Saturday, March 18, 2017

Notes on the Measurement of Unemployment

The Persistence of Memory

i saw...
somebody said the calculation of unemployment has not changed.
they said it vaguely, so that it wasn't quite a lie.
but it is not true.
3:16 AM 3/16/2017
a couple days ago I saw it.

// Here it is:

The White House Takes Its Attacks On Jobs Data To A New (And Dangerous) Level
by Ben Casselman at five thirty eight
filed under Data Integrity

"(When pressed by Tapper, Mulvaney acknowledged that he didn’t think the Bureau of Labor Statistics had changed the way it collected jobs data since Trump took office.)"

"... there is no conspiracy here. Obama didn’t change the definition of unemployment, which has been essentially unchanged for decades."

The words "essentially unchanged for decades" link to

Ques12 is "Have there been any changes in the definition of unemployment?"

The answer is
"The concepts and definitions underlying the labor force data have been modified, but not substantially altered, even though they have been under almost continuous review by interagency governmental groups, congressional committees, and private groups since the inception of the Current Population Survey."

So yes, there have been changes. But the answer is not specific as to what those changes were.

If memory serves, under Clinton they added the condition that if you stop looking for work, you are no longer counted as unemployed. Clinton or Reagan, I forget. I think Reagan changed the inflation calculation and Clinton changed the unemployment calc.

Here you go:
"Yes, there have been modest shifts through the decades in how unemployment is defined, the last ones in 1994." -- Justin Fox at Bloomberg


What I can't figure out is why there is no discontinuity in the data at 1994. Can't see one on a graph. I've looked.


The Bloomberg article starts out very interesting, then drops off to asking
"Does this mean that the unemployment rate is some sort of “big lie” or “hoax...?”
(Can't you just deal with the economics? If you are addressing the question of the 'big lie' then you are NOT doing economics)
Then it gets interesting again.

The article challenges my memory:
"And when the U.S. government finally started measuring unemployment on a monthly basis in 1940 it was with a similar understanding that you didn’t count as unemployed unless you really wanted to work."

The "similar understanding" is a reference to "men who would have liked to work if they could have found a job that paid as much as they had been earning before."

But no, that's not really the same as no longer looking for work...

Recommended reading: What's Really Wrong With the Unemployment Rate by Justin Fox at Bloomberg. It gets specific about those changes in the unemployment calculation.

But I remember that NY Times article I read back in the '90s...


The Arthurian said...

NY Times February 5, 1994: Unemployment Is Put at 6.7% By New Method

"The unemployment rate in December was 6.4 percent, but the Bureau of Labor Statistics stressed that the number could not be compared with the January rate because of a major revamping of the population survey on which it is based. The January report was the first to use the new method, which had been under development since the Reagan Administration."

The Arthurian said...

I think this is the article I remember reading. By Bob Herbert.

NY Times February 23, 1994: In America; Counting the Jobless

"The Government has changed the way it determines the national unemployment rate, which has resulted in a number that is marginally higher. But the new and supposedly improved methodology does not provide anything close to an accurate picture of a devastating jobs crisis that is becoming ever more entrenched.
Inevitably the official rates of unemployment are much lower than the true rates. The Government is not concealing the real numbers. In fact, the Bureau of Labor Statistics does a remarkable job of documenting those who are working and those who are not. But the raw numbers get whittled down by the complex procedures and definitions used to arrive at the official statistics.

For example, discouraged workers -- people who have given up looking for a job -- are not counted as unemployed. The bureau will readily tell you how many people fall into the discouraged category, but that number will not be factored into the official unemployment rate.

And even the discouraged category is being shrunk by the bureaucracy. Under the bureau's new rules, a discouraged worker who has not looked for a job for a year is no longer considered discouraged. That worker falls off the statistical charts. Actually, there were a lot of them. Before the change, the bureau counted 1.1 million discouraged workers. After the change, 600,000.

There are endless examples of people who are out of work but not counted as unemployed. Laid-off workers have traditionally been considered unemployed, even though there was a time when they could reasonably expect their jobs to return. Now laid off pretty much means fired. But during the survey that is used to determine the unemployment rate, laid-off workers are asked how active they have been in looking for a new job. If the answer is that they have simply been checking the want ads, they are not counted as unemployed. They sure are out of work, but officially they're not unemployed.
The official unemployment rate for January was 6.7 percent. The more we focus on it, the less we understand the extent of the problem. A better indicator of prevailing conditions would be a statistic that showed the number of people who wanted a job but could not find one. That number would be astonishingly high."