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Methodology is different, I'll go over it, but I'm referencing the BLS U6 data Isaac Send a noteboard - 24/01/2013 06:32:49 PM

First off, our unemployment rate isn't 8%, it is well into the double digits, more than 2% have given up on finding a job and don't count in.


... that the 8% figure referenced with a link to data whereas your nebulous "double digits" weren't even defined, let alone backed up. Not the best way to argue a point.


U3 BLS data is available from a thousand different websites and the monthly report is one of the major news items for the day even when the economy is good and there is a war or disaster above the fold. I'm also pretty sure I've linked to data more often than any other poster here, and probably by a wide margin, so that is a surprising criticism to be hit with. Still, a valid one, if you're looking for comprehensive data I suggest going straight to the horse's mouth, the US BLS, where not only is the data available in rigorous detail but with in depth explanations of methodology for obtaining and calculating it.

I'm going to assume you're either unfamiliar with how they calculate this stuff or at least how they do it in the US, or you wouldn't make the remark, in any event a lot of people aren't I suppose so it is worth detailing and apologies if I dumb it down or the reverse. I don't want to water it down too much for brevity's sake but that may be unavoidable so googling the topic will ring up plenty of discussions of anything I mention in insufficient detail

All right, baseline, unemployment is unemployed workers divided by the Labor Force, U/L . Conceptually easy but both U and L are variable. Everybody doe sit different, but the US Burea of Labor releases regulary stats called the U1 through U6. The most common cited is the U3, this is the number of people out of work who have actively pursued work in the last 4 weeks. Alternatively the U4 rate is the U3 + "Discouraged workers". The U5 is adds in marginally attached workers or those who would like to work but can't find any, the U6 adds in pat-time workers who wish full-time employment.

Now any of these are valid, but the U6 typically hangs about 3-4 points above the U3, in 2009 and it jumped to 6 points baove and has been hanging 6-7 points above the U3. So in Jan 2000 for instance, the U3 was 4.0 and the U6 was 7.1, a 3.1 difference, in Jan 2001 U3 was 4.2 and U6 was 7.3, a 3.1 difference.

Now the U3 has climbed as high as 10 in fall 2009 to spring 2010, however the U6 wasn't 3 or 4 points higher then, it was a full 6 points higher. Then in the summer the U3 dropped to mid 9, but the U6 went up to mid 16, a 7 point difference. U6-U3 often increases right after U3 drops, because of how U3 is defined and how it is calculated. Many of us feel the U6, not the U3, is the best value to look at when looking at recession impact, and I think I already went over that but we'll repeat.

If a man is out of work and hasn't actively looked for work in the last 5 weeks, he drops off the U3. Now, one might criticize someone for giving up, or entering a lull, but it doesn't change that the person is unemployed, not retired or removed from the labor force because they are a full-time homeworker. It isn't that the U3 is less valid, all of them are equally valid, but the U3 is more pleasant for the incumbent administration to announce, it is always lower than the U4, 5, and 6 by definition and more importantly it tends to top out, while the others will keep rising relatively and stay higher longer. The admin controls the BLS so besides being in a position to fudge the numbers a bit here and there, they also get to pick which number to trumpet as the appropriate one to review, needless to say every admin prefers to discus U3 data, the 'official' unemployment rate. The BLS isn't the only source for such things nor are the U1-6 the only ways of measuring the economy of course.

This of course has nothing to do with how media, party, or pundit portrays this data or rounds when it pleases them, including our original poster who said it rose to 10 under Bush, well even in Jan 2009, his last lame duck month, it never even got to 8, but 7.8, that same month 8 years prior it was 4.2, not 4. So our OP claims a 6 point U3 difference when in fact it was a 3.6 difference. I'm not sure they know that, those sort of interactive graphs aren't noted for giving precise and accurate impressions.

Now as to the other matters, I honestly am not sure how those comments were confusing to anyone. They seem rather obvious and common sense, but of course I wrote them so they would to me, you'll have to point out the parts you didn't find to be so.

As for how the stats in general can give a bad view, I don't think that is tricky. As I said, a month of 'improvement' where 50,000 jobs get added isn't just lukewarm growth, because you need to check and see if the jobs added and the jobs lost - the difference of which is that 50k - were better, worse, or roughly equal in terms of wage, benefit, labor, etc. But, as I mentioned, it does not stop there because the population grows a few million each year and those people will need jobs. Having 150 million jobs at 300 million people and going to 151 at 303 is growth, but it is not improvement, it is relative loss, of 500,000 jobs. Jobs can be added but the U3 still go up, in bad months like that the current admin will announce growth figures, as they might be positive even if the U3 has remained the same or even gone up. In theory the U3 reflects that correctly, by making it a ratio of those unemployed compared to the total labor force, U/L, in practice both U and L are hard to nail down and the methods for doing so can overlook young people not previously in the labor force who put off joining it in bad times, and also overlooks the ever larger percentage of the population over retirement age, who typically draw some form of entitlement and/or are a dependent of someone.

So when discussing the economy, the U's aren't bad but often are not indicative of the economy's real state. So as the OP mentions, you can't lie about the facts (which I dispute) but as I said, you can seriously misunderstand what they say. U3 data is a lot like the weather, if you hear some place is 90 degrees (fahr.) and another 95, you don't yet have sufficient data to know which is more unpleasant. The 95 might be dry and warm with a steady breeze near the beach and the 90 humid, muggy, and a stagnant swamp full of mosquitoes with no wind at all. And that doesn't even get into how the 95 has seaside bars and scantily clad ladies and the 90 a bunch of banjo-wielding hicks straight from Deliverance. You can't just leave out things like median household income (better a U3 of 10 and a MHI of $100,000 a year then a U3 of 8 and a MHI of $50,000) or labor conditions, work week length, benefits, etc from the equation and just say "Unemployment was 10 under Bush [which it never was], case closed."

The intuitive mind is a sacred gift and the rational mind is a faithful servant. We have created a society that honors the servant and has forgotten the gift.
- Albert Einstein

King of Cairhien 20-7-2
Chancellor of the Landsraad, Archduke of Is'Mod
This message last edited by Isaac on 24/01/2013 at 06:33:41 PM
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You can't lie about the facts. - 24/01/2013 04:37:17 AM 739 Views
You can, of course, misuse them to draw erroneous conclusions. - 24/01/2013 07:49:13 AM 470 Views
This is pretty much the tongue in cheek point I was going for. *NM* - 24/01/2013 12:51:47 PM 175 Views
But you can misunderstand them... - 24/01/2013 12:39:08 PM 501 Views
All I got from this was... - 24/01/2013 03:35:57 PM 463 Views
Methodology is different, I'll go over it, but I'm referencing the BLS U6 data - 24/01/2013 06:32:49 PM 621 Views
Straight from the horse's mouth. - 24/01/2013 06:47:00 PM 459 Views
Excellent, now look up Dec 2008 - 24/01/2013 07:06:13 PM 465 Views
Links are useful. - 24/01/2013 08:10:25 PM 348 Views
Don't you think maybe... - 24/01/2013 08:33:29 PM 377 Views
What exactly am I defending? *NM* - 24/01/2013 10:16:36 PM 180 Views
You just repeated your original post, merely with the numbers corrected. - 24/01/2013 10:31:54 PM 337 Views
It sounds like you misunderstood my reply to Ghavrel. - 24/01/2013 10:41:20 PM 540 Views
Interesting post, thanks for that. *NM* - 24/01/2013 07:38:14 PM 181 Views
It stinks! *NM* - 24/01/2013 11:24:46 PM 286 Views

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