If you were a senior government official, would you propose a different set of priorities and policies if the unemployment rate were say 22% versus the official 9.5%? And in world where the government doesn’t want to be cast as an abysmal failure, what is the incentive to report extremely negative statistics after you have fomented a number of so-called “effective solutions”? Here’s the July 2nd jobs report from the Bureau of Labor Statistics: “Total non-farm payroll employment declined by 125,000 in June, and the unemployment rat e edged down to 9.5 percent, the U.S. Bureau of Labor Statistics reported today. The decline in payroll employment reflected a decrease (-225,000) in the number of temporary employees working on Census 2010. Private-sector payroll employment edged up by 83,000.”
If you delve a little deeper into the numbers, you see the ingredients for a more relevant analysis: “The number of persons employed part time for economic reasons (some-times referred to as involuntary part-time workers), at 8.6 million, was little changed over the month but was down by 525,000 over the past 2 months. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.” And “Among the marginally attached, there were 1.2 million discouraged workers in June, up by 414,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are perso ns not currently looking for work because they believe no jobs are available for them. The remaining 1.4 million persons marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.”
The BLS aggregates the above categories and comes up with a combined statistic – the alternative measurement: “Total unemployed [for June 2010], plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force… [equals] 16.8%.” I’m so confused!!!! And the numbers just feel wrong as I look around me, admittedly from a “I live in economically desperate California” perspective. Could it be that these numbers are just plain wrong? Does anybody else measure U.S. unemployment?
The July 16th DailyFinance.com found someone credible who did: “Raghavan Mayur, president at TechnoMetrica Market Intelligence, follows unemployment data closely. So, when his survey for May revealed that 28% of the 1,000-odd households surveyed reported that at least one member was looking for a full-time job, he was flummoxed… Mayur's polls continued to find much worse figures [than BLS statistics]. The June poll turned up 27.8% of households with at least one member who's unemployed and looking for a job, while the latest poll conducted in the second week of July showed 28.6% in that situation. That translates to an unemployment rate of over 22% , says Mayur, who has started questioning the accuracy of the Labor Department's jobless numbers.”
OK, is this just one guy who’s rockin’ the statistical boat? “Mayur isn't alone in harboring such doubts, nor is he the first to wonder about inaccuracies. For years, many economists have pointed to evidence that the government data undercounts the unemployed. Economist Helen Ginsburg, co-founder of advocacy group National Jobs For All Coalition, and John Williams of the newsletter Shadow Government Statistics have been questioning these numbers for years.” DailyFinance.com. Don’t believe them, then travel to your local Starbucks and you may discover a pile of folks with graduate degrees steamed with more than the froth on a latte working behind the counter. And so many people have just stopped looking for work… a whole host of folks have opted to trigger the early-retirement Social Security plan (with lower benefits) at age 62 because there are no job options for many at that age.
Bad times are real. They are what they are, but if the government under-reports the problem to make themselves look better, then policy-makers are clearly reacting to the wrong set of assumptions in bringing our economy back to life. It’s not that I don’t trust government, but… okay… I don’t really trust government. I would prefer to “make it real” even if it is bad news rather than be told that things aren’t really that bad.
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