NY Times: Unemployed, and Skewing the Picture

[marmar]

Economic Scene
Unemployed, and Skewing the Picture


By DAVID LEONHARDT
Published: March 5, 2008
(UPDATED March 7, 9:55 a.m.) This month's jobs report is a great example of how misleading the unemployment rate can be. In February, the economy shed 63,000 jobs, which is a strong indication a recession may be at hand. But the unemployment rate actually fell, to 4.8 percent from 4.9 percent.

The government's definition of the unemployed includes only those people actively looking for work. And last month, the number of people in that category fell significantly. It seems that more of the jobless gave up looking for work. So the unofficial number of unemployed fell, even as the labor market worsened.

My column this week, which appears below, explains the history behind the government's definition of unemployment.

In 1878, Carroll D. Wright set out to do something that nobody in the United States had apparently ever done before. He tried to count the number of unemployed.

As is the case today, the 1870s were a time of economic anxiety, with a financial crisis — the panic of 1873 — having spread into the broader economy. But Wright, then the chief of the Massachusetts Bureau of the Statistics of Labor, thought there weren’t nearly as many people out of work as commonly believed. He lamented the “industrial hypochondria” then making the rounds, and to combat it, he created the first survey of unemployment.

The survey asked town assessors to estimate the number of local people out of work. Wright, however, added a crucial qualification. He wanted the assessors to count only adult men who “really want employment,” according to the historian Alexander Keyssar. By doing this, Wright said he understood that he was excluding a large number of men who would have liked to work if they could have found a job that paid as much as they had been earning before.

Just as Wright hoped, his results were encouraging. Officially, there were only 22,000 unemployed in Massachusetts, less than one-tenth as many as one widely circulated (and patently wrong) guess had suggested. Wright announced that his “intelligent canvas” had proven the “croakers” wrong. ....(more)

The complete piece is at: http://www.nytimes.com/2008/03/05/business/05leonhardt.html?_r=1&oref=slogin

[Supersedeas]

1. it is kind of like "Negative Growth" -- just tinker with the Double Speak enough to make it sound

good -- so defining the number of people so frustrated with no finding a job as a positive thing is the Bushist meaning of honesty and accountability.

[Vincardog]

2. "actively looking for work" has been defined as receiving unemployment benefits. IF you are not you

are SOL

[Name removed]

3. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Mountainman]

4. I doubt people stop looking for work. They fall off the unemployment compensation roles.

There is no way to count people unless you are in contact with them. One reason to not extend unemployment compensation is this, if you extend, it makes the unemployment figures more accurate.