I said it before (September 20, 2012 Blog) but, nonetheless, after seeing the Bureau of Labor Statistics (the “Bureau”) Report for November 2012 and listening to the politicians and “talking heads” spin their tales I feel compelled to say it again: Figures Don’t Lie But Liars Sure Can Figure, especially by omission.
You may have heard on the news or from your favorite commentator that the nation added 146,000 jobs in November, significantly exceeding the median forecast of 85,000. Sounds like great news, right? Did your commentator stop there or did he or she share the rest of the picture. That is, the Bureau also reported that it revised the number of jobs created in September and October with the net result that the nation added 65,000 less jobs than originally reported.
You may also have heard that the Bureau reported a decline in the unemployment rate from 7.9% to 7.7%. Sounds like more good news right? Well did your source also disclose that the reason the unemployment rate fell is that 350,000 people gave up looking for work and dropped out of the labor force. This decrease in the labor force impacts all of the alternative measures of unemployment.
Let’s look at a few refined measures and try to discern a clearer picture of the real unemployment situation. To do this we need to define a few terms:
• Discouraged Workers (U4): These are persons who have stopped looking for work because they believe no jobs are available. Stated another way, these people have given up hope. (Follow the link below and see Table A-16.)
• Marginally Attached Workers (U5): These individuals are not in the labor force but wanted and sought work at some point in the last 12 months. However, they were not counted as unemployed since they had not sought work in the four weeks immediately preceding the survey. (Follow the link below and see Table A-16.)
• Involuntary Part Time Workers (U6): These persons were working part time because their hours were reduced or they could not find full time employment. (Follow the link below and see Table A-8.)
Following are the official unemployment rates for September and October and statistics relative to the three additional concepts discussed above:
|U3:||The Official Unemployment Rate||7.9%||7.9%|
|U4:||U3 Plus Discouraged Workers||8.4%||8.3%|
|U5:||U4 Plus Marginally Attached Workers||9.3%||9.2%|
|U6:||U5 Plus Involuntary Part Time Workers||14.6%||14.4%|
For more detailed information related to the above, see the Bureau’s December 7, 2012 news release.
I hope this helps take some of the spin out of what you may have heard about our nation’s unemployment situation.