
The Big Lie: 5.6% Unemployment - mudil
http://www.gallup.com/opinion/chairman/181469/big-lie-unemployment.aspx
======
me2i81
The BLS puts out 6 different unemployment statistics for every period. U3 is
the "official rate", but you can also look at the other ones, including U4 =
U3 + "discouraged workers", U5 = U4 + "marginally attached" workers, U6 = U5 +
part time workers who would like to be full time. You can make arguments about
which measurement is "right", but putting out an editorial implying that there
is sleight-of-hand going on is silly--all the measurements are available, and
comparing a single one to itself over time as a "headline rate" is completely
reasonable.

~~~
forgottenpass
Ha, I came here to make the same comment. Anyone who writes about the
misleading nature of U3 without describing U6 exists, is a BLS reported
figure, and that there is no prefect definition of "unemployed" is a hack.

There is plenty of bad reporting out there (including "analysis" from
political talking heads that don't know the difference between U3 and U6), but
U3 is like the snow forcasts for NY last week. If you don't care to look
beyond the surface level, don't be surprised when a wide-breadth news
establishment only gives the basics.

If anyone reading wants to see U6, or just doesn't know about raw data on
FRED, go look at it [1].

[1]
[https://research.stlouisfed.org/fred2/graph/?chart_type=line...](https://research.stlouisfed.org/fred2/graph/?chart_type=line&recession_bars=on&log_scales=&bgcolor=%23e1e9f0&graph_bgcolor=%23ffffff&fo=verdana&ts=12&tts=12&txtcolor=%23444444&show_legend=yes&show_axis_titles=yes&drp=0&cosd=1948-01-01%2C1948-01-01&coed=2014-12-01%2C2014-12-01&width=670&height=445&stacking=&range=&mode=fred&id=UNRATE%2CU6RATE&transformation=lin&nd=&ost=-99999&oet=99999&scale=left&line_color=%234572a7&line_style=solid&lw=2&mark_type=none&mw=1&mma=0&fml=a&fgst=lin&fgsnd=2007-12-01&fq=Monthly&fam=avg&vintage_date=&revision_date=)

~~~
vitd
Serious question - looking at the graph, it looks like the disparity between
U3 and U6 jumped quite a bit in 2009 and is just starting to get back the
historical difference today. Do you think it was valid to be concerned about
the disparity increasing by so much in 2009? That part does strike me as a
little worrying, though it is coming back in line now, which seems good.

~~~
skolor
The difference looks fairly consistent:

Febuary 1995: U6 is 183% of U3.

Febuary 2000: U6 is 175% of U3.

Febuary 2004: 173%

Febuary 2006: 155%

Febuary 2007: 182%

March 2008: 178%

Febuary 2009: 183%

March 2010: 172%

Febuary 2011: 177%

Febuary 2012: 180%

March 2013: 184%

Febuary 2014: 188%

There quite a bit of variance, but it seems to be seems to have been
consistently in the 170-185%, with a few outliers.

------
med00d
The standard rate (U3) doesn't take underemployed or those who give up looking
for work into account, but the U6 rate does. The U6 rate in January of 2009
was 14.2% and it is now down to 11.2% from its peak at 17.1% at the end of
2009/early 2010. Is the economy still struggling? Sure. Is unemployment headed
in the right direction? Absolutely.

Edit: One thing that people commonly like to do is compare the U6 rate to the
U3 rates of the past. "Unemployment isn't 5.6%, it's really closer to 12% ..."
That's foolish because it's an apples to oranges comparison. Yes 11.2% is high
unemployment, but what we judge as the low/satisfactory unemployment rate
would come in somewhere around 7-7.5% when looking at the U6 rate -vs- the
4-4.5% that's considered low/satisfactory using the U3 rate.

Source:
[http://portalseven.com/employment/unemployment_rate_u6.jsp](http://portalseven.com/employment/unemployment_rate_u6.jsp)

"The U6 unemployment rate counts not only people without work seeking full-
time employment (the more familiar U-3 rate), but also counts "marginally
attached workers and those working part-time for economic reasons." Note that
some of these part-time workers counted as employed by U-3 could be working as
little as an hour a week. And the "marginally attached workers" include those
who have gotten discouraged and stopped looking, but still want to work. The
age considered for this calculation is 16 years and over."

~~~
enraged_camel
>>The standard rate (U3) doesn't take underemployed or those who give up
looking for work into account, but the U6 rate does. The U6 rate in January of
2009 was 14.2% and it is now down to 11.2% from its peak at 17.1% at the end
of 2009/early 2010. Is the economy still struggling? Sure. Is unemployment
headed in the right direction? Absolutely.

But the decrease in unemployment and underemployment still don't paint the
most accurate picture, because a lot of people who became employed did so at
lower pay. I mean you may be employed full-time but if you're making 25% less
than what you did before the crash, it's difficult to make the case that
things are improving.

~~~
med00d
Can you share any information about people taking the same job for less pay? I
haven't seen evidence of this, but I don't doubt that it's happening in some
places. I'll admit that I live in sort of a bubble because my salary has
doubled since 2008 and the salaries of many of my friends and family have
grown quite a bit as well. Granted, most of the people I know work in some
sort of tech-related field.

~~~
enraged_camel
I don't have any citations handy, but there are a lot of stories, both
reported in the press and relayed anecdotally, of people who got laid off
during the crash and then got re-hired at lower pay once the dust settled.

On top of that, a lot of people were unemployed for a long time and then had
to jump on the first offer they got, which often paid less.

------
seizethecheese
Economics student here.

One reason Economists are interested in Unemployment is because when it
reaches a certain level it puts pressure on prices through upwards wage
pressure (fewer people looking for work means employers need to pay more.)
Defining Unemployment narrowly as only those actively looking for work and
recently unemployed provides for a statistic best measures the labor market's
functioning.

As others have noted, there are many other statistics that are collected which
can elucidate social concerns.

~~~
nostromo
That shows problem with the official number though.

If unemployment is down, wages should be up. But wages are down. That implies
the unemployment rate is not accurately reflecting the true supply of labor.

Or, it shows what I believe: demand for labor is decreasing even as the
economy grows.

~~~
adventured
This is wrong. Wages are rising. And as slack continues to be removed from the
labor pool, wages will continue to rise.

From a week ago:

"An important measure of household income rose in December by the largest
amount in nearly 8 years, signaling a long-overdue rebound in family earning
power."

"Data from Sentier Research show that median household income in December rose
3.3% from the year before, the strongest year-over-year reading since October,
2006"

[http://finance.yahoo.com/news/families-are-finally-
earning-m...](http://finance.yahoo.com/news/families-are-finally-earning-
more-151120875.html)

From July:

"U.S. Wages, Benefits Rise at Fastest Pace in Almost Six Years"

[http://www.wsj.com/articles/employment-costs-rise-0-7-in-
sec...](http://www.wsj.com/articles/employment-costs-rise-0-7-in-second-
quarter-1406810233)

~~~
nostromo
From your own source:

[https://s2.yimg.com/bt/api/res/1.2/WphI5hi8meGKLNEtu6eygg--/...](https://s2.yimg.com/bt/api/res/1.2/WphI5hi8meGKLNEtu6eygg--/YXBwaWQ9eW5ld3M7cT04NQ--/http://l.yimg.com/os/publish-
images/finance/2015-01-27/3603d370-a637-11e4-aaa8-7dade6203616_HHI.JPG)

So, incomes were flat or down for 14 years, and have since slightly rebounded
to be just 4% less than in 2000, not 8% like they were. Shall I pop the
champagne or do you want to?

~~~
adventured
Of course wages were flat or down, there hasn't been a particularly strong -
or sustained strength - labor market since 2000. In the 2005-2007 time frame
there was a brief respite, and that of course was not only fake (powered by
the housing bubble) but crashed.

Fact is, once enough slack is removed from a labor pool, wages rise. Happens
every time.

It's exactly what occurred in the 1980s and 1990s. Wages weren't booming in
the 1990s until the unemployment rate got to a certain low level toward the
last several years of the decade.

I wouldn't expect wages to rise when U3 unemployment is 7% or 8%. I would
expect to see it at closer to the 4% to 6% range. That's historically what has
been the case, and we're seeing it happen again right now. If we add another
~3 million jobs in 2015, wages will rise at a healthy clip.

------
nostromo
Take a look at this chart:

[http://www.advisorperspectives.com/dshort/charts/employment/...](http://www.advisorperspectives.com/dshort/charts/employment/workforce-
changes.html?LFPR-25-54-since-1990.gif)

I fear that 1999 was "peak labor" \-- the point at which technology started to
destroy more jobs than it created.

We HN types live in a bubble in which times couldn't be better -- but in the
larger economy there are fewer jobs paying and they're paying lower wages.
It's troubling.

~~~
clavalle
'fear'?

That's an odd response to our most precious resource, human minds, being freed
from time sucking drudgery.

We've created the economic systems. They are not the Laws of the Universe. We
can change them if they become a problem

~~~
dtlawhon
I'm not sure you can call it being "freed" when freedom in this context is the
freedom to starve or live on disability/food stamps/whatever you can find.

And while I agree that economic systems can and should be changed as we shift
towards a post-labor society, I'm worried about political obstacles to that.
Even in the height of the worst recession in 70 years, we couldn't get
Congress to approve food stamps for people out of work. How are those same
politicians going to feel about cranking the work week back to 20 hours and
tripling the minimum wage to make everything balance out? And if companies end
up having to pay the same in labor costs to offset their automating, then
what's the point in them automating? Will we actually see automation-enabling
technology (3D printing, robotics, etc) hit their own peak and slide backwards
in the face of higher fees/social unrest/political change/etc etc etc?

It's a trickier situation than you're giving credit.

~~~
clavalle
>How are those same politicians going to feel about cranking the work week
back to 20 hours and tripling the minimum wage to make everything balance out?

They will feel how the people tell them to feel (ideally).

Now, the real problem, how to change people's minds?

I see that as a job well suited to HN frequenters: intelligent, imaginative,
creative people need to take their responsibility as harbingers seriously and
evangelize for a better future. Smack one molecule at a time and eventually
the whole pot boils. Show people that the way things are done are not
necessarily how they must be done. As a group, we've done a pretty good job in
certain areas but I definitely see a lot of reluctance to tackle macro-social
problems with the same zeal as attacking other historical accidents that
impede progress like Uber taking on cab companies.

It's tricky, sure, but its all in our collective head.

~~~
dtlawhon
Well, the overwhelming majority of people support an increase in the minimum
wage, immigration reform, and a host of issues that Congress has not budged
on. Why? Because they're beholden to a handful of special interests. I
consider myself liberal, but if we're being bluntly honest both parties are
stuck for the same reason. Even if one is worse than the other. ;)

I absolutely agree that we are in a great position to influence debate. If
anything needs to be disrupted, it's the political system. I wish more folks
with our skill sets were interested in tackling something like that.

------
tjradcliffe
I'm not sure why this is being reported as new or interesting. "They don't
count people who have stopped looking for work" has been reported to death for
decades (always, year after year, decade after decade, as if no one had ever
pointed this out before... it's one of those strange "perpetually surprising"
stories, like "engineers look to nature for inspiration".)

What is new and interesting is that in the past six years the American labour
participation rate--the fraction of the working-age-adult population that is
either employed or looking for work--has plummeted from 66% to 63%:
[http://data.bls.gov/timeseries/LNS11300000](http://data.bls.gov/timeseries/LNS11300000)

To get a sense of what a big deal this is, you can re-run that chart to cover
the full range of data from 1948-2014. After being flat at about 59% for two
decades, the LPR begins to ramp up in the late 60's as Boomer women entered
the workforce. It exhibits a broad flat peak from 1990 to 2008 at about the
66-67% level, and then starts its dramatic decline in sync with the financial
crisis, and is now back at a level not seen since 1978.

This is a demographic shift of enormous proportions, and the answer to "Why"
is not known:
[http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/06/t...](http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/06/the-
incredible-shrinking-labor-force-again)

There is a fairly desperate attempt to spin this as "Boomers retiring" but
that runs into a problem of simple arithmetic: the population of the United
States was 203 million in 1970, when the ramp-up in the LPR began. It is now
320 million, a factor of 1.5 higher. So for every Boomer retiring, there
should be 1.5 new workers entering the workforce. Where are they?

~~~
acscott
Agreed. They taught this in high school economics class--a public high school
economics class. I think the article is playing into the political rhetoric.
For a politician to use the Unemployment Rate as a benchmark is fine as a
delta since all the U values seem to track each other if this chart is
accurate: [http://www.macrotrends.net/1377/u6-unemployment-
rate](http://www.macrotrends.net/1377/u6-unemployment-rate)

3% of what? I would not characterize that as plummeting, but after looking at
the graph you linked to, it very much looks like a "plummet".

It doesn't sound like they have a definitive answer of the cause. The data is
done by survey, and missed surveys are "imputed".
(ftp://ftp2.census.gov/programs-surveys/cps/techdocs/cpsmar14.pdf) So I
strongly suspect (but cannot support) there's probably some kind of assumption
of a gaussian somewhere, and of course human behavior can assume many
different "forms". In other words, I think they should be providing an error
rate with these numbers. The other aspect is they probably have faith in the
Gaussian I suspect.

------
Animats
Realistic numbers for unemployment and other economic statistics are available
at "[http://www.shadowstats.com"](http://www.shadowstats.com"). These are
mostly computed from older Government definitions. Over the years, the way
some key numbers are computed have been changed to make them look better.
Shadowstats uses the old computation methods, which are more honest. It's a
paid service ($175 a year) for people and businesses who need better numbers.

Their unemployment rate, currently at 23%, includes long-term discouraged
workers, which the BLS stopped counting in 1994.

Their inflation value is based on the way inflation was computed before 1980.
It includes house prices. Their value is currently 8%. This compares to the
official number of 2%. Shadowstats has it right - increasing real estate
prices are inflation.

~~~
mikeyouse
Shadowstats is the dumbest thing I've ever read. If they have it right on
inflation, the US has been in a recession since 1988. If they have it right
re: house prices, houses are worth 60% less than they were in 1980 and we
never had a housing bubble. One important note, Williams from Shadowstats
definitely doesn't use 'the old computation methods' \-- he just arbitrarily
adds a 'factor' to the CPI rate and claims that's the real number.

The BLS has published volumes about the idiocy of the assumptions behind
Shadowstats. As have many economists from all over the spectrum.

Literally nobody worth listening to takes them seriously. Why would banks
willingly offer 30-year fixed mortgages at 3.6% if inflation was 8%/year?

From the right-leaning AEI: [http://www.aei.org/publication/why-amity-shlaes-
is-dead-wron...](http://www.aei.org/publication/why-amity-shlaes-is-dead-
wrong-about-inflation/)

    
    
        Think for a moment what that means for real GDP growth the 
        past three decades. Nominal GDP averaged about 5% from 
        1986 through 2013. Of that 5%, 2% was inflation and 3% was 
        real GDP growth. If inflation was really 5% — and often, 
        according to Williams, it was much, much higher — then 
        there has been no real economic growth in America all that 
        time. Actually, we have probably been in a long depression 
        from the Reagan years forward.
    

Or from the left-leaning John Aziz: [http://azizonomics.com/2013/06/01/the-
trouble-with-shadowsta...](http://azizonomics.com/2013/06/01/the-trouble-with-
shadowstats/)

    
    
        But Shadowstats is not calculating inflation any 
        differently. They are not using the 1980s or 1990s
        methodology that they believe would be higher. All
        Shadowstats is doing is taking the CPI data and adding
        on an arbitrary constant to make it look like inflation
        is higher!

~~~
beagle3
While I agree that Shadowstats is likely wrong, your counterfactual statement
is not really counterfactual:

In the 70s and even early 80s, it was possible to support a family of 4 on the
income of one average wage earner. In the 50s it was even a good life. Today
it is nearly impossible to do, so something very significant happened to the
value of money that is not reflected in the official inflation/wage disparity.

TVs and computers cost about 90% less than they did in 1980, and that's
something the BLS happily takes into account in more ways than one
("hedonistic adjustment"). If you assume, e.g., that houses right now are
worth what they were worth in 1980 and work everything out form there, it's a
lot less inconsistent than you think. It is inconsistent, sure, but at about
the same level of inconsistency that official BLS numbers suggest.

> Why would banks willingly offer 30-year fixed mortgages at 3.6% if inflation
> was 8%/year?

Because they don't know how to get a higher return, regardless of what
inflation really is. (Of which there are multiple definitions - some based on
prices, and some on money supply - and they are useless if you are not
consistent in the definition you use)

And the AEI quote is hyperbole. Read e.g. Karl Deninger for consistent
numerical proof (if you accept his methodology, which is not mainstream but
definitely not unreasonable) that indeed, all GDP growth in the last 30-40
years is smoke and mirrors.

~~~
mikeyouse
I was going to type a big response calling out the random anecdotes but then I
read;

> All GDP growth in the past 30-40 years is smoke and mirrors.

Which might be the most absurd thing I've ever read. At least it prevented me
from typing a more thorough rebuttal though.

~~~
beagle3
Suit yourself. I was replying to anecdotes with anecdotes - note that the
quotes you gave do not actually bring anything to the table (neither do mine).

But I do urge you to read denninger. You will very likely disagree with him
(I'm not sure if I agree with him), but he is consistent, and is very well
supported by data. Whether you accept the axioms or not is up to you. As far
as track record with predictions go, he has a significantly better one than
essentially all mainstream media.

Ask yourself why you accept the GDP growth is real. If you do just because
everyone else does, without looking at the numbers and at alternative
explanations - that's religion. Which is fine - none of us has time to
evaluate every single thing we believe in. But it is important to acknowledge
it for what it is.

And for that matter, ask yourself why you accept GDP as a measure of growth
and welfare - Kuznets, the person who came up with the definition thinks you
shouldn't.

~~~
mikeyouse
The fact that if Shadowstats' figures are correct, we didn't have a housing
bubble and have been in a 30-year recession are far from anecdotes. As is
Williams admission (referenced in the Aziz piece) that he _doesnt_ actually
calculate the figures using the old methodology but rather just adds an
arbitrary factor to the CPI data.

I 'believe' that GDP is higher and inflation is in check because I can buy a
60" LCD for $400, a hybrid car that gets 45mpg and will last 200k miles for
$18k, I can get a 30-year mortgage for well under 4%, my cell phone is faster
and more capable than a 5-year old laptop, I can get any physical good
delivered to my door in 12 hours, doctors can perform miraculous procedures at
podunk hospitals with fantastic success rates, and there are free courses
available from the best schools on the planet in just about every subject.

Do I have to work longer hours than my parents did for a similar quality of
life? Perhaps, but it seems like that is far more likely due to globalization
and the fact that there are _billions_ of people participating in the global
economy rather than some conspiracy. Do I think GDP is a perfect measure of
growth or welfare? Not especially. I think median household income combined
with hours worked is a better gauge but that doesn't mean the GDP stats are
useless.

I'll gladly read some Denninger but I'm not sure how you explain the massive
global shift from abject poverty to something resembling a first-world
existence without economic growth.

------
jobu
Some people would argue that Social Security Disability Insurance is soaking
up a huge number of people that would rather be working as well:
[http://apps.npr.org/unfit-for-work/](http://apps.npr.org/unfit-for-work/)

 _" But, in most cases, going on disability means you will not work, you will
not get a raise, you will not get whatever meaning people get from work. Going
on disability means, assuming you rely only on those disability payments, you
will be poor for the rest of your life. That's the deal. And it's a deal 14
million Americans have signed up for."_

------
scottkduncan
"Gallup defines a good job as 30+ hours per week for an organization that
provides a regular paycheck."

Perhaps this definition hasn't caught up with the increase in freelancing and
self-employment. Underemployment, particularly among lower skilled workers,
surely is an issue in the U.S. but Gallup's approach could be undercounting
some newer types of "good" jobs.

~~~
unreal37
Yeah, agreed, that's a terrible definition of a good job. 1) Many people live
off investments, pensions and passive income 2) Many people have income that
is not regular or predictable, but large 3) Many people have good paying jobs
that don't require 30 hours per week

That's a very narrow definition. That's why they are only asking for a target
of 50% I guess.

------
kwhitefoot
On the subject of Basic Income. I think most people are missing some very
important points by concentrating so hard on the costs, that is, the money
provided to the recipients of the Basic Income.

\- Poor people spend pretty much everything they get and they do so locally,
so a very large proportion of the BI will be immediately spent in the local
economy thus increasing the opportunities for people to provide goods and
services.

\- Having an income that will prevent you starving to death or having your
house or car repossessed means that you have the opportunity to turn down a
poorly paid or dangerous job. This will go some way to rectifying the
imbalance of power between employees and employers and drive up wages at the
bottom end

\- BI is not charity and is generally not intended to be means tested; every
citizen gets it rich and poor alike. It is income and taxable in the normal
way.

------
rilita
"many Americans... don't know... Few Americans know this"

"wondering what hollowed out the middle class"

Perhaps the clueless people who don't know anything about what things mean (
the people this article is targeted at ) are the same people who are
unemployed/under-employed ( notably also the group this is targeted at )

Summary of tfa: "The number news refers to as unemployment does not mean what
you thought it means; it means X" Great, now how does this tell us anything we
couldn't learn by looking up "unemployment rate" on wikipedia?

~~~
lutorm
_now how does this tell us anything we couldn 't learn by looking up "xxx" on
wikipedia?_

That applies to many things written. Not sure why you're singling this out. If
every blog post written had to include original research, there wouldn't be
much writing going on...

~~~
rilita
This is hacker news, I expect that things posted here are noteworthy to people
who know what they are doing and can research stuff they are interested in for
themselves.

Posts of the type "Did you know that the tooth fairy isn't real" are a waste
of time to the professionals who read hacker news.

Also, anything I spend my time reading through expecting something unique /
new and find nothing I respond this way.

------
declan
This is well-known, I think, in economic circles. If you want another,
arguably more accurate measure based on the government's previous (pre-1995)
methodology, check out Shadowstats.com:
[http://www.shadowstats.com/alternate_data/unemployment-
chart...](http://www.shadowstats.com/alternate_data/unemployment-charts)

It shows the real unemployment rate, counting short-term discouraged and
marginally attached workers, to be around 22-23% today. That's up from around
12-13% before the 2008 recession.

~~~
mikeyouse
How on earth is a vague chart, with absolutely no methodology, promoted by a
charlatan to sell subscriptions "arguably more accurate" than a completely
transparent nationwide survey?

Especially when that survey matches with literally all of the private measures
of employment.

~~~
streptomycin
My favorite thing about Shadow Stats is that they claim inflation is really
high and the government numbers are fake, but they haven't increased their
subscription price since as far back as it goes on archive.org.

------
ptaipale
It's interesting that so often everyone talks about how unemployment develops,
but not how employment develops.

Unemployment statistics are not so useful, precisely for the reason given:
people who've given up hope of finding employment are often excluded.

Employment statistics are much more real, because the taxman wants his own, so
it covers everyone who actually works. Of course, there are imperfections here
as well: people may be working part-time when they actually would like to have
a full time job.

During the years 2000 - 2012, employment rate in United States has gone down
from 74.1 % to 67.1 % [0].

In Germany, the rate has gone up from 65.6 % to 72.8 %. [1]

In Sweden, it is relatively unchanged, 74.3 % to 73.8 %. [2]

In Greece, the numbers have always been much lower: from 55.9 % down to 51.3
%. [3]

E.g. Korea and France are surprisingly low, in the 60's. Israel has increased
during this decade a lot, and it seems to be due to more women working.

[0] [http://www.oecd.org/els/emp/howdoesyourcountrycompare-
united...](http://www.oecd.org/els/emp/howdoesyourcountrycompare-
unitedstates.htm)

[1] [http://www.oecd.org/els/emp/howdoesyourcountrycompare-
german...](http://www.oecd.org/els/emp/howdoesyourcountrycompare-germany.htm)

[2] [http://www.oecd.org/els/emp/howdoesyourcountrycompare-
sweden...](http://www.oecd.org/els/emp/howdoesyourcountrycompare-sweden.htm)

[3] [http://www.oecd.org/els/emp/howdoesyourcountrycompare-
greece...](http://www.oecd.org/els/emp/howdoesyourcountrycompare-greece.htm)

Short-term comparisons of OECD here:
[http://stats.oecd.org/Index.aspx?DataSetCode=STLABOUR](http://stats.oecd.org/Index.aspx?DataSetCode=STLABOUR)

------
smackfu
Boy, a polling org putting up political opinion pieces sure seems like a
terrible idea.

~~~
muglug
It seems like it's equally about promoting one of Gallup's products, the "good
job" metric they link to. I don't see anything partisan in the piece, simply
because the same unemployment metric has been used by both Republicans and
Democrats to further their goals.

~~~
smackfu
Here's a piece from a conservative think tank that is essentially the same
argument as what is in the "non-partisan" Gallup opinion poll:
[https://www.aei.org/publication/tracking-the-
unreported-15-6...](https://www.aei.org/publication/tracking-the-
unreported-15-6-unemployed/)

It's been a pretty common talking point.

------
joelhaus
The delta is the most relatable conclusion the average person can draw from
the unemployment rate reports. Otherwise, without taking some economics
classes, you're doomed to misinterpret.

------
alyandon
The various unemployment rates are pretty clearly defined and U3 is arguably
not the most meaningful one to use but it is considered the "official" rate.

More information here:

[http://portalseven.com/employment/unemployment_rate.jsp](http://portalseven.com/employment/unemployment_rate.jsp)

------
msoad
All these facts were true when unemployment rate was higher. So even if the
numbers are off by some offset they improved.

~~~
tomp
It makes sense that the rate decreases - people give up hope and stop looking
for jobs, or get shitty 3hrs/week jobs, and thus drop out of official
statistics, without any actual improvement.

~~~
mikecb
Here's U6, which takes into account these groups:
[http://research.stlouisfed.org/fred2/series/U6RATE](http://research.stlouisfed.org/fred2/series/U6RATE)

------
goorpyguy
I've been thinking for a while that there need to be incentives put in place
for companies who short-change their their employees (and by extension, the
public as a whole) by hiring 3 part-time workers instead of one full-time.

This goes towards the "good job" / "American Dream" aspect of the article.
People shouldn't have to work 2 or 3 part-time jobs to make a living if they
don't want to, just because those are the jobs available. If somebody wants
full-time employment (for which they are otherwise qualified), it would be
better for them to have that.

Of course, it is cheaper for the corporations to use part-time, because it
keeps them flexible with scheduling/substitutes and due to added costs like
benefits etc.

I have been trying to figure out whether it makes sense to offer tax
incentives/penalties which would push the balance towards more full-time jobs
instead of part-time. One piece I have envisioned is forcing employers to
offer the benefits a full-time employee would receive prorated to part-timers,
with a penalty added for splitting it up. Make them want to offer a full-time
job instead.

The part I am worried about is whether the effect is too strong and prevents
somebody who actually only wants part-time work from finding employment (e.g.:
a student, full-time parent, senior citizen or handicapped person). There
needs to be some part-time work available, but generally a member of the
workforce probably wants a full-time job.

~~~
brc
The issue is already the amount of regulations that attach to a full time
worker. Adding more will only generate adverse affects.

Using words like 'forcing' and 'penalising' will work in the opposite
direction to what you might hope.

You already identify the issue - full time workers require benefits and the
like. For many small organisations, these make the cost of a full time worker
prohibitive, so they fill in with multiple part time instead. The employer is
incentivised to keep people part time.

------
PythonicAlpha
Same as in Germany: Every government invents new possibilities to "count
people out" of the official statistics. So the numbers fall, but unemployment
stays the same or even rises.

------
danans
Some of the hypothetical examples of out-of-work people the author uses are
pretty unlikely, and seem intended to cast an artificially wide net for his
argument: i.e. engineers and health-care workers and math degree holders
probably have lower than average unemployment rates, yet the author paints a
picture of them mowing lawns and losing unemployment (i'm not saying it
doesn't happen, just that it's unlikely).

In a way, the author is committing the same sin as those he criticizes: he
also oversimplifies the employment situation. The unemployment rate and the
labor force participation rate vary dramatically by region and by profession
(in California alone, compare the Bay Area to the Imperial Valley).

It's much better for some highly skilled individuals, especially in booming
metros, and much worse for others, who are in either low skilled, or in
regions experiencing secular decline.

Also, Gallup's own underemployment numbers (cited in the article) show both
the unemployment rate and the underemployment rate at 7.1% and 15.9%, which is
lower than where they were in Feb 2010, and that it is almost certainly lower
than what they were in the depths of the great recession.

Nobody would argue that these stats aren't as good as they should be, but to
say that things haven't improved at all is very disingenuous, which is why
this reads more like political anger-rousing article than a well-reasoned
op/ed. The latter isn't surprising considering that the first rumbles of the
next presidential election cycle are here.

EDIT:wording

------
dredmorbius
Workforce participation, median, minimum, and bottom decile wage are in many
ways vastly more informative than unemployment numbers. Yes, even the expanded
U6 values BLS provides.

Participation tells you how many people are working. Minimum wage tells you
how well the worst-paid fare (and as Adam Smith notes in _An Inquiry into the
Nature and Causes of the Wealth of Nations_ , "A man must always live by his
work" \-- which he expands to mean: wages must provide _not only_ for the
laborer, but for a spouse, children, _and the education of those children_ to
provide for the _next_ generation of workers.

Median wage tells you where the _typical_ worker is. It's not skewed upwards
by a few highly-compensated individuals as _mean_ would be. If you and I are
at a bar and Bill Gates walks in, the _mean_ wealth has just jumped
tremendously, the _median_ not so much.

Bottom decile tells you how those at the bottom rung of the compensation
ladder, though not necessarily at minimum wage, are doing. Smith has a
considerable amount to say on this as well.

The biggest problem with unemployment (and other economic / econometric
metrics) is that once defined they become political, and an change to more
meaningful statistics tends to make the administration in power look worse.

------
bayesianhorse
Touting these unemployment numbers as a "big lie" is equally misleading.
Especially when comparing this number to a past situation of which we don't
know the disappointing details.

Just saying "only 44% of adults have a good job" doesn't sound like a good
number either. This doesn't seem to count mothers, "house wifes" (if they
choose that occupation voluntarily and gladly), college students and probably
not even grad students.

~~~
unreal37
Doesn't include retired people, investors, the rich, people with an irregular
but high income, actors, singers, contract consultants, people taking a long
vacation or sabbatical, people who own a business in the early stage,
y-combinator companies...

------
bibabo
Most interesting is this: Many people compare other countries unemployment to
US U3 not US U6/U5 while countries with gov. unemployement benefits
(unemployed are people who get money, which includes people not looking or
with a small amount of income) have numbers more in tune with U6/U5 and should
be compared to U6/U5.

This makes the US economy always looks nicer.

(Same for GDP with chained dollars btw.)

------
dkrich
This article reads like a transcript of a drunk guy at a bar explaining his
political point of view. Lots of stated assumptions about what other people
don't know, backed up with zero facts to substantiate any claims made therein.

He claims repeatedly that "most people don't know [some fact about what goes
into calculating the unemployment rate]." I think actually most people who
read the news do, in fact, know that people who have been chronically out of
work and given up looking are not counted among the unemployed. How could they
not? It was hammered home over and over in the midst of the recession.

He never provides any numbers to support the claim that a large percentage of
people fall into that category. He just states that it's left out of the
calculation, that few people know it, and then leaves you to assume that
therefore this must be a significant percentage of the population.

Stupid article.

------
jpetersonmn
I personally don't know anyone that doesn't already understand the things this
article is pointing out.

------
ThomPete
I must say I am chocked at how many people seem to defend the U3 definition
vs. U6

As far as can tell the number of actual fulltime jobs is decreasing and the
number of jobs that aren't providing full time income is increasing.

Unless you have a political agenda why would you insist that U3 is better than
U6?

~~~
mikeyouse
Because it's directly comparable with the rest of the worked and is the
measure we've used historically - both of which have value. If others decide
U6 is the most important figure, it's reported in literally the same
publication as the U3 figure and they can reference it accordingly.

~~~
ThomPete
The US and the EU measures unemployement differently. Also U3 is hiding things
U6 aren't.

------
pkaye
I was once trying to compare US unemployment to other countries but was not
sure which "U" statistic is closest to how others measure unemployment. Anyone
has an idea for example within the EU?

~~~
hudibras
U3

[http://stats.oecd.org/index.aspx?queryid=36324](http://stats.oecd.org/index.aspx?queryid=36324)

One of the reasons the U3 definition won't be changed (or alternately, why the
other U rates were created) is that it's harmonized with the other OECD
countries' rates. So, say, a 6% unemployment rate means the same thing in the
U.S., Germany, Japan, Greece, etc.

------
tezza
Others have mentioned U6 etc.

The issue of the headline figure not capturing certain key features is
mentioned as nauseum on CNBC a or any decent financial news source.

Gallup and the person who posted this is trying to make it sound like a
revelation. Further almost all types of employment has improved.

Here in the UK we have a similar obfuscation technique where the opposition
says more women are out of work than ever, whereas the government says more
women are in work than ever. Both are true, but behind the scenes it is
because there is the largest population of work aged women ever.

------
debrice
If you're getting unemployment benefit but do some undeclared job, you are
employed but count as unemployed.

If you're not looking for a job, it's fair to not be counted as unemployed.
Otherwise you can also count any kid in age of working in the statistics or
family who have decided to have one member employed and the other taking care
of the family.

The writer (CEO of gallup) pretty much explains that the stats behind the
title is not what HE thinks it is.

This statistic describes those who want to work and cannot find a job.

------
samspot
> None of them will tell you this: If you, a family member or anyone is
> unemployed and has subsequently given up on finding a job -- if you are so
> hopelessly out of work that you've stopped looking over the past four weeks
> -- the Department of Labor doesn't count you as unemployed

Even the local news gives this disclaimer almost every time they mention the
unemployment rate. Maybe it's not that nobody tells you, but that the author
just didn't notice it.

------
acd
Before the 2008 financial crisis 1 of 8 american children where on food
stamps. 2015 1 of 5 children are on food stamps. In short this is bad. I bet
banker bonuses have went in the totally opposite direction, ie up since the
financial crisis.

Here is the article [http://www.reuters.com/article/2015/01/28/us-usa-economy-
fam...](http://www.reuters.com/article/2015/01/28/us-usa-economy-families-
idUSKBN0L12E120150128)

------
yohann305
It is far from being perfect metrics, I agree. However, it is a good way to
compare unemployment fluctuation over time as long as we keep the same
paramaters over time.

------
chipuni
I look at Gallup's web page about U.S. employment
([http://www.gallup.com/poll/125639/Gallup-Daily-
Workforce.asp...](http://www.gallup.com/poll/125639/Gallup-Daily-
Workforce.aspx)), and I have a question:

The sum of their "% Payroll to population", "% Underemployed", and "%
Unemployed" appears to be about 70%. If they're disjoint categories, what is
the other 30%?

------
SeanLuke
I don't get this argument. Let's put aside that the author seems to be unaware
that the BLS puts out multiple unemployment statistics. It seems to me that
what really matters is not what statistic is being used but rather that the
statistic being used is consistent from year to year so we can see what the
trend in employment is.

------
clarkmoody
Whether or not this information is always available each time BLS publishes
the statistics is not the issue here.

The potentially alarming angle is whether the drop in unemployment is
attributed to people finding jobs or to people leaving the workforce.

The current reporting of unemployment numbers certainly leaves room for spin,
depending on how you want to package the news.

~~~
clavalle
Only for people who don't know how to look up the data for themselves.

------
franciscop
If we counted Spanish unemployment like that it would surely not be the same
rate as it is today, 23.7%. This definitely includes people that has given up
hope about finding a job.

On the other hand, it doesn't include those who are working without a legal
contract, which I am sure would lower the percentage significantly since it's
not uncommon.

------
pbreit
Right-leaning Gallup of course "forgets" to note that baby boomers retiring is
making a material contribution.

------
brohee
That's why the number of people 18-70 employed full time would be a much more
interesting number.

No removing of prisoners, people on disability, housewifes, people that worked
just one paid hour this week...

The picture painted by that number would be bleak in most of the developing
word, that's why it's not readily published.

~~~
nmcfarl
The problem here is that it wouldn't necessarily be bleak.

Housewives by choice, college kids and those just retired at 35 (or 65) are
good things - these people are doing what they most want to do with their
lives, and are having all their needs met without a job.

However, as we haven't been collecting this data for the last hundred years we
don't know what's normal for this number. And we don't know what percentage of
the population are these "good unemployed" and what percentage of people are
the traditional (bad) unemployed, so our guesses suck as well.

I think this number should be released, but I don't think it will do much good
for the first decade or 2.

\--

Addendum- after seeing maxericson's comment, I was reminded that I should not
comment on things I don't know in depth. And it does seem like the U.S. does
report the number of employed, it's just not what the press tracks. However,
oddly, the numbers he links to seem to mainly be predicated on the same
definition of unemployment, and do not seem to dive deeply into the category
of "neither employed nor unemployed." Anyhow I'll leave my comment for the
time being.

~~~
maxerickson
I expect the other tables there contain the information to get some answer to
your "neither employed nor unemployed", several of them analyze the workforce.
For instance:

[http://www.bls.gov/news.release/empsit.t01.htm](http://www.bls.gov/news.release/empsit.t01.htm)

I don't think I'm very informed on this topic, I just happen to know the BLS
is tracking a lot more than gets reported in the news.

------
marquis
This American Life has an excellent exposé on this topic, from 2013:
[http://www.thisamericanlife.org/radio-
archives/episode/490/t...](http://www.thisamericanlife.org/radio-
archives/episode/490/transcript)

------
yason
This is how it's in Europe as well: unemployment rates can be redefined to
include or exclude certain people depending on what are the desired results. I
usually look at employment rates instead which comes with its own
peculiarities.

~~~
hnnewguy
> _unemployment rates can be redefined to include or exclude certain people
> depending on what are the desired results_

The metrics aren't redefined, nor are there "desired results". There are a
variety of unemployment measures at the BLS, and the information on how each
are calculated is freely available. Why assume conspiracy?

------
neves
I always thought that the great lie in the employment statistics was due to
high percentage of the American population that is in jail. USA has the
greatest number of prisoners of the developed countries, and it skews the
statistics.

~~~
jpatokal
Sure, but the total prison population has been static to falling since 2008 or
so. This means it's _increasing_ the labor pool, not shrinking it.

[http://amsaltz.com/tag/achievement-gap/](http://amsaltz.com/tag/achievement-
gap/)

------
stalcottsmith
The author is not a dummy. He is CEO of a top tier polling organization.
Surely he understands U3 and U6, etc. He may have partisan leanings to the
extent that this can be taken as a criticism of the current administration.
Current policies may not be helping but I'm not sure that any partisan
solutions provide the answers needed.

The bigger picture here is that the US sacrificed some broad-based increase in
prosperity over the last 20+ years while helping the developing world to climb
out of true poverty. You cannot bring 1 billion Chinese (and to a lesser
extent other peoples) into the "middle class" through trade while at the same
time sustaining the exceptionally high standard of living of so many Americans
-- at least not without some major, hopefully-temporary dislocations.

At the same time, somewhat related to this, we are witnessing the passing of a
period in which America enjoyed unique competitive advantages which are
unlikely to re-occur in a similar form. No amount of IT innovation can make up
for the passing of peak-US-cheap-oil-production (1970s), or the loss or
diminishing of the dollar's reserve status and the US's central role in global
trade (ongoing), or the temporary advantage of economic competitors being
crushed in WWII (50's and 60's)...

The Americans worst affected by these policies were bought off to some extent
with cheap imported consumer goods (think Walmart), oodles of credit, the
spread of two income households and of course benefit programs.

Now, if you were to try to address this problem sincerely from a position that
jobs and employment are desirable social goods you wish to maximize, you might
aim for sensible policies that would reduce the cost of living for typical
Americans (allowing them to attain desirable, economically justifiable
employment at globally competitive wages), increase labor mobility (ability to
move for opportunity), and reduce the barriers to employment at the bottom of
the employment ladder. Secondary policy objectives might include simplifying
the tax system, encouraging household formation, and restructuring education
so that expensive college degrees are less necessary.

A lot of this has to do with how people are living in what kind of housing,
how that housing is financed and what kind of transport they use to get to
work and what kind of shape they are in mentally, physically and perhaps even
spiritually to be be productive. I think major changes are needed to achieve
broad-based 21st century prosperity growth in the US. Some of these changes
would be deeply unpalatable and will only be considered if economic conditions
worsen substantially.

Some here seem to think we are entering a post-employment society where jobs
will be increasingly scarce because they are not needed and that this is a
good thing. Maybe it is, maybe it isn't. This kind of thing is the hallmark of
privileged bubble thinking. If you really remove the dignity of work from so
many, you run the risk of making the people themselves seem redundant.

------
jordache
it's funny that some right winger would link this ridiculous article here,
thinking it would fool the HN collective.

------
zkhalique
Deficit is dropping like a stone, but republicans aren't looking to bring back
government jobs, they are just looking to use the flavor of the day to make
people afraid of the Obama administration.

~~~
mod
Smaller government has been a part of the Republican platform since long
before Obama.

~~~
zkhalique
It's part of the Republican platform when a Democrat president is in office,
but it seems Republican presidents don't get the message. Deficits rose under
every Republican president and dropped under every Democratic president, since
the 1950s. But republicans always act as if it's the other way around.

Bush's administration for example financed: medicare overhaul, no child left
behind, two wars overseas, and bank bailouts. The way they did the spending
had little oversight and the results were mediocre, or negative. Under Obama's
admin at least there was "recovery.org - track the money" and more
accountability.

If republicans really want to cut government spending and deficits they should
look into cutting the military budget. Not only does has it ballooned to take
up nearly half of all non discretionary income, but apparently $7 TRILLION is
unaccounted for. So until they do that, I don't consider their "platform"
anything but a talking point to bring up ONLY against Democratic presidents.
(In some way, it's good because it keeps them in check, but then republican
presidents get a free ride from them.)

[http://finance.yahoo.com/blogs/daily-ticker/want-cut-
governm...](http://finance.yahoo.com/blogs/daily-ticker/want-cut-government-
waste-8-5-trillion-pentagon-142321339.html)

------
pbreit
Right-leaning Gallup of course "forgets" to note that baby boomers retiring is
making a material contribution. Also that the recession gave employers a good
opportunity to automate workers out.

