Lies, Damned Lies, and Job Statistics-Part 1

marktwain1

Note: Many official job statistics are brought to you by the same type of folks that guaranteed Trump would lose.

The title of this post is based on a famous saying by Benjamin Disraeli and quoted by Mark Twain.

The point of the quote is that you can make statistics say almost anything you want, depending on how you present them.

Statistics are scary for those who hate math. But I’m going to try to bring the statistics about jobs and unemployment down to the most basic level.

First, a definition. What is statistics?

According to Dictionary.com statistics is “the science that deals with the collection, classification, analysis, and interpretation of numerical facts or data…”

So, not only does statistics involve collecting and analyzing numbers, it also involves INTERPRETING the numbers.

Now let’s look at how jobs and unemployment numbers have been INTERPRETED. As Jim Clifton, CEO of Gallup says,

“The official unemployment rate, as reported by the U.S. Department of Labor, is extremely misleading.”

In an article by Scott A. Wolla on “Making Sense of Unemployment Data,” Wolla says, “Those classified as not in the labor force are not working and not looking for work. So, they are not employed and also not considered unemployed.”

Wolla gives us a number of reasons why someone may be put into this category of “not looking for work.” They might be retired, or a full-time student, or a stay-at-home parent caring for children or other relatives. All of these people are legitimately “not looking for a work and not unemployed.”

But there are other reasons a person might be counted as “not looking for work, and not unemployed,” and here’s where things get tricky.

If you are laid off from a job you are considered unemployed. BUT, suppose you have been unemployed for so long that you gave up and have not been actively looking for work in the last 4 weeks.

Guess what? Because you are neither working nor looking for a job, you are no longer counted as a “member of the labor force.”

And because you are not in the labor force, by definition, you can’t be unemployed.

Just like that, you have been magically transferred out of the ranks of the unemployed, and the economy looks that much better STATISTICALLY because you gave up!

So, you are just one more reason President Obama can go out and report to the press that unemployment is down! YAY!

But meanwhile, you, and millions like you, still have no job. You are using up your savings, cashing in your 401(k) and losing your house – BUT unemployment is down!

According to the most recent numbers by the Bureau of Labor Statistics (BLS), the labor force participation rate in October 2016 was 62.8%.

That means that, for every 100 Americans over the age of 16, only about 63 of them are working full time, down from a high of 67 in 2000.

Civilian Labor Participation Rate, St. Louis Fed
Civilian Labor Participation Rate, St. Louis Fed

This difference, between 67% and 63% represents millions of American workers who are out of the workforce.

The last time this huge percentage of Americans were out of the workforce was in December 1977, right about the time women began leaving the home and going to work in larger and larger numbers.

Just how many Americans have found themselves in this category of “no man’s land”? And are you one of those people? Leave your comments below.

In Part 2 of Lies, Damned Lies, and Job Statistics, we will look at how the Bureau of Labor statistics explains away the millions of Americans now subsisting on one or more low-paying part time jobs with no benefits.

 

References:

Scott A. Wolla, “Making Sense of Unemployment Data,” Page One Economics, February 2016

Clifton, Jim. “The Big Lie: 5.6% Unemployment.” Gallup. February 3, 2015; http://www.gallup.com/opinion/chairman/181469/big-lie-unemployment.aspx.

Bureau of Labor Statistics Oct. 2016 Employment Situation

St. Louis Fed: Civilian Labor Force Participation Rate

CNS News, Record 97,408,000 Americans Not in the Labor Force; Participation Rate Drops in May

“Mark Twain.” BrainyQuote.com. Xplore Inc, 2016. 25 November 2016. https://www.brainyquote.com/quotes/quotes/m/marktwain128372.html

Follow me on Twitter: