What's the Real U.S. Unemployment Rate? We Have No Idea
businessweek.com
businessweek.com
But it also misleads in saying "real US unemployment rate."
Dr. Deming would say "there is no true value" of any measured process. The results depend on the process which includes the operation definitions.
http://management.curiouscatblog.net/2009/11/05/deming-there...
Over time the value of a measure (as a proxy measure for some condition you care to monitor) can change.
http://management.curiouscatblog.net/2004/08/29/dangers-of-forgetting-proxy-nature-of-data/
The unemployment rate certainly has proxy issues. But there is no "true unemployment rate." There are ways to change the process to focus on different things (make the proxy better matched to certain issues). But also it seems to me, unemployment rate needs to have other related measures that are considered in concert with the unemployment rate (such as the labor force participation rate, perhaps some measure of under-employment etc.).
Those paying much attention do use other measures in concert but the last few years I read lots of different people complaining that the unemployment rate doesn't capture various aspects of how the job market is poor (and often claiming the unemployment rate was "inaccurate" as though there was a platonic form of the actual rate divorced from the measure process.
Operant knowledge is not blanket relativism.
The bad news is that participation rate in the labor force has continued on a downward trend even as the economy rebounds.
http://data.bls.gov/timeseries/LNS11300000
I think a growing economy that does not create jobs should concern us all.
If population growth continues to outpace job growth, we're going to end up with a nasty game of economic musical chairs.
From 2010 to 2020, the civilian labor force aged 16 to 55, prime working years, is actually going to shrink by almost a million people. So the population is growing, but more of those people are of ages where it is typical to not work, so labor force participation rate can naturally be expected to go down, even if nothing is wrong with the economy.
It is true that this number is affected by people retiring, newborns, immigrants but it basically shows how many (or few) that are producing the goods and services consumed by the whole population.
The unemployment number is heavy politized and it is always easier for politicians to hire economists to design measurements that shows a lower unemployment than it is for politicians to actually implement measures that increase meaningful and sustainable employment.
I think that the (western) world is in a development that will leave us with much lower employment for good. And this is due to the forces for globalization (such as outsourcing of jobs and manufacturing, global competition) and advances in technology (robots, information technology removing middle men and backoffice functions). Much more so than ageing or immigration.
It is important that this becomes a bigger issue in public discourse otherwise we risk ending in bad place with too many people living of welfare and highly skewed wealth and income distribution.
His point was that the way we model economics data will inherently result in missed predictions. We need to remember this fundamental flaw of modeling when we interpret the results of a model, like unemployment rate.
It is indeed unsurprising that participation drops in a period of high unemployment, but it's not just a matter of mathematics. Instead, it's the effect of people simply giving up looking for work.
That said, it's important to watch out for what the participation rate is measured against. Obviously, the participation rate of the population as a whole can drop for entirely benign reasons (higher percentage of retirees).
#2 I also want to get an idea of how many people are over employed and under employed.
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Payroll tax receipts show how many people are employed.
Then do a straight forward head count.
Employment rate = jobs / people.
Yearly Employment load = hours reported / ( people * 2080 )
Why do we need sampling, when we can just measure the totals (with a margin of error)?
Why do we have fudge factors like "discouraged workers"? People are either working or they're not. Student, disabled, retired, whatever, they're still unemployed. When elderly people continue to work past 65 and the working poor have multiple jobs, I'm really not terribly interested in splitting hairs. Break up employment rates by demographic group, if it matters that much.
I suppose you mean direct election[0]
The Electoral College is in place just for Presidential Elections because it used to be that it was impossible for the various candidates to peddle their platform all over the country. No other position had that issue, governors, senators, congressmen are all far more local elections.
That issue doesn't exist anymore. There is no reason the president can not be directly elected.
Switch to direct election, and there will be no need for the various candidates to peddle their platform all over the country: candidates will focus on high-density population regions, ignoring "flyover country" entirely and unfairly biasing political power toward urban interests.
In the fantasy version of direct democracy, every decision there is to be made is a clear yes or no on an easily defined question ("Do we invade Iraq?"). In such a system, the power would end up belonging to the people who write and pose the questions. Look at the history of the initiative system in the US for an idea of what that looks like even on a limited scale -- the potential for graft, corruption, incompetence, and capture by special interests makes the current system look like rule by benevolent genius saints.
Because these vary. What is employment? Does sitting at home creating an app that could have future rewards employment? Possibly.
The labour force varies according to factors including living costs, available prospect of work, potential compensation, and many other factors. For example, a new plant in a town offering part time work could encourage stay at home parents to take a part time job - while not previously unemployed (chose not to participate in employment) they are now employed. Vice versa, for example, a sudden decline in living costs could encourage a fall in workforce participation.
Then there is the unreported number of jobs, which tend to be picked up be census rather than tax receipts.
People create jobs, jobs don't create people (well, kinda inverse, as better incomes sometimes or often lead to lower birth rates, but that's a tangent). It is not a process of children's puzzles where blocks are put into holes, and after the box is full no more blocks can be inserted.
If someone doesn't want to be employed, they're not unemployed, this is a definition of (un)employment, and the distinction is important. When employed but not reporting this through any important means, this is also important. Measuring this is hard.
http://delong.typepad.com/sdj/2014/08/male-and-female-prime-...
Why try to guess whether people are truly expressing their desires?
http://www.shadowstats.com/alternate_data/unemployment-chart...
According to them, unemployment is about 23%.
I'm not exaggerating, that's their entire shtick.
[0] http://www.shadowstats.com/alternate_data/unemployment-chart...
They report inflation and other economic figures using the methods that the government previously used before "moving the goalposts" in order to report more "convenient" numbers.
Basically, they think (without evidence) that the government has moved the goalposts so they add an arbitrary number to the official number. They specifically do NOT recalculate the CPI based on old methodology; the shadowstats guy admits this in the blog post.
Can't help mentioning this Paul Krugman post from last month, where he points out that annual subscription to shadowstats has remained the same price for the past 8 years. So much for hyperinflation...
http://krugman.blogs.nytimes.com/2014/07/19/always-inflation...
I wish people would realize they're a complete joke.
Some other fun quotes from the brain trust behind Shadowstats;
> (Feb 22, 2012) Gold to $8,890, Silver to $517 says John Williams of Shadowstats
When this prediction was made, Gold was at $1,775/ounce and Silver was at $34/ounce. 2.5 years later, Gold is down to $1,286 and Sliver is at $19.50. While Williams was very, very long, the price declined between 30% and 40%.
> (Oct 24, 2012) Economist John Williams says the latest round of “open-ended” QE has set the table for a global “dollar sell-off” and “hyperinflation” no later than 2014. Williams says, “There’s no way the consumer can fuel the economic recovery, and there is no way we’re going to see one in the near future.” Williams predicts, “The Treasury is going to have funding problems, and that means the deficit gets a lot worse.” [4]
The dollar is up 15% since then, inflation is still nonexistent, and the 2014 deficit is over $500 billion smaller than the 2012 one.
You'd be much better off taking financial advice from the Dogecoin guys.
[1] - http://www.washingtonpost.com/blogs/wonkblog/wp/2014/07/17/t...
[2] - http://pragcap.com/update-theres-still-deflation-in-hyperinf...
[3] - https://www.goldstockbull.com/articles/gold-8890-silver-517-...
[4] - http://usawatchdog.com/dollar-sell-off-and-hyperinflation-by...