Why the unemployment rate is really higher than it looks.

[radfringe]

Odd Jobs -- Why the unemployment rate is really higher than it looks.
http://slate.msn.com/id/2094690/
By Daniel Gross
Posted Friday, Jan. 30, 2004, at 1:57 PM PT


"People are finding work," President Bush proclaimed yesterday in New Hampshire. "There's an excitement in our economy." Evidently, President Bush failed to read the first paragraph of the most recent Employment Situation Summary, which showed that the mammoth U.S. economy added a paltry 1,000 payroll jobs in December. He probably skipped right to the second paragraph, which showed that the unemployment rate fell in December to 5.7 percent from 5.9 percent in November.

The Bureau of Labor Statistics measures employment in two ways. The Establishment Survey gathers data directly from 400,000 companies and then estimates how many Americans have payroll jobs. The Household Survey, based on surveys of 60,000 households, determines how many people are working and produces the unemployment rate. Occasionally, the two surveys show divergent trends in job growth—especially when an economy is coming out of recession. According to the payroll survey, the number of jobs fell 232,000 over the course of 2003 on a seasonally adjusted basis. But according to the Household Survey, which includes farm workers, the self-employed, and people who may work off the books, the number of Americans working rose by 1.03 million in 2003 on a seasonally adjusted basis.

[benburch]

1. Also...

There are those of us who are seriously UNDERemployed!

I made $33,000 last year.

In 2000, I made $120,000.

So, officially, I am not unemployed.

[Sapphocrat]

4. I'd give almost anything...

...to make $33,000 this year.

2000: $110,000

2003: $0

[Skittles]

11. I think those extra large salaries

prompted outsourcing

[LosinIt]

2. Don't they also look at unemployment as those collecting benefits?

I could be wrong here, but I thought so. That number will decrease as people exhaust their benefits and fade into the woodwork. They love to manipulate these numbers, this would be funny if it wasn't so sad.

[unblock]

5. no, this is a common myth

looking at who collects benefits would be a terrible way to guage unemployment, not only because benefits run out, but also because plenty of unemployed people simply choose not to claim the benefits.

it's a hassle, there are pride issues, and it's not much money. many people who are entitled don't bother.

[rogerashton]

8. That has changed.

I don't quite know when. Years ago, unemployment compensation applications were the main source of the data, but the surveys are the main source now.

[Dogmudgeon]

3. Similar dilemma here

I've had eight weeks of employment, as a cumulative total, since November 1, 2001. Most of that was in 2003; so, I was considered unemployed in 2002, but employed in 2003!

What did I used to do for a living? Computer programming for Big Pharma. It all moved to India. Well, a little did move to Bulgaria.

I remember three, four years ago, many of my fellow code-jockeys were cheerily reciting the Quotes of Chairman Ayn. It was all "Free Markets, Free Men!" and TANSTAAFL and "A Republic, if you can keep it!" These days, marginally-employed ex-programmers are beginning to use the Accursed Name of the Demon Most Damned ... Karl Marx. Hopelessness turns to despair turns to ugliness.

Last March, I was evicted from my apartment; my docket number ended in 059, indicating that I was the 59th such ne'er-do-well at township court since New Year's Day. But in contrast, it took until October 2002 to reach #59, and there were fewer than 59 evictions all year in 2001. This coming year, with a doubling of local unemployment, eviction will become a real problem in my area. The local GOP, which runs politics around here, is likewise getting scared. My mother, who works "with the public" and helps people register to vote, tells me that most of the people she meets at work spontaneously complain about Bush. It's now been about 6 months since she's encountered anyone who flaunts their Republicanism or wants to change parties to Republican.

The Bureau of Labor Statistics has been playing games with the numbers for the last three years. Meanwhile, millions of jobs will be migrating to other countries. Computer programming is just about finished in this country for the next decade. Soon, this trend will move higher into the professions -- young physicians are already getting upset as pilot programs to send medical diagnostic work overseas are getting green-lit from management.

The tendancy of Capitalism in the early 21st century seems to be towards enforcing equality through poverty. You know, when one person loses a job, that's too damn bad. But when millions lose their jobs, it becomes serious trouble.

--bkl

[radfringe]

10. ....spontaneously complain about Bush.

yeppers... seems to be the trend

:evilgrin: looks like the 'Hungry Hungry Caterpiller' has a sequel - The ANGRY ANGRY Caterpillars :evilgrin:

[onebigbadwulf]

6. I thought unemployment rate was only measured by

NEW unemployment claims.


I know for sure they don't count people whose benefits have run out. They are just considered "disgruntled workers" and taken out of the total.

[SheilaT]

7. This is how they come up with the numbers

Every month 60,000 households are surveyed, and its members self report on their occupational status. All those over age 16 who is not in prison, a mental hospital, or on active military duty, is counted, and classified as either employed or not employed in the civilian labor force.

Those with jobs are employed.
Those who do not currently have a job and who are looking for one are unemployed.
Those neither employed nor unemployed are not in the labor force.

For a much more detailed explanation go here: http://www.bls.gov/cps/cps_htgm.htm

One figure that is often used is the number of unemployment claims in a given week. So when first time jobless claims decline, it's often presented as if there's been a rise in employment. All that actually means is fewer new people filed that week than the one previous. It says nothing whatsoever about numbers of people who went to work.

[rogerashton]

9. discouraged workers and underemployment

Those who continue actively looking for work after their compensation runs out are still considered unemployed. However, if they give up looking because they have lost hope, they are "discouraged workers" and are not counted as unemployed. That is a distortion -- they should be counted, and the evidence suggests that there are enough of them to raise the total significantly.

Underemployment is most obvious in the case of people who have part-time jobs but want full-time jobs. They are counted as employed. This is another distortion, and again the numbers are significant.

People with qualifications but in unqualified jobs (for less money) may also be thought of as underemployed. In this case, things are a little more complicated. If there is an oversupply of the qualified labor, there may be little potentiality for everybody to be employed up to their qualifications. Do we then have underemployment?

Of course, oversupply is partly determined by public policy. In the case of imported programmer services, it would be possible to protect domestic programmers by regulation or protective tariffs. Would that be good public policy? (In general, protection is not good public policy, since it is inefficient). If not, should people formerly employed as programmers bear the cost of the policy? Well, that's capitalism.

[dfitzsim]

12. And now service jobs can be outsourced ...

This was my first thought when Chimp Co. announced his temporary worker program. "We've out sourced a significant portion of our prized technology sector, now how do we outsource those crummy service sector jobs? I know, let's bring the workers here!"