Unemployment

[uberdionysus]

The Unemployment Rate
So everyone is making a big deal about the 8.5% unemployment rate, which is a big deal, but it's also a bit of a lie. Our real unemployment rate is 15.6%, and is what the government terms "U-6." As the government says, U-6 includes the "total unemployed, plus all marginally attached workers, plus total employed part time for

Comments

[never_the_less]

Out of curiosity, do you know why it actually matters which statistic is given?

That is to say, it seems like what makes news/has any kind of effect, is the change in the unemployment rate, no matter how it is reported/what it reflects (provided that the counting mechanism stays the same). Though certainly one problem is that (I think, correct me if I'm wrong) the US stops counting people as unemployed after X time period of being unemployed, effectively curbing the growth/change in the unemployment rate -- which seems to be the real problem, no? (I.e. if change in official unemployment rate over a period of time < change in real unemployment rate, then we have a problem)

But really, do you know at all how these statistics are used aside as indexes? (I don't.) I'm sure that various resources are allocated based on unemployment statistics, but I wonder if (and seriously doubt that) MORE resources would be allocated if the numbers were simply generally higher.

I agree with you that depression seems like a reasonable word, and wish that we could all start using it sooner rather than later, possible pre-empting the fall out that will inevitably happen once it's announced.

[uberdionysus]

It matters because U-3 simply isn't an honest reflection of our unemployment rate. As you say, once you're unemployed for X amount of time, you are no longer counted. Out of work freelancers and forced part time workers are also not reflected in U-3, along with people entering or re-entering the job market. It's simply dishonest.

I'm not sure how they're used as indexes, but I imagine that resources are allocated based on them.

In 1994 we changed the rates in order to decrease the unemployment numbers. Of course, we claimed it was to get a more accurate number, but that's obviously not true.

Here's our old criteria:
http://en.wikipedia.org/wiki/Current_Population_Survey#1994_CPS_Revisions

One last thing: "depression" is pretty vague. It's roughly a long and deep recession, which is where we're at.

[never_the_less]

I guess I asked because (allow me here that this is informed by a minor interest in the history of statistics -- check out Ted Porter and Ian Hacking if you are interested...) I would say that "unemployment rate" is merely a statistical concept. I.e. it exists only as a statistic -- there is no actual "unemployment rate" out that can actually, as an entity be counted.

As your extended discussion above makes clear, it could potentially be counted in any number of ways, using any number of criteria, which are essentially arbitrary. Not unlike the statistic of IQ, which does not actually measure any thing/property/characteristic that exists on its own. Perhaps the binary of working/not working makes it seem like it would be easy to fit someone into the categories employed or unemployed, but the reality, as everyone is pointing out, is that there is a lot of grey room. So for me, the question of "accurate representation" doesn't mean anything/is a tautology.

But I have a feeling that these numbers ARE used to gain leverage, which is where to me it becomes significant. And I agree with you that it is important to maintain the SAME arbitrary criteria however, otherwise the change in the figure will cease to have significance. It (how we count) also of course has significance if we are comparing figures internationally....

Also, huh, I didn't realize that there wasn't a statistical definition of a depression, the way there is for recession. Weird.