THE UNEMPLOYMENT RATE Based on an essay in The New Yorker, September 10, 2016

THE UNEMPLOYMENT RATE Employment—the number of people who do have jobs—is a tricky enough stat to measure. You have to define what a job is, figure out how to count people who have one, and sort out some way of dealing with the confusing cases, like teen-agers who help out on the family farm during harvest season for a bit of allowance, volunteer workers, drug dealers and other off-the-books workers, and the list goes on. And measuring unemployment is harder still. It’s not simply the opposite of employment, a measure of all the people in the country who aren’t working. There are lots of people who are neither employed nor unemployed: children, retirees, students, stay-at-home parents, and plenty of others.

THE UNEMPLOYMENT RATE How do you properly estimate unemployment? Many of the nation’s leading economists, sociologists, and statisticians spent the Great Depression years working to develop a reliable way to figure out how many people were unemployed. Some compared one year’s average number of workers with a prior year’s, but this left out the chronically unemployed and ignored demographic changes. Others asked imprecise survey questions, which made the answers from survey to survey unreliable. What the social scientists and government statisticians lacked was a seemingly simple idea: the labor force. It wasn’t until 1940 that statisticians, designing that year’s census questions, began to use the term and concept of a “labor force,” which was defined as the group of people who are capable of work, want to work, and are actively either working or searching for work. It took some time to refine the precise questions, but statisticians and economists today accept unemployment data from 1948 onward as valid.

THE UNEMPLOYMENT RATE The Current Method Each month, the Bureau of Labor Statistics and the U.S. Census Bureau jointly conduct the Current Population Survey. Government employees conduct phone and in-person interviews with members of sixty thousand households. The selection of these sixty thousand is itself a wonder of modern sampling science, with complex computer models randomly selecting regions of the country, then buildings within those regions, then households within those buildings. Every aspect of the sampling method—save the actual names of the people being sampled—is widely disseminated and pored over by academics, advocates, journalists, and others. In 1994 it was decided that people can only be classified as unemployed if, in their search for work, they have taken some sort of action in the previous four weeks. (Simply staying at home and reading the help-wanted ads doesn’t count.)

THE UNEMPLOYMENT RATE There are six different official unemployment rates in the public release, allowing us to see, with precision, various trends in how people are finding and not finding work. The highest number, known as U6, includes not only the officially unemployed and the discouraged but people who have part-time jobs but wish they were working full time. This number, currently, is 9.7 per cent. Another crucial statistic, released monthly, is the labor-force participation rate, the percentage of all working-age adults who are either working or are seeking work. This number has decreased from 67.3 percent in 2000 to 62.8 per cent. Much of the decrease in working people can be attributed to positive factors: more Americans live longer and have longer retirements, more young adults stay in school longer. But it is also the result of more troubling forces, including an anemic recovery from the recession.

THE UNEMPLOYMENT RATE In a 2015 blog post by David Stockman, who served as the director of the Office of Management and Budget under President Ronald Reagan. He argued that, in 2014, America had two hundred and ten million people between the ages of sixteen and sixty-eight. They all, Stockman said, could have been working forty hours a week. Therefore, there should have been four hundred and twenty billion hours worked in America in 2014. Instead, a mere two hundred and forty billion hours had been worked. “Technically, therefore, there were 180 billion unemployed labor hours, meaning that the real unemployment rate was 42.9%, not 5.5%!” he concluded. Stockman studied theology in graduate school and has no formal training in economics. His calculations are built on a notion that everyone—including “non-working wives, students, the disabled, early retirees and coupon clippers”—could be working forty hours each week.

THE UNEMPLOYMENT RATE

THE UNEMPLOYMENT RATE