Unemployment Stats

August 19, 2017

Some issues should not result in much political disagreement, but do. Labor statistics become partisan despite good statistical analysis by the Labor Department. The Bureau of Labor Statistics uses six measure of unemployment (both seasonally and not-seasonally adjusted). The standard rate usually reported is U3 (seasonally adjusted), which hit 10% in October 2009 and has been dropping ever since (4.3% in July 2017). Trump claimed the numbers were bogus when he was running and Obama was president. In mid-2017 he seemed to take full credit for the low unemployment rate. Numbers are calculated based on surveys of around 60,000 households. In other words, an estimate rather than a census--the reason they are quickly available after the end of the period.

 

U3 (measured as unemployed/labor force) includes those willing and able to work, including temporary and part-time employees. U6 includes those marginally attached to the labor force as part of the denominator, while the numerator includes marginally attached plus part-timers. U6 is the most extreme measure (that is, reporting the highest unemployed percentage) and typically used to show how bad the economy really is (with various pundits often claiming the government is lying when reporting U3--conveniently ignoring that both numbers are provided by the same Bureau and the media decides what to report). U6 hit over 17% at the end of 2009, then fell--8.6% in July 2017.

 

The media and readers/listeners can go ballistic when the number are reported in a misleading way. This is a group of bureaucrats that are competent and hard working, providing unbiased estimates of economic activity that are useful for thoughtful analysis. It is a shame that the numbers (and the statisticians) are not always treated objectively.

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© 2016 Gary Giroux

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