The Real Number

The lead article at Ezra Klein’s Wonkbook at the Washington Post reports that the real unemployment rate in America is actually 11 percent. Where does this number come from? In order to keep the unemployment number below 10 percent, the government has been statistically shrinking the work force. They can actually do this in a logical way–let’s say that because of the Christmas season, you have momentarily stopped looking for a job–statistically the government does not count you as part of the work force or part of the unemployed. You have fallen into the abyss of ‘people not looking for work.’ That may be temporarily true, but it’s a little self-serving. Anyway, according to government statistics, if the number of people looking for work today were the same is it was in 2007, the unemployment rate would be 11 percent.

The article reports:

Since 2007, the percent of the population that either has a job or is actively looking for one has fallen from 62.7 percent to 58.5 percent. That’s millions of workers leaving the workforce, and it’s not because they’ve become sick or old or infirm. It’s because they can’t find a job, and so they’ve stopped trying. That’s where Luce’s calculation comes from. If 62.7 percent of the country was still counted as in the workforce, unemployment would be 11 percent. In that sense, the real unemployment rate — the apples-to-apples unemployment rate — is probably 11 percent. And the real un- and underemployed rate — the so-called “U6” — is near 20 percent.

The problem with statistics is that they can be easily spun to appear to show whatever the person citing them wants them to show. The current ‘drop’ in unemployment is an example of that spin.

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