The Real reason we are under 10% unemployment

[ALS]

Thursday, October 22, 2009
CNN: 7,000 People per Day exhaust Extended Unemployment Benefits
by CalculatedRisk on 10/22/2009 10:59:00 AM

calculatedriskblog

From Tami Luhby at CNNMoney: 7,000 unemployed Americans lose their lifeline every day (ht Dirk)

Another day, another 7,000 people run out of unemployment benefits.

One month after the House passed a bill extending unemployment benefits, the issue is still being debated in the Senate.

...1.3 million people [are] set to lose their benefits before year's end if Congress doesn't act, according to the National Employment Law Project, an advocacy group. In October alone, more than 200,000 people will fall off the rolls.

This will probably hit 10,000 people per day soon. An extension of this safety net has widespread support ... and is still being held up in the Senate

[dc dalton]

If you actually believe those nonsensical 'official' employment numbers you have definitely 'drank the koolaid' ... the numbers are an outright lie

[mjfletcher]

If you actually believe those nonsensical 'official' employment numbers you have definitely 'drank the koolaid' ... the numbers are an outright lie

The numbers aren't outright lie, the way they're quoted by every administration is a lie. SOP for politicians, instead of saying "number of people collecting unemployment" they say "number of people unemployed" and ignore the fact that not all the unemployed are collecting.

The numbers and what they mean are legit, the distortion of them presented by politicians is the problem.

[Yellowfin]

The numbers and what they mean are legit, the distortion of them presented by politicians is the problem.

Isn't distortion by politicians ALWAYS the problem?

[mjfletcher]

Isn't distortion by politicians ALWAYS the problem?

Bingo. Enjoy your rep.

[Dredly]

The numbers aren't outright lie, the way they're quoted by every administration is a lie. SOP for politicians, instead of saying "number of people collecting unemployment" they say "number of people unemployed" and ignore the fact that not all the unemployed are collecting.

The numbers and what they mean are legit, the distortion of them presented by politicians is the problem.

Even this is incorrect... the number of unemployed should have nothing to do with who is collecting unemployment, who is recently off the rolls, who no longer is trying to find a job, who is on welfare... etc

the numbers should be broken down like this:

1. Retired - obvious
2. Employed - You have a job
3. Unemployed - You are of working age (18 if not in school) and do not have employment
4. Partially Employed - You have a job but are not working 30 hours a week min on average
5. Unable to be employed - disabled, mental issues, in prison, etc

This would give us a true account of employment rate... but the numbers would never be released as it would outrage the small percentage of people who still work

[mjfletcher]

Even this is incorrect... the number of unemployed should have nothing to do with who is collecting unemployment, who is recently off the rolls, who no longer is trying to find a job, who is on welfare... etc

Which was precisely my point. The numbers being quoted are only one part of the total breakdown. To use your example (which as you demonstrated in point 5 can be further broken down to sub categories):


1. Retired - obvious
2. Employed - You have a job
3. Unemployed - You are of working age (18 if not in school) and do not have employment
3a. Receiving unemployment benefits
3b. Not receiving unemployment benefits
4. Partially Employed - You have a job but are not working 30 hours a week min on average
5. Unable to be employed - disabled, mental issues, in prison, etc

Politicians are quoting 3a as though it is the whole which distorts the meaning of the numbers. The numbers aren't wrong, its the way they're being used by politicians that's wrong. They're pointing at the elephants tail sticking out from behind a curtain and telling you it's the whole elephant.

[FNG19]

Which was precisely my point. The numbers being quoted are only one part of the total breakdown.

You're right, but not for the reasons you may suspect. The numbers that are quoted are the "official unemployment rate", which is technically the U3 measure of unemployment. These U3 measurements are figures with technical definitions, and matter a great deal in the field of economics. In that the U3 number has been quoted for years as "the unemployment rate", it's a good measure of relative employment levels and suffices for the average person's understanding. As long as you're comparing apples to apples, if the unemployment rate was 6% in 20xx, and it's 9% in (20xx + 3), things are worse off relative to 20xx.

Besides, if we're going to get technical, there's a certain level of unemployment (4-5% in the US, IIRC) that's healthy and necessary for a functioning economy. Then, we can talk about the various types of unemployment (structural, frictional, etc). The point here is that we're talking about a technical measurement that non-technical people are using, and then we're suggesting that the terminology applied isn't sufficiently technical. Yes, you're right, it's not.

Frankly, to most people, the difference between the various rates is academic. The relative size of a given rate at two different moments in time is what's important to most folks. I wouldn't call the use of those numbers deceptive, nor would I call the description often used as intentionally misleading. I seriously doubt that most politicians are even aware of there being more than one measurement of unemployment, and frankly, they probably shouldn't. They're not economists. It's not their job to know. Even if they did know, most people who don't have a reason to know don't know there's a difference, and don't care for the same reasons.

[Dredly]

so riddle me this...

if unemployment last month was 10.0% and since then there have been an average of 575,000 people a month going on unemployment, and the 10% doesn't change, even though an additional 2.3 Million people have lost their job... how does that work out?

[dc dalton]

so riddle me this...

if unemployment last month was 10.0% and since then there have been an average of 575,000 people a month going on unemployment, and the 10% doesn't change, even though an additional 2.3 Million people have lost their job... how does that work out?

Because between people that do get a new job (part or full time) and the people that are no longer eligible to collect they offset each other, even though they shouldn't

As MJ pointed out there are two classifications of unemployed, ones collecting (that we can track) and those that have run out of benefits are 'disappear' from the ranks, there in lies the entire problem with the way the numbers are calculated.