Jeff Neal for C.U.R.E. - Certain Unalienable Rights Endowment

8.3% Unemployment – A New Online Game – Playing Numbers with Friends

In Opinion on February 5, 2012 at 3:10 pm

The Bureau of Labor Statistics makes people disappear.  Let me explain.

First, a question:  Is an 8.3% unemployment rate good news for Barack Obama and the American economy?

Depends on who you count?

Below I’ve shown figures from the Bureau of Labor Statistics for December 2010 & 2011 and January 2012.

The politicians and the press report (most with celebratory glee) that the “Unemployment Rate” has gone down from 9.4% in December 2010 to 8.3% in January 2012, and we’re told how good that is for the economy and, in turn, President Obama’s re-election prospects.  Let’s look more closely.

That metric – The Unemployment Rate – is calculated as the number of “Unemployed” people divided by the “Civilian Labor Force.”  The problem is that “Unemployed” does not include people who are “Not in the Labor Force*” a figure that was 2,598,000* larger in January 2012 than in December 2010.  If we include those people, the “Actual” unemployment rate works out to be 9.9%, not 8.3%.  See, as the population grows – even if 75% of Catholics use contraception! – so grows the Labor Force.  Unless those people show up to be counted (by either applying for unemployment benefits or being on someone’s payroll) in the “Participation Rate” they get deleted from the math and, voila, the Unemployment Rate goes down!

Fast forward to November 2012 – election month.  Let’s assume population growth equal to that from Dec ’10 to Dec ’12 and let’s assume a Participation Rate equal to the average over the same period – 63.85%.  If we also assume an additional 3,500,000 people are employed by then (i.e. the number of jobs created is double the population growth) the Unemployment Rate will be reported as 6.8% – calculated as (Labor Force – Employed)/Labor Force or (155,765-145,137)/155,765 – while the Actual rate will be 8.7% because an additional 1,507,000 people are “Not in the Labor Force” (88,204,000 less 86,697,000).  The bottom table shows the same projected statistics under more likely job growth scenarios.  In every case, the way the Bureau of Labor Statistics counts “People” the unemployment rate is understated by about 2 percentage points, or about 25%.

Do you want to venture a guess how many people the Obama Administration will make disappear between now and November?

* Not in Labor Force – Total Population less Civilian Labor Force.  They stop being counted, they just disappear.

A friend puts it in his words HERE

Playing Numbers Games with Friends

WHO COUNTS?

Unemployed - They Count

Hungry - They Don't Count

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