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Unemployment Lies and Deception

December 18th, 2009

(didn’t mean to rant when I first started this… but this stuff really bugs me)

I’m in Utah, which is where this article comes from: Utah unemployment rate drops to 6.3 percent.  I clicked over because I find anything under 9% to be remarkable.

I recently read that “Detroit’s Unemployment Rate is Nearly 50%, According to the Detroit News” (and here is the Detroit News link).

Which seems more believable?  6.3% or 50%?

In Utah, a state economist is giving the number, and the article even says this “may mark a turning point in the state’s economic recovery.

This bothers me (more on that later).

In Detroit, the mayor said (click the link to see it there) “the city’s official unemployment rate was as believable as Santa Claus.”  (sorry for the spoiler on next week’s main event)

Who is to believe, the state economist  with the good news, or the mayor of a city (an elected official) with the grim thought?

Surprisingly, I’m siding with the elected official.  To the state employee’s defense, though, he is only reporting on a certain kind of statistic that was predefined… so he’s just doing his job.

THIS STATISTIC (unemployment rate) IS FLAWED, MISLEADING, AND DECEPTIVE.

To the average Joe or Jane Worker, the unemployment rate seems to be the number of people who can’t get a job.

Unfortunately, the way unemployment is measured, it’s not that simple.  The official unemployment rate does not take into consideration “those who gave up the job search more than a year ago,” which, according to the Detroit News, could be more than 100,000 potential workers in Detroit.

100,000 workers.  And their families, and other dependents.  And their bill collectors.

Why are they left out of the unemployment numbers?

As far as I know, unemployment numbers are based on those who are reporting to the government — those who are collecting unemployment insurance.

Guess what… unemployment insurance RUNS OUT.  And then, you are so worthless, you aren’t even counted as a statistic!  You are essentially written off the books.

Yeah, this really gets under my skin. And we aren’t even talking about UNDEREMPLOYED people!!

I gotta stop blogging because this makes me so mad… but I’ll leave it with this one thought:

Aside from the sad fact that there are human beings on the other side of these numbers, the scary thing is that the government is making decisions based on these numbers.  Unemployment rising or lowering is virtually meaningless to me, as it paints an incomplete picture.

<angry!>

7 Comments »

7 responses to “Unemployment Lies and Deception”

  1. Oh, Jason, I get this and feel your anger. I don’t know if there is a way to truly measure the impact, the recovery, the feelings, the way that not just this particular economic situation has affected us but the way overall we don’t look at employment right either. I’m a statistic too… and so are you. We handled things differently and I am sure that there have been ups and downs in our worlds. I asked on Twitter a few weeks ago, when were the good times. Because when the economy was doing great, there were times when I was really struggling. That lost and hopeless feeling impacts how you do things. Pondering your post.

  2. You’re right the numbers as they are don’t tell the whole story (how can any number tell the whole story?), but the line has to be drawn somewhere, right?

    To put on my pointy-hat for a second, in pure “economic” terms, you’re not unemployed unless you’re in the job market AND don’t have a job.

    The way you determine if you’re “in the job market” is is the thing that’s up for grabs here, and economists, I feel, are doing the best they can to track this appropriately given a very hard-to-measure statistic. One way to track that is to follow unemployment insurance payments, however, if you’re getting unemployment benefits or not is NOT a requirement for the stat…. but its pretty hard to get people to “claim” unemployment without getting a benefit check after they’re done.

    Usually, job service centers and state job placement agencies will try to determine flow of traffic in and out of their facilities or online registrants actively searching, etc., but then you could get a lot of duplication or human-errors and lots of other problems.

    The only way to accurately count this would be to force every “unemployed” person to “check in” weekly, as if with a parole officer, to declare their current unemployment status–and some kind of penalty if you don’t do it. As if calling the state for unemployment assistance isn’t humiliating enough, having to “check-in” every week, even without the benefit of a little lump of cash to keep the lights on and put gas in the car to get to the next job fair.

    Technically, if you stopped looking for a job, or went to school, or decided to do something else, you really are not in the job market from an economics standpoint. Also, if you got a part-time job or a temp job or a contract or started your own business, you are employed during that time.

    This is why unemployment UNDER 4-5% is usually considered bad for the economy because there should be a reasonable amount of people in transition to keep the economy innovating and moving forward. When it gets below this–into the 2-3% range–it usually means the economy is, frankly, overheated, and that people that would otherwise really NOT WANT TO WORK are working because there are too many jobs or salaries are inflated or other things are happening. Its an indicator that a recession is imminent.

    Blah blah blah.

    Anyway, I do wish there were more accurate numbers to reflect the real human suffering out there. Like George Fulton said in the Detroit article you linked to, “It’s a big number, and we should be concerned about it whether it’s one in two or something less than that.”

  3. Btw, on the upside of economic issues, a LOT of new things can take “root” (pun intended). This is how we innovate and change ourselves from one economy to a new one.

    Check out this Marketplace article on Urban Farming taking over vacant lots in Detroit:
    Urban farming takes root in Detroit | Marketplace From American Public Media http://bit.ly/5MV7Fj. For more information or to donate, visit UrbanFarming.org.

    It’s not as space-age as “WALL-e” but has a similar feel :) :)

  4. I don’t know that I’d call it lying. As Robert Merrill says, you have to draw the line somewhere.

    On the plus side, the government has given a huge amount of additional assistance to the unemployed in the last year as part of the stimulus package, including several extensions to unemployment benefits and paying 50% of COBRA. I have a friend who was literally saved by these two programs but it seems most people barely know they exist.

  5. reinkefj says:

    And, don’t forget the underemployed and the old farts who are now “retired” for want of anything better to do.

    I fault the gooferment and it’s absolute stupidity.

    First, average wage in gooferment is twice that of private industry. Regardless of how they slice and dice the numbers, gooferment workers are in the ascendancy in both quantity and money. TARP — bailout to the banks; should have just let them fail. (Cynically, I’d bet that they’d have figured out how to survive. The bail out of AIG was a direct payoff to Goldman Sachs. The same Goldman Sachs that paid gigantic bonuses.)

    Second, every dollar the gooferment “gives” in unemployment benefits has to come from some taxpayer. Remember Basiat and the unseen victim. In this case, we now have four generation of “welfare farmers”. Some of those on “welfare” are rich companies and individuals. Milk and sugar subsidies come to mind.

    Third, the poor economy has landed hard on the young and old. Youth unemployment — especially minority — is skyrocketing. And, the older workers are being forced into early retirement; some after burning through their savings from reduced retirement portfolios.

    My solution is reduce gooferment. They need to cut, cut, and cut some more. Some entities need to be killed — Agriculture and Education would be my starting point. We need to cut the corporate income tax from 30+ to say ZERO. (Corporations don’t pay taxes. Only real people do. Corps pass them along or go out of business.) When Ron Paul campaigned, he asserted that cutting gooferment back to 1990 levels would allow the income tax to be ZERO.

    Not like any of this is going to happen. But I wouldn’t trust anything the gooferment says or does. This included “running health care or health insurance”.
    fjohn

  6. If you want to lower the unemployment in the U.S., employers should be taxed a flat rate of 50% of those wages paid to non- U.S. citizens. If an employer is found to be violating the tax, for each non-U.S. employee that he or she paid in a given month, the employer will pay a flat fee of $1,000.

    With the aforementioned plan in place, the U.S. umemployment will significantly drop. When, if and when it occurs, the U.S. unemployment rate drops to a reasonable level and maintains for 6 months, the aforemetioned tax and flat fee shall cease.