Not to pick on my friends in the field of Economics, but the Bureau of Labor Statistics October Jobs Report is the perfect example of how to paint a false unemployment picture.
I have continuously said that the U3 doesn’t measure much of anything anymore, but this month even the BLS says that the numbers are skewed. The actual number of unemployed remained unchanged, while the Unemployment level (U3) rose .3%. The BLS also acknowledged that the Employment Participation Ratio dropped to 62.3% from 68%, the lowest level since 1978.
So there’s a measuring problem, which was not helped by the government shutdown, where 800,000 workers were considered both employed, and unemployed. That’s a whole different can of worms that can’t be untangled.
Here’s a more accurate way to measure. First, the Labor Force Participation rate (from BLS raw data):
According to math, with a labor force participation rate of 62.8%, for every person unemployed, there should be a little more than 1 ½ with a job. So here’s how that looks when the U6 rate as a ratio of people with jobs:
That’s about right. According to this ratio of U6 and non-farm employment, for every person unemployed there’s 1.585 people with a job.
The U6 rate is a more accurate measure – sort of. The U6 unemployment rate is currently 13.8%. That doesn’t really tell us much of anything of the social picture, unless we first turn it into a ratio of the employed. Then the picture remains bleak.
Of course, these are all the things that neither the left nor the right is putting out there to the public. What have we, as social scientists learned from the BLS report?