Update on the Unemployment Number Issue

A few days back, I wrote about the idea that the unemployment rate that most Americans read about in their newspaper or hear reported on the news obfuscates the facts as it doesn't account for the underemployed and frustrated workers. In the minds of some, the 7.8% number that was recently reported isn't only an obfuscation, but is an outright fallacy. From an opinion piece by Jack Welch in today's Wall St. Journal:

 

"Unfortunately for those who would like me to pipe down, the 7.8% unemployment figure released by the Bureau of Labor Statistics (BLS) last week is downright implausible. And that's why I made a stink about it (ed. note - this was last week on Twitter).

 

Let's get real. The unemployment data reported each month are gathered over a one-week period by census workers, by phone in 70% of the cases, and the rest through home visits. In sum, they try to contact 60,000 households, asking a list of questions and recording the responses.

 

Some questions allow for unambiguous answers, but others less so. For instance, the range for part-time work falls between one hour and 34 hours a week. So, if an out-of-work accountant tells a census worker, "I got one baby-sitting job this week just to cover my kid's bus fare, but I haven't been able to find anything else," that could be recorded as being employed part-time.

 

The possibility of subjectivity creeping into the process is so pervasive that the BLS's own "Handbook of Methods" has a full page explaining the limitations of its data, including how non-sampling errors get made, from "misinterpretation of the questions" to "errors made in the estimations of missing data."

Bottom line: To suggest that the input to the BLS data-collection system is precise and bias-free is—well, let's just say, overstated.

Even if the BLS had a perfect process, the context surrounding the 7.8% figure still bears serious skepticism."

 

To reiterate a point I made in my post the other day, the problems with the unemployment number are not new, and any political intrigue surrounding them is the fault of R's as much as D's. And as always, we should also be cognizant of the motives of the person I am quoting. 

 

All that said, and regardless of whose fault shall we say...an interesting...number is, the facts can act as a good shield when something seems a bit off. Therefore, Americans should always be cognizant of the facts when it comes to this widely followed statistic. Sadly, most just aren't.