Saturday, February 5, 2011

The real unemployment numbers

I've just spent some time reading about the various measures of unemployment, and it's a bit confusing. The government has its numbers, the Gallup polling organization has its, and the payroll company ADP chimes in as well.

The news this week from the government was that the unemployment rate has dropped! To 9 percent from 9.4 percent! In fact, the unemployment rate has declined more in the last two months than in any two months since 1958.

Nobody can figure it out, since the same government report has it that only 36,000 jobs were created. So something's wrong with the way we measure.

The Gallup organization reports at the same time that the unemployment rate was 9.8% at the end of January -- up from 9.6% at the end of December. Gallup doesn't seasonally adjust its numbers, as the government does, meaning the government smoothed out the job losses of retail workers after Christmas.

My feeling is that we should watch the underemployment rate, which measures the number of people seeking full time work who can't get it. That, Gallup says, improved slightly in January.
Underemployment -- the combination of part-time workers wanting full-time work and Gallup's U.S. unemployment rate -- was 18.9% in January, essentially the same as the 19.0% of December. Underemployment now stands one percentage point below the 19.9% of a year ago.
The journalist Don Surber points to another key number, the labor force participation rate.
But the participation rate in the labor force — the percentage of people working or seeking work, fell to 64.2% from 64.3% a month earlier. While the pool of adults grows, the number of people in the labor force shrinks. That’s the story.

At 64.2%, the labor force participation rate (as a percentage of the total civilian noninstitutional population) is now at a fresh 26 year low, the lowest since March 1984, and is the only reason why the unemployment rate dropped to 9%, one observer adds.

The numbers will be part of the 2012 election campaigns, already underway. The number most well-known and reported is the unemployment rate.

It doesn't tell the whole story.

Bob Herbert, a New York Times columnist with whom I don't often agree, nails it this time, I think.
What data zealots need to do is leave their hermetically sealed rooms and step outside, take a walk among the millions of Americans who are hurting to the bone. They should talk with families that are suffering, losing their homes, doubling up, checking into homeless shelters.

The numbers are just tools, abstractions to help guide us, orient us. They aren’t the be-all and end-all. They don’t tell us squat about the flesh-and-blood reality of the mom or dad lying awake in the dark of night, worrying about the repo man coming for the family van or the foreclosure notice that’s sure to materialize any day now. 
One in five of us is un- or underemployed. Either means they don't go out to eat at the family-owned restaurant or hire the mason to fix up the stoop, as they've been needing to do, and then those folks have less as well. It's a spiral.

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