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The Myth of Unemployment Numbers: How They Help or Hurt in Politics [10]

Updated on August 16, 2016

Weekly Unemployment Claims


What is Unemployment

You would think the answer to the question posed in the subtitle is simple. It isn't. For example, are you unemployed when you

  • aren't working?
  • aren't working at a wage earning job?
  • aren't working at a wage earning job when you desire one?
  • aren't working at a wage earning job when you desire one and are actively looking for one?
  • is it Merriam Webster's definition that unemployment is the "Involuntary idleness of workers"
  • or is it the Official, i.e., federal government definition of when a person does " ,.. not have a job, [has] actively looked for work in the last four weeks, and are currently available for work."

Once we have defined it, how do we measure it in a meaningful way? There are many ways available here as well, each with its own set of problems. You can:

  1. 1 - Total Number of Employed / Total American Population (children and adults)
  2. 1 - Total Number of Employed / Total Number of Working in America, however that is defined.
  3. 1 - Total Number of Employed / (Total Number of Working Age People- Estimated Number of Chronically Unemployed), however that is defined.
  4. 1 - Divide the Total Number of Employed / (Total Number of Working Age People - Estimated Number of People Not Actively Looking for Work in the Last Four Weeks or are Not Currently Available for Work) - the Official definition of unemployment

IS YOUR HEAD HURTING YET? Because it may be is one reason President Obama and the Democrats got ... how did he put it ... shellacked on November 2.

When Unemployment Is a Good Thing

Unemployment is a good thing for the party out of power. They revel in it. In this case, it was the Republicans who were the benefactors because all they have to do is point to the 9.6% unemployment rate and go tsk, tsk, tsk. Well, they don't really do that, they put out attack ads that lie and distort and mislead and do everything but tell the truth. They do what they have turned into an Art form.

Never mind that President Obama never had a chance. Never mind that it was physically impossible for ANYBODY to have prevented the runaway locomotive the Republicans let loose on the American public. A locomotive which Barack Obama gamely put himself in front of to try to stop to save America from another Great Depression.

Never mind that the Republican do-nothing solution ... I am sorry Republicans I am besmirching your name, I should say the Right-wing Conservative anti-federalists (RWCAF) do-nothing solution would have left America with a bankrupt financial institution, bankrupt auto industry and 25% unemployment. A bitter pill for sure, but they think it would have been cathartic to swallow it.

The RWCAFs (do you think it will catch on?) were counting on the fact that America was angry at the whole situation and so disappointed that President Obama wasn't a miracle worker. They used that disappointment in all of their ads to great effect and essentially turned the thinking part of Americans' brains off and turned their emotional part on. Again, something RWCAFs do VERY well.

As you will see, it is impossible for politicians to explain unemployment problems to any ones satisfaction and the RWCAFs knew and took full advantage of it, as they should have.

When Unemployment is a Bad Thing

 Unemployment is always a bad thing, of course, but here I am talking about for the party in power.  I have been there a long time ago and it wasn't fun.  I was luckier this time.

First, let me be a little bit even-handed and dance on the Democrats head for a moment.  I know it is hard to try to explain bad unemployment numbers but from I stood, it looked like you didn't even try.  You rolled over and played dead.  You let the Republicans have a field day with you.  For that sin alone, they should have one (if they weren't so darned dangerous to America ... but that is another hub.) 

The problem, obviously, that the Democrats and President Obama has is that to talk about unemployment in an intelligent way, you have to talk about numbers and how they are counted. 

 (When you don't need to be intelligent, all you need to do is point to the 9.6% unemployment rate and rant about why Obama hasn't put the 6 million people back to work in 18 months.  After all, we did the hard part.  It took us eight years to get them to lose their jobs in the first place just so you would have something to do for us to pin the blame on!)  I digress, sorry, I am just a wee bit annoyed.

As soon as you try to explain, people start snoring.  That is unfortunate, but that is life.  This is a hub, however, so I am going to make the attempt. :-)

Some Numbers, Sorry

 First, a little primer on what makes up an unemployment number.  I will try to keep this as entertaining as possible.  There are five main ingredients:

  1. Civilian Non-Institutional Population (16 years or older, not inmates of institutions or persons in the military)
  2. Employed
  3. Unemployed (willing, able, and looking for work)

Things to keep in mind:

  1. The non-Institutional Population is an estimated number that grows every month (about 0.8% at the moment)
  2. This number, the Employed. and the Unemployed are estimated numbers.
  3. The remaining numbers and percentages are calculated.
  • Total Labor Force
  • Not in Work Force
  • Unemployment Rate

A simple example.  Assume:

  • Population is estimated at 100,000
  • Employment is estimated at 90,000
  • Unemployment is estimated at 4000
  • Therefore,
  • Total Workforce equals 90,000 + 4000 = 94,000
  • Not in Labor Force equals 100,000 - 94,000 = 6,000
  • Unemployment Rate equals 4000/94,000 = 4.3%

So, what is the take away from this little, not so entertaining example?  In addition to the number of job openings that are available, there are two other variables, neither of which are obvious to the average Joe, but both of which effect that all so important Unemployment Rate you heard so much about the last nine months (which gave birth the RWCAF take-over of the House).  They are:

  • Changes in Total Population and,
  • Changes in Not in Labor Force.

President Obama was sunk by both of these.


Where Did It Go Wrong?

I would offer this up for debate. What went wrong (or right from my perspective in terms of a good, sustained recovery) is a conservative monetary policy from the Federal Reserve Board, a modest Stimulus program, and population growth.

I believe the first two items possibly and properly led to slow yet sustainable economic growth. The Fed did everything in its power to try to get the economy going again WITHOUT igniting inflation and driving us into the hyperinflation we experienced in the 1970s. President Obama is now getting yelled at from the left and center for not doing enough with the stimulus and from the right for having done anything thing at all. I don't think he could have pumped anymore money into the system any faster than he did without 1) wasting most of it and 2) flooding the engine. So, it would seem to me we erred on the prudent side and kept growth manageable rather than let it go wild which would have brought the unemployment numbers down nicely.

Given we ended up with slow growth, then President Obama and the Democrats succumbed to the inevitable ... population growth. In the period from January 2009 to October 2010, the Bureau of Labor Statistics (BLS) estimated the Population grew 2.7 million people! That means besides the 6.5+ million people who lost their jobs because of the RWCAF fiasco, the Democrats and President Obama were now expected to create jobs for another 2,700,000 new labor market entrants, WOW, talk about high expectations.

So, how did that impact the Unemployment Rate. The math isn't too hard but if you:

  1. Assume no population growth starting in 2009 (there are techniques for doing that) and
  2. Also, assume that after the worst of it is over in December 2009, that nobody who had stopped looking for a job starts looking again (meaning we are going to find jobs for 14,837 million people who wanted a job as of Jan 1, 2010)
  3. Then, by September 30, 2010, unemployment would have been on a downward track at 9.2%! There was actually a couple of months in there were it got down to 9.1%.

IF, and that is an impossible if, some smart ad people could have taken that message and packaged it in such a way as to be easily understood AND believed, the Democrats might not be in such a fix. But then, I still believe in Santa Claus.

Anyway, I hope you made it through all of my vitriol and numbers and manage to see what I am trying to get at regarding unemployment numbers. Given what President Obama had to start with, I think he ought to be given a medal for doing as well as he has done. It was an impossible job made that much harder by an opposition who openly and proudly made it clear they were more interested in bringing down his presidency than in sustaining America.



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