We are going on a journey over a couple of blogs, looking at the unemployment situation. Today I want to try to understand the way the federal government comes up with it’s monthly number, and how that relates to the economic recovery.
The US Bureau of Labor Statistics (BLS) is responsible for calculating and reporting the month unemployment number. If you are like me, you basically assume that the unemployment number is calculated by taking all the adults in the US and divide that by the number of those adults not working. Presto, you have the unemployment number.
That’s not how it’s done. I spent a couple of hours on BLS’s website looking at spreadsheets, charts, and definition of terms. What I found is that my assumptions on each of the two variables in the unemployment equation are wrong. Let’s start with my bottom number; total adults in the
US.
Officially, the BLS calls it the “Civilian Labor Force” The Civilian Labor Force is “All persons in the civilian noninstitutional population classified as either employed or unemployed.” While that sound innocuous enough, it is filled with things you wouldn’t even think of.
First, let’s deal with the benign ones; the issues that make sense. Since it is “civilian” it excludes all military personnel from the population. That could make a difference when comparing apples to apples. With wars ending and soldiers coming back home, you could be classifying a lot more people as civilian. But as it turns out, the military levels are about the same now as compared to when Obama took office. That is what I am interested in. I want to know if real unemployment is better or worse in the last three years.
The Civilian Labor Force also excludes retired persons, students, and those taking care of children or other family members. That sounds reasonable to me. Retirees, kids in school, and stay at home Moms (who I am sure would argue they “work” for a living) should not be part of the
potential labor force. They are either already working or not eligible to work.
Next is the word “noninstitutional”. That means those not in jail and not in a mental facility. OK, I can buy that. You don’t want to include those incapable of seeking work in an unemployment number. I couldn’t find a lot of information to compare Jan 2009 (when Obama took office) to now; so I will assume that they are about the same as well.
But that leaves us with the final part of the definition; “classified as either employed or unemployed” Well, duh! What else is there? As it turns out, in addition to retirees, and such, (that I mentioned above), there are those who are classified as “Marginally Attached Workers.” What the hell is that, you ask?
A Marginally Attached Worker is “Persons not in the labor force who want and are available for work, and who have looked for a job sometime in the prior 12 months (or since the end of their last job if they held one within the past 12 months), but were not counted as unemployed
The US Bureau of Labor Statistics (BLS) is responsible for calculating and reporting the month unemployment number. If you are like me, you basically assume that the unemployment number is calculated by taking all the adults in the US and divide that by the number of those adults not working. Presto, you have the unemployment number.
That’s not how it’s done. I spent a couple of hours on BLS’s website looking at spreadsheets, charts, and definition of terms. What I found is that my assumptions on each of the two variables in the unemployment equation are wrong. Let’s start with my bottom number; total adults in the
US.
Officially, the BLS calls it the “Civilian Labor Force” The Civilian Labor Force is “All persons in the civilian noninstitutional population classified as either employed or unemployed.” While that sound innocuous enough, it is filled with things you wouldn’t even think of.
First, let’s deal with the benign ones; the issues that make sense. Since it is “civilian” it excludes all military personnel from the population. That could make a difference when comparing apples to apples. With wars ending and soldiers coming back home, you could be classifying a lot more people as civilian. But as it turns out, the military levels are about the same now as compared to when Obama took office. That is what I am interested in. I want to know if real unemployment is better or worse in the last three years.
The Civilian Labor Force also excludes retired persons, students, and those taking care of children or other family members. That sounds reasonable to me. Retirees, kids in school, and stay at home Moms (who I am sure would argue they “work” for a living) should not be part of the
potential labor force. They are either already working or not eligible to work.
Next is the word “noninstitutional”. That means those not in jail and not in a mental facility. OK, I can buy that. You don’t want to include those incapable of seeking work in an unemployment number. I couldn’t find a lot of information to compare Jan 2009 (when Obama took office) to now; so I will assume that they are about the same as well.
But that leaves us with the final part of the definition; “classified as either employed or unemployed” Well, duh! What else is there? As it turns out, in addition to retirees, and such, (that I mentioned above), there are those who are classified as “Marginally Attached Workers.” What the hell is that, you ask?
A Marginally Attached Worker is “Persons not in the labor force who want and are available for work, and who have looked for a job sometime in the prior 12 months (or since the end of their last job if they held one within the past 12 months), but were not counted as unemployed
because they had not searched for work in the 4 weeks preceding the survey.”
Yeah, my eyes glazed over, too. It means people who aren’t looking for work anymore are not part of the population number used to calculate unemployment. But, why does that matter?
Use a high school graduation class. If the graduating class was 1000 strong, and a year later, 90 of those kids are not working, you might say that the unemployment rate was 9%; 90 divided by 1000. But, if 10 of those graduates are Marginally Attached you now have the formula of 80 divided by 990 and your unemployment rate is only a shade under 8.1%. Nice trick, huh?
You noticed that I subtracted the 10 Marginally Attached people from both the top and bottom number. This is because according the BLS, Marginally Attached people are not considered unemployed or part of the labor force Repeat: They are not considered unemployed. They just don’t exist as far as unemployment figures are concerned. (We will examine this closer next week.) I imagine there is a very good reason why it is done that way, but I can’t find it. I also can’t find when this became the official definition, but I doubt it was done in the last three years. I am not accusing Obama of cooking the numbers.
In January 2009, when Obama took office, there were officially 2.13 million Marginally Attached people. Three years later, there are 2.81 million people. That is an increase of 31.8%. That number is at it’s peak and has seen a steady rise in Obama’s tenure. It did not peak in late 2009 as did the unemployment number. More and more people have simply left the work force under Obama.
The total number of unemployed (as defined by BLS) in Jan 2009 was 12.05 million. In Jan 2012 it was 12.76 million; a 5.8% increase, when the total population only went up by 1%. Factor in the Marginally Attached people and it get’s worse. Total Unemployed plus Marginally Attached was 14.18 million in Jan 2009 and 15.57 million in Jan 2012. This is what I would call the real number of unemployed people. That has increased by 9.8%
What does that mean in numbers we can understand? The official number says that unemployment was 7.8% in Jan ’09, when Obama took office. It peaked at 10.0 in Oct ’09, and as of Jan ’12 is at 8.3%. Putting these Marginally Attached people back in; the Real Unemployment Rate was 9.1% in Jan ’09, was at 11.5% in Oct ’09, and is at 9.9 % now.
Officially we peaked, in Oct ’09, 2.2 points higher than when Obama took over, and have dropped to only ½ a point higher, after three years. Actually, we peaked at 2.4 points higher and are still 8/10thof a point higher.
My point? The official numbers are making Obama’s policies and the recovery look better than they are. There are nearly 32% more people who have just stopped looking for work. There are 1.39 million more people not working than when Obama took the reins. And real unemployment is still almost a full percentage point higher than we he took office. He has had a myriad of opportunities to help this situation, with the Keystone Pipeline, off shore drilling in Gulf Coast, oil exploration in the west and Alaska, and his dictatorial policies enforced by the National Labor Relations Board and the EPA.
I think it time to add Obama to the ranks of the unemployed. Don’t worry. He’ll be fine.
Yeah, my eyes glazed over, too. It means people who aren’t looking for work anymore are not part of the population number used to calculate unemployment. But, why does that matter?
Use a high school graduation class. If the graduating class was 1000 strong, and a year later, 90 of those kids are not working, you might say that the unemployment rate was 9%; 90 divided by 1000. But, if 10 of those graduates are Marginally Attached you now have the formula of 80 divided by 990 and your unemployment rate is only a shade under 8.1%. Nice trick, huh?
You noticed that I subtracted the 10 Marginally Attached people from both the top and bottom number. This is because according the BLS, Marginally Attached people are not considered unemployed or part of the labor force Repeat: They are not considered unemployed. They just don’t exist as far as unemployment figures are concerned. (We will examine this closer next week.) I imagine there is a very good reason why it is done that way, but I can’t find it. I also can’t find when this became the official definition, but I doubt it was done in the last three years. I am not accusing Obama of cooking the numbers.
In January 2009, when Obama took office, there were officially 2.13 million Marginally Attached people. Three years later, there are 2.81 million people. That is an increase of 31.8%. That number is at it’s peak and has seen a steady rise in Obama’s tenure. It did not peak in late 2009 as did the unemployment number. More and more people have simply left the work force under Obama.
The total number of unemployed (as defined by BLS) in Jan 2009 was 12.05 million. In Jan 2012 it was 12.76 million; a 5.8% increase, when the total population only went up by 1%. Factor in the Marginally Attached people and it get’s worse. Total Unemployed plus Marginally Attached was 14.18 million in Jan 2009 and 15.57 million in Jan 2012. This is what I would call the real number of unemployed people. That has increased by 9.8%
What does that mean in numbers we can understand? The official number says that unemployment was 7.8% in Jan ’09, when Obama took office. It peaked at 10.0 in Oct ’09, and as of Jan ’12 is at 8.3%. Putting these Marginally Attached people back in; the Real Unemployment Rate was 9.1% in Jan ’09, was at 11.5% in Oct ’09, and is at 9.9 % now.
Officially we peaked, in Oct ’09, 2.2 points higher than when Obama took over, and have dropped to only ½ a point higher, after three years. Actually, we peaked at 2.4 points higher and are still 8/10thof a point higher.
My point? The official numbers are making Obama’s policies and the recovery look better than they are. There are nearly 32% more people who have just stopped looking for work. There are 1.39 million more people not working than when Obama took the reins. And real unemployment is still almost a full percentage point higher than we he took office. He has had a myriad of opportunities to help this situation, with the Keystone Pipeline, off shore drilling in Gulf Coast, oil exploration in the west and Alaska, and his dictatorial policies enforced by the National Labor Relations Board and the EPA.
I think it time to add Obama to the ranks of the unemployed. Don’t worry. He’ll be fine.
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