Good (But Not Great) News On Unemployment
The media are giddily reporting the good news that an estimated 200,000 jobs were added to the U.S. economy in December. And considering the weak jobs reports we've seen even in the last year, this is good news.
The reported unemployment rate dropped to 8.5%, which would be even better news if that didn't demonstrate another shrinking of the labor force. As Jim Pethokoukis notes on his Twitter feed, if the labor force were the same size as it was when Obama took office, the unemployment would currently be 10.9%. And if labor force participation were simply the same as it was throughout most of the 2000s, the unemployment rate would currently be 11.4%.
Jim Geraghty notes that the change in the size of labor force over past 3 years is -349,000. The change in size of labor force over 3 years before that is +4.4 million.
The U-6 unemployment rate (a broader look at unemployment) is currently at 15.2%, down from 15.6% in November.
Now, I'm old enough to remember when President Obama said spending $787 billion on a stimulus package would drop the unemployment rate to below 7%. That we've wasted all of these precious funds to put the jobless rate back where it was in March 2009 is criminal.
Anyway, pundits and the media are excited by this news, hoping that unemployment will be below 8% by election day. In order to get that, we'd need to add 250,000 jobs a month (or keep shrinking the labor force).
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Re: Good (But Not Great) News On Unemployment
At the WSJ, in a piece headlined "Unemployment Rate Drop Is For Real":
Sep '10
Re: Good (But Not Great) News On Unemployment
Your posts on this monthly report are as biased as the liberal medias are. This is the third positive monthly report and each one has been slightly more positive than the last. Unfortunately it comes most likely at or near the peak of the current business cycle. Yes there is still a business cycle and we are about five years from the last peak which is why I am not optimistic. Given the debt and regulation burden I would guess the up leg of the current cycle will be less positive and shorter than normal and if we enter the down leg with financial conditions at or near the current level things will be bleak. That said the labor market is still bad , but the latest report indicates the improving trend is continuing. I would hope it would continue, but I am doubtful. All this gibberish about labor market size is more about making noise than clarifying the data.
Mar '11
Re: Good (But Not Great) News On Unemployment
This administration thinks they're being cute by reducing the universe of jobs and therefore reducing the number of unemployed. Bu,t that will never impact the psychological effect of all those people who have lost their jobs in the last three years and still have not found relatively full employment. Not to mention, all the people who have jobs but feel insecure about keeping them. This 8.5 may make the true believers rejoice, mostly the media, but for most everyone else it is further proof of the deception and phoniness of this administration.
Aug '10
Re: Good (But Not Great) News On Unemployment
Can you imagine what gyrations will be necessary for them to be able to announce an unemployment rate below 8% by the end of October ? Even if the BLS numbers are skyhigh, I'll bet the NYT and AP will ecstatically announce a new low !! Gosh.
Edited on Jan 6 at 7:45amJan '11
Re: Good (But Not Great) News On Unemployment
The U-6 for the last 10 years can be found here. It shows the monthly numbers.
I found this useful since I had nothing to compare to the current U-6. I didn't look for a table going back farther.
The average yearly U-6 has been:
Edited on Jan 6 at 7:52amMay '11
Re: Good (But Not Great) News On Unemployment
U-6? What about a number that takes account of all persons living in the US and assumes that all can work full time? (I know there are people who can't...bear with me) This would give a gross unemployment number. Then ANY percentage movement would be reflected accurately against the total whether the population is increasing or decreasing. For purposes of evaluating a government policy regarding unemployment it would seem valid.
Mar '11
Re: Good (But Not Great) News On Unemployment
@Pilli,
There are many valid reason for not working. Retired, Full Time Student, House Mom, Disabled. Just because someone is not getting paid for work does not mean they are not working or doing something useful. Also this would not take into consideration the informal economy which is almost 9% of the economy by some estimates. The numbers vary but somewhere between 3% to 40% of the work age population is involved in some capacity of employment in the informal economy.
The biggest problems with U-6 is it does not take the informal jobs/hours worked into consideration.
Edited on Jan 6 at 8:05amDec '11
Re: Good (But Not Great) News On Unemployment
With respect, I disagree. The “gibberish about labor market size” is about clarifying the nature and extent of the good news contained in the monthly jobs reports. It provides context as to the nature of the manipulation that goes into the broadly reported unemployment number. If nothing else, Mollie’s contributions should point out the absurdity of this content of this tweet, which was retweeted by a sports talk host whom I generally admire:
Eric Stangel @EricStangel
Unemployment rate falls to 8.5%.
Roughly 1 in 12 Americans are
without jobs. Norv Turner
somehow still employed…
Retweeted by Bill Lekas
The fact of the matter is, it’s wrong to say that 1 in 12 Americans are out of a job. It is closer to accurate to say that 1 in 7 Americans are out of a job. Although I do agree with the sentiment behind the tweet that perhaps Norv Turner should be one of them.
(Note I recreated the tweet because I can’t use Twitter on work computer or Ricochet on my phone)
Sep '10
Re: Good (But Not Great) News On Unemployment
Bluenoser
With respect, I disagree. The “gibberish about labor market size” is about clarifying the nature and extent of the good news contained in the monthly jobs reports. It provides context as to the nature of the manipulation that goes into the broadly reported unemployment number.
I am not sure what you mean by manipulation. The fact that the unemployment rate is 8.5% is not, at least to me "good news" It has been calculated the same way for several decades. If someone knew why the labor force contracted by 50K this month it would give one a basis on which to judge if it was of some significance. In fact many factors contribute to this and therefore it is unknown and therefore of little or no significance. Only 158K jobs were reported in the Household survey which is down almost 50% from last month. If you want something to be concerned about I would suggest focusing on this.
Dec '10
Re: Good (But Not Great) News On Unemployment
Anyone else notice the irony that Obama's best hope of a second term lies in enough people losing hope to push official unemployment numbers down?
Re: Good (But Not Great) News On Unemployment
Liberal Jim, here's a good piece on why the smaller work force is a big issue:
Jul '10
Re: Good (But Not Great) News On Unemployment
liberal jim
...
I am not sure what you mean by manipulation. The fact that the unemployment rate is 8.5% is not, at least to me "good news" It has been calculated the same way for several decades. If someone knew why the labor force contracted by 50K this month it would give one a basis on which to judge if it was of some significance. ...
No, it has not been calculated the same way for several decades. Experts have estimated that, calculating by the rules in place in the Clinton years we have scraped 12%, higher by FDR's rules in the 1930's. A Reagan era reform automatically dropped individuals who had not held a job for an extended time, and this seems to follow the claims numbers (the tracking got fuzzy from there and there was a boom on).
The fact that the labor pool number has been shrinking sharply in a time of growing working age population is a big red flashing indictment of the job numbers.
Maybe when the next President drives the unemployment rate into negative percentages, folks will sit up and take notice.