Monday, April 09, 2012

Reality check on unemployment

The most recent unemployment figure is 8.2%.

This is supposed to represent the number of people who are unemployed. 

But let's look at this another way.  If unemployment is 8.2%, it stands to reason that employment is 91.8%. (100-8.2)

Do you really believe that 91.8% of the American people are actually employed?

In December, I did a post, Unemployment rate vs. the number employed, where I explained how the unemployment rate can go down while the number of people with jobs could stay the same or increase.

At that time, the percent of people participating in the labor force (those who actually have jobs) was unchanged at 64%.

Rather than keep track of the unemployed - which doesn't include those who are without a job but have stopped (at least temporarily) looking for one - why don't we track the actual employment numbers?

They're much more accurate on a month-to-month basis and are more reflective of the work status of the nation.

Here are the recent Ohio Civilian Labor Force Estimates for Lucas County.

February 2012:
Labor Force:  210,500
Employment:  191,300
Unemployed:   19,200
Rate:     9.1%

January 2012:
Labor Force:  208,900
Employment:  189,300
Unemployed:   19,600
Rate:     9.4%

December 2011:
Labor Force:  210,700
Employment:  193,000
Unemployed:   17,700
Rate:     8.4%

November 2011:
Labor Force:  211,800
Employment:  194,100
Unemployed:   17,700
Rate:     8.4%

As you can see, our employment rate is varying between 189,000 and 194,000.  But the December unemployment rate was the same as the November employment rate despite the fact that more people were employed in November.  That's because the 'labor force' number decreased. 

By increasing and decreasing the labor force number, the unemployment rate can be manipulated.

Politicians are constantly talking about jobs.  They use declining unemployment numbers as an indicator of success, but the actual unemployment number is subject to manipulation and doesn't tell us what we need to know:  how many people are working.

They also use the 'jobs created' each month as another indicator, but that number, too, is subject to manipulation.

The number that would give us a good measurement is the number of people actually employed.  When that number goes up, we're doing well.  When that number goes down, we're not.

And we don't have to worry about doing any division or multiplication, though I expect that, sooner or later, some politician or bureaucrat would figure out a way to manipulate that as well.





2 comments:

skeeter1107 said...

One can only assume that if Romney wins in November, the media will suddenly begin reporting the unemployment rate correctly.

It sort of follows right along with the Democrats screaming that the Republican budget proposals "cut" spending and harms society. The reality of course is that the Republican budget merely increases the budget at a lesser rate.

In a version of the "King has no clothes," we all hear the news and then we have to roll our eyes and say to ourselves or anyone listening, "those numbers don't actually tell the truth." Everyone of course agrees.

Perhaps I'm being old fashioned in that I assume when a number goes down from the previous number, it's a cut. When it goes up, it's an increase. Not a cut when it's goes up less than they initially assumed.

So my advice to any young mind in a math class anywhere in America. If your stodgy math instructor marks your problem wrong because you identified an increase as a "cut," simply explain that on Career Day you decided to be a politician. That way the numbers are irrelevant, it really just depends on what you want to say.

Can't say it will work. Some math instructors are somewhat old fashioned like me. But hey, it's worth a try. Good Luck!

Maggie Thurber said...

PRICELESS!

"So my advice to any young mind in a math class anywhere in America. If your stodgy math instructor marks your problem wrong because you identified an increase as a "cut," simply explain that on Career Day you decided to be a politician. That way the numbers are irrelevant, it really just depends on what you want to say."

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