How About Adjusting for the Size of Labor Force?
WASHINGTON (Reuters) – U.S. employers slashed 598,000 jobs in January, the deepest cut in payrolls in 34 years as the national unemployment rate shot up to 7.6%, according to a Labor Department report today that underlined a deepening recession.
January's job losses were worse than the 525,000 that had been forecast by Wall Street economists, who also had expected the unemployment rate to come in lower at 7.5%. The bleak employment data is certain to be cited by the Obama administration as a fresh reason for Congress to speed up debate over a multibillion-dollar package of proposals to try to stimulate economic activity.
Last month's job reductions were the largest since 602,000 in December 1974, while the jobless rate reached its highest level in more than 16 years.
MP: Here we go again. The labor force today is almost 154 million, or more than 65% higher than in December 1974 (92.78 million), so comparing today's job losses to 1974 is meaningless. As a percent of the labor force, today's job losses would have be almost 1 million before we would be at the same level as 1974.
7 Comments:
This is one of the things that has consistently bothered me about the financial press. Whether talking about the DJIA or job losses, the complete disregard for the relative levels of change is ignorant, at best, and a dishonest distortion, at worst.
As a financial professional, I would be drummed out of an approval committee meeting if all I presented were raw numbers without providing context to go along with them.
A friend sent me to your blog yesterday and I am so glad she did. This kind of honest comparison is just what we need!
Adjusted for the size of the labor force, from the cycle peak the percent decline in employment of 2.6% in the 2007-2009 recession has now surpassed the decline of 2.4% in the 1981-1982 recession at this stage (13 months) into the recession.
Prof Perry and CJ said it. Journalists (who by and large have majored in English Lit or Communications) love comparing apples to genetically modified apples.
Good post. Every day we are bombarded with information. Learning to ask questions is a key component of critical thinking.
> Learning to ask questions is a key component of critical thinking.
Not.... exactly.
Learning which questions to ask is a key component of critical thinking.
Asking a businessman, "Has your elephant stopped canoodling?" doesn't really do much good in assessing the status of business operations.
If course, if you ask that of a member of Congress, the answer is likely to be somewhat amusing, and hence of far more use and worth than in the first case...
Good post.
I suppose so if you are like Perry who whistles past the graveyard.
The genetically modified apple headline should read: The cumulative decline in payroll employment is the worst since 1957.
The scary part is that if payroll employment declines by an average of 365000 per month for the next 11 months, there will have been no net jobs created in this decade.
It's not out of the critical thinking parameter now, is it?
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