
Unemployment Rate 7.2% - kp212
http://online.wsj.com/article/SB123150742539367897.html?mod=googlenews_wsj
======
pchristensen
Greenspun sliced up the unemployment numbers and got 9.1%

Unemployment statistics were redefined starting in the early 1960s by the
Kennedy Administration. First they took out the "discouraged", people who
wanted a job, but had stopped looking. Under the Reagan Administration, the
workforce was expanded by adding in members of the U.S. military, who were by
definition "employed", thus shrinking the percentage of "unemployed". The
Clinton Administration reduced the number of households sampled from 60,000 to
50,000 and "a disproportionate number of the dropped households were in the
inner cities." Phillips doesn’t talk about prisoners, but we have greatly
increased our prison population, most of those incarcerated are working-age
men, and none are counted in the workforce. Phillips claims that "Based on the
criteria in place a quarter century ago, today’s U.S. unemployment rate is
somewhere between 9 percent and 12 percent." [Poking around at
<http://www.bls.gov/cps/> reveals that, in 2007, 146 million of us were
working, 7 million were unemployment, and 4.7 million were classified as not
in the workforce but "wanted a job"; an additional 2.3 million Americans were
in prison, presumably due to their energetic work habits in illegal trades.
The "U-6" series, published by the BLS but almost never reported by
newspapers, shows an unemployment rate right now of 9.1 percent.]

[http://blogs.law.harvard.edu/philg/2008/04/23/cooking-gdp-
un...](http://blogs.law.harvard.edu/philg/2008/04/23/cooking-gdp-unemployment-
and-inflation-numbers/)

~~~
anamax
> Phillips doesn’t talk about prisoners, but we have greatly increased our
> prison population, most of those incarcerated are working-age men, and none
> are counted in the workforce.

Many prisons have inmates who work at various jobs. Should those jobs count?
If not, why should we count folks in prisons?

~~~
jhancock
We should count the number of prisoners as an extra hardship on our economy.
There is the cost of keeping them in prison, the cost of when they get out,
the cost of the children they have but are not raising.

~~~
thomasmallen
Count yourself as one of the ones putting them in prison. For the public, it's
not a hardship, but rather, an investment. Now, undoubtedly, destructive crime
adversely affects the economy and community stability. Let's just hope that
those in prison truly threaten enough harm to warrant the investment, or else
we're wasting our money (It's always "ours" until you find yourself on the
other side, right?) while severely damaging lives of others, such as the
children you mentioned.

~~~
jhancock
There is a more complex breakdown that what you suggest: "For the public, it's
not a hardship, but rather, an investment."

For some of the prisoners, for some of the public, its an investment. For some
of this same public, some of the other prisoners, it is a hardship. For some
other part of the public, the breakdown is different.

The prison issue should eventually come into focus as the complex problem it
is. Up to now its not talked about enough for most (including myself) to have
a clear opinion.

------
jbrun
I never understood American unemployment numbers. Many countries operate fine
with far higher unemployment numbers. Canada was at 7 or 8% for many years,
France is often around 10%.

Also, I remember reading an article that talked about the vast number of
people who are excluded from the American data. People in prisons for example
- 2 million people. There are also people who do not file unemployment claims
or are ineligible to do so because of much higher restrictions in the US
compared to more liberal societies. Therefore, US unemployment figures are
always about 2% too low, but it is one of these 'psychological' stimulus the
government gives. If our unemployment rate is near 0, then economy must be
doing great!

Please correct me if I am wrong.

~~~
uuilly
Another major difference is that unemployment benefits are much better in
places like France and Holland and it encourages people to stay unemployed.
Though we're not immune from this problem either. I recently met a lady who
was, "on fun-employment," as she called it. "I get a card from New York City
every two weeks that gives me cash from most ATM's. My rent also gets paid.
I'm moving in with my future husband at his apt in the Hamptons but we're
keeping my place in the city in case we want to come party for a w/e." When I
asked how long things would go like that she said, "Another 15 weeks to be
sure, but if I fill out some paper work I could stretch it to 40 weeks, and I
hear that Obama wants to add another 9 weeks, so all it all it's about a
year."

Anyone ever use fun-employment to bootstrap as startup? :)

~~~
patio11
_fun-employment_

Please be a dear and forward that woman's contact information to the New York
Republican Party. She has excellent career prospects as a talking point. (Hey,
it worked for Joe the Plumber.)

I haven't been so disgusted since my $40,000 a year university had a newspaper
publish instructions on how to apply for welfare benefits, "as most students
are legally entitled to them and, hey, free beer money". (Some of us worked
our way through college. Surveying the few I can remember, I think all moved
rightward over their four years. Wonder why.)

~~~
blackguardx
What is wrong with getting support from the government while you are in
school?

I didn't think full-time students were eligible for anything. I worked through
school but still came out with over $60k of student debt. I would have done
anything to reduce that, even take government handouts.

I'm glad you had the courage of your convictions not to apply for the
benefits, though.

~~~
patio11
_I would have done anything to reduce that_

I sympathize with the aversion to debt but have to note that, empirically, you
were not willing to do "anything" to reduce that because you could have gotten
a sheepskin from a perfectly acceptable state university for about a fifth of
the price.

Now there are many reasons to prefer what you did to what you could have done,
but I think paying for your choices is your responsibility, not the
responsibility of the rest of us. For example, had you gone on public
assistance merely because it was possible due to a bug in the law, you would
be transferring money to yourself from folks without college degrees who work
much, much harder than you or I ever will. There is no justice in that. The
hypothetical availability of that as an option also corrupts your incentives
to choose cheaper options like that state school I was just talking about.
When you replay those distorted incentives across the whole market, this just
increases education prices for everyone.

(This is why I think that subsidies for higher education, such as grants and
subsidized loans that I favor in principle, need to be carefully kept in check
for them to have any meaning. Otherwise you end up with a bidding war between
the colleges and subsidizer for who can pull a higher number out of thin air,
with the number eventually footed by the taxpayer. Which is exactly where we
have been for the last two decades, with tuition galloping in front of
inflation every year.)

I note in passing that you, or any student similarly situated, should be more
than willing to take on $60k of student debt in return for any undergraduate
education that results in a profession because the delta in earnings outcomes
exceeds the loan payments (including interest) by a stupidly high margin.

~~~
blackguardx
Sorry, you are wrong.

I went to the cheapest school I could go to.

------
vaksel
Those numbers are absolutely meaningless, since they count a $70K/yr job, in
the same category as a $7/hr burger flipper.

You can take that 7.2%, and pretty much double it for all the people who got
fired, and had to take a job paying half of what they used to make.

~~~
dfranke
That's okay, as long that effect is roughly equal in every period of
increasing unemployment. This and many other factors make it meaningless to
treat unemployment additively, e.g. to say that 8% unemployment is "twice as
bad" as 4%, but it doesn't diminish the number's comparative value, telling us
whether we're better or worse off than before.

------
steveplace
And to be the contrarian:

The NFP is Meaningless

<http://www.ritholtz.com/blog/2009/01/counter-intuitive-nfp/>

~~~
jbarciauskas
The author is absolutely right - we knew this was coming. Another item he
might have mentioned to bolster his claim is that there are other unemployment
related statistics that are more meaningful than this one, commonly referred
to as the "headline" number.

In fact, I googled as I was writing this post and found he addressed this 6
months ago, and made exactly the same case I'm about to make- the U3 number
that is the "headline" number should be ignored, and we should focus attention
on the U6 number. ([http://www.ritholtz.com/blog/2008/06/unemployment-
reporting-...](http://www.ritholtz.com/blog/2008/06/unemployment-reporting-a-
modest-proposal-u3-u6/))

A quick synopsis of the U6 measurement from his post: "U6, on the other hand,
is the broadest measure of Unemployment: It includes those people counted by
U3, plus marginally attached workers (not looking, but want and are available
for a job and have looked for work sometime in the recent past), as well as
Persons employed part time for economic reasons (they want and are available
for full-time work but have had to settle for a part-time schedule)."

He also links to a nice chart:
[http://bigpicture.typepad.com/photos/uncategorized/2008/06/0...](http://bigpicture.typepad.com/photos/uncategorized/2008/06/06/alternative_measures_of_labor_under.png)

~~~
yummyfajitas
Just a minor nit: if a marginally attached worker looked for work, he would be
unemployed.

"Unemployed" == "Not working but looking for work."

"Marginally attached" == "kinda wants a job, but not enough to actually look
for one."

------
jmatt
I'm interested in seeing how the unemployment numbers break out.

In the recent past, unemployment amongst people with a Bachelor's degree or
better is about 2.2%^. So nearly zero. I'd imagine, though I'm not sure, that
most people on HN have a bachelor's or better and thus most of us are at a
lesser risk of unemployment than others. I think when this number changes we
will know it's fundamentally different from other recessions that we've had in
the last 30 years.

It's the rest of the population that takes the brunt of the economic downturn.
Recently there has been reverse immigration, people leaving the US^^. And most
of the people that are being hurt by unemployment don't have proper skill sets
to just get another job.

I know a number of internationals working in the US and they are all still
employed and in demand. Most people think that people on Visas are at risk. In
fact I think there are plenty of jobs for the well qualified. Most of the
professional Visa / Green card holders in the US got here because they were
uniquely qualified - and that doesn't change with an economic downturn. There
is, especially from my perspective, still continued demand for good IT people
and good programmers^^^. Against popular belief but understood here at HN; not
all programming jobs are outsourced. But many high schoolers and their parents
believe this, so there are less people going into tech. This, of course, is
good news for those of us who are already in tech. It also does a great job
protecting us from economic downturns compared to other fields.

The WSJ, as usual, is out to sensationalize business as much as possible. I
like the WSJ and read it regularly. I try to take it with a grain of salt.
They'd like to have you believe the economy will never turn around. Because
then when it DOES turn around it'll be great, new and unexpected news. In the
end it's all about page loads or papers sold after all.

^ <http://www.bls.gov/emp/emptab7.htm>

^^ [http://latinobusinessreview.blogspot.com/2008/12/hispanic-
im...](http://latinobusinessreview.blogspot.com/2008/12/hispanic-immigrants-
leaving-us.html)

^^^ Reported by the ACM so take it for what it is...
[http://www.cio.com/article/466228/IT_Careers_Expected_to_Sur...](http://www.cio.com/article/466228/IT_Careers_Expected_to_Survive_Global_Economic_Storm_in_?source=nlt_ciocareers)
and
[http://www.networkworld.com/newsletters/edu/2008/120108ed1.h...](http://www.networkworld.com/newsletters/edu/2008/120108ed1.html?hpg1=bn)

[EDIT: Formatting, and some additions ;-)]

------
lsc
now is the time to hire.

You can pick up some good deals. Right now, especially with the 'just out of
college' crowd, and if it's like the last downturn, in a year or two you will
be able to find good people who got discouraged and did retail work for a
while.

------
nazgulnarsil
keynes created the fetish of full employment.

~~~
eru
Sources?

~~~
nazgulnarsil
have you read the General Theory of Employment Interest and Money? directly
from the book: "THE outstanding faults of the economic society in which we
live are its failure to provide for full employment" -from the chapter:
Concluding Notes on the Social Philosophy towards which the General Theory
might Lead

Keynesian economics focuses on full employment and income distribution as the
primary failings of classical economics. In attempting to address these two
non-problems keynes introduced blatant scientism into economic discourse.

~~~
eru
I know that Keynes cares a lot about full employment. But you said he
introduced it as a concern. Do you have sources that nobody cared about it
before?

~~~
nazgulnarsil
the only pre-keynes material I have been able to find is keynes' ideological
predecessor Jeremy Bentham. Keynes is the one who popularized the approach and
introduced policies that were actually adopted by government. control over
monetary expansion to the degree that is required wasn't possible until the
Federal Reserve was established.

When I say that keynes created the fetish of full employment, I mean that
post-keynes it was a continuing concern of government, whereas pre-keynes it
had not been.

~~~
eru
Thanks!

------
villageidiot
The unemployment rate for IT workers is still closer to 2% according to an
article I read somewhere recently (sorry, don't have the reference).

