage is high.

We are, of course, comparing apples to apples in that the unemployment rate is always the number of people not working divided by the total estimated number of people who can work. But what does it really mean?

Is Ohio worse off now, because of a higher rate, than it was in 1982 when more people were actually unemployed? That's the question.

Sadly, the facts behind the statistics are often overlooked when it comes to how politicians and others spin the numbers. With a Democrat governor, Republicans will blame the high percentage on him and his administration of the state. This being a presidential election year, Democrats will blame the Republican in the White House.

And in trying to put the blame on each other, they will miss the real problem: that Ohio has not been a place where businesses want to be, which is why we have residents who cannot find jobs, and that our out-of-work residents either can't or won't do the jobs that are available.

Ohioans (both employed and unemployed) would be better off if those politicians would focus on making our state more business friendly, rather than focusing on how to 'spin' the numbers.

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