Monday, April 14, 2008

The "NY Times Jobless Rate"



According to Paul Krugman in today's (Apr. 14) NY Times: The official unemployment rate may be relatively low — but the percentage of prime-working-age Americans without jobs, which isn’t the same thing, is historically high.

According to a comment on this earlier CD post about Krugman and Don Boudreaux's response, Krugman was referring to the top chart above in the April 12 NY Times article by Floyd Norris "Many More Are Jobless Than Are Unemployed," which claims that "Men in the prime of their working lives are now less likely to have jobs than they were during all but one recession of the last 60 years. Most of them do not qualify as unemployed, but they are nonetheless without jobs."

Norris uses a "jobless rate," or "proportion of people without jobs," which can be calculated as: 1 - Male Employment Ages 25-54/Population. Using employment/population data for men, women and all workers aged 25-54 from the BLS (via Economagic), the "jobless rates" are calculated and displayed in the bottom chart above. The middle chart above shows this calculation for males aged 25-54, which matches the Norris graph at the top.

If Krugman did refer to that article as his source, there are a few problems:

1. Krugman says "the percentage of prime-working-age Americans without jobs is historically high," which is clearly not accurate. It would be more accurate to say that it is close to being historically low (see middle brown line above for "All Workers"). Krugman may have used Norris' data, but then mistakenly discussed the jobless rate for all workers aged 25-54 being high, when he should have been discussing men only aged 25-54.

2. When the data are displayed over a range from 0% to 70% (bottom graph) instead of a more narrow range from 2-16%, it's much clearer that the jobless rate for men aged 25-54 has been relatively stable at about 12% for the last 25 years. Further, the jobless rate for all workers aged 25-54 has been relatively stable at about 20% for the last 25 years, and jobless rate for women has been stable at about 28% for the last 20 years, and is close to an historical low.

Update: After exchanging emails with Norris, he calculated his "jobless rate" by first finding the number of men with jobs aged 25-54 in the household employment survey, and he then compared it to the civilian noninstitutional population for the same age group. Then he subtracted the employment/population ratio from 1 to calculate the "jobless rate." That calculation can be replicated by using the Employment/Population ratio from the BLS, and then subtracting that ratio from 1, see the middle chart above - it replicates Norris' top chart exactly.


14 Comments:

At 4/15/2008 6:36 AM, Anonymous Kevin Gunn said...

Mark -- You lost me on #3 (though your overall analysis is hard to refute).

Are you saying that Norris used:

1 - Employment (ages 25-54) / Total Pop?

rather than:

1 - Employment (25-54) / Male Pop (25-54)?

 
At 4/15/2008 7:00 AM, Blogger Mark J. Perry said...

Yes, Norris is using Employment (ages 25-54) / TOTAL POPULATION.

 
At 4/15/2008 7:26 AM, Anonymous Kevin said...

Thanks, Mark -- That's a huge blunder on the part of Norris. I read the NY Times article Sunday and wondered WHY the "jobless rate" would be changing like that. Now it makes perfect sense!

 
At 4/15/2008 7:28 AM, Blogger Shawn said...

...remarkable how much easier the whole thing is to see in a graph (your post vs. Prof. Boudreaux's). It baffles me that people can think as clearly with just numbers as I can with a drawing.

But, then, that follows: my clients can't read floorplans/siteplans, crystal clear as they are to others in the design field.

 
At 4/15/2008 7:31 AM, Anonymous Anonymous said...

Does the BLS break out a U-6 alternative measure of unemployment for the age 25-54 men cohort?

The Norris chart shows that jobless rate is successively higher at the top of each economic expansion since the boomers would have entered this workforce cohort in 1980.

It would seem to me that if the jobless rate less the U-6 alternative rate (the gap) has been rising since 1980, then demographics not the labor market may be explanatory of the gap.

BTW, I believe that the Norris jobless rate is for the 25-54 cohort not the total population.

 
At 4/15/2008 7:51 AM, Blogger Walt G. said...

I know a lot people who are retired in their late 40s and early 50s. It's the standard retirement age in my business. They pay them incentives to leave.

It does not seem accurate to count those who are jobless by choice in any valid jobless analysis.

 
At 4/15/2008 8:10 AM, Anonymous Anonymous said...

You think that maybe, just maybe, a wee bit of the "joblessness" has something to do with the perverse incentives of government programs that are so beloved by Krugman? I do.

 
At 4/15/2008 9:48 AM, Blogger James Hanley said...

Mark,

I stumbled onto your blog from Cafe Hayek. Good stuff--it's good to know there's a GMU economist here in Michigan. I'll have to add you to my regular reading (along with, of course Marginal Revoliution). I'm not sure how I'm going to find time to keep up with all three blogs, but I'm sure it will be worth my time.

 
At 4/15/2008 11:04 AM, Anonymous Anonymous said...

Too bad that few people who read the NYT will think to question Krugman. It is high time Mr. Krugman's columns were subjected to a bit of objective analysis.

Hope you will submit this post as a ltr to the Editor. Mr. Krugman badly needs this kind of feedback. Krugman's analysis is not worthy of his capabilities as a Bates medal winner.

Krugman seems to have lost his objectivity as he has become an increasingly strident critic of the Bush admin. His partisanship is starting to damage his credibility.

 
At 4/15/2008 1:56 PM, Blogger OBloodyHell said...

.

What? What? You mean you can (GASP!!!!) actually LIE with statistics?

Nawwww! Say it ain't so, Mark!!!
:o)

.

 
At 4/15/2008 2:00 PM, Blogger OBloodyHell said...

> It does not seem accurate to count those who are jobless by choice in any valid jobless analysis.

Only if Truth means anything to you.

Who ever said the Old Grey Whore is interested in Truth?



Please don't lie to me, unless you're absolutely sure I'll never find out the truth.
- Ashleigh Brilliant -

.

 
At 4/15/2008 2:20 PM, Anonymous Anonymous said...

Have encountered this kind of dishonest presentation of data. Income for single individuals included with family income as families of 1, for example.

In our age of massive amounts of statistical data, there seems to be an assumption that readers will not check anything even the scale of a graph. The internet has so much misinformation that one is well advised to corroborate what one reads (ie. hummingbirds do not burn 75,000 calories a day as claimed on a university website that I came across - the university took no responsibilities for the accuracy of the content which was supplied by students).

Question. Test. Verify.

 
At 4/15/2008 7:04 PM, Anonymous Anonymous said...

Question. Test. Verify.

Absolutely. The problem being that this blog post as originally written was scurrilous and vexatious, skirting the edge of libel. And, subsequently, it has been altered; dumped in the ether.

I do hope that the professor does not treat his students in such a disdainful and despicable manner.

 
At 12/22/2008 5:37 PM, Blogger mwtherrien said...

Thanks for the information. I was under the impression that the Jobless rate and the Unemployment rates were different but didn't understand why. My only question is now has that always been the standard formula? since we did not have unemployment during the depression years (a safety net and current bar for government calculations) where the figures we heard from that era indeed the Jobless rate? Or was there a unique formula used during that time? I am having difficulty accepting the current numbers as compared to the 20's and 30's. I am concerned that they are indeed two differing formula's..

 

Post a Comment

<< Home