What About Adjusting for Population?
WASHINGTON (AP) -- The Labor Department reported Thursday that the number newly laid off workers applying for benefits dropped to 601,000 last week. That was far better than the rise to 635,000 claims that economists expected. But the total number of people receiving jobless benefits climbed to 6.35 million, a 14th straight record.
MP: There's one small problem with the bold statement above: The population of the U.S. has roughly doubled since the 1950s, so comparisons of today's unemployed (unadjusted) to past periods is meaningless without adjusting for the population. The chart above shows that the current number of unemployed (6.2 million average for April) is about 2% of the current U.S. population (estimated 306.56 million for April), which is still below the 2.12% level in 1975. So the claim of a 14th straight record for Americans receiving jobless benefits is not accurate, after adjusting for the size of the U.S. population.
8 Comments:
Good job Mark. You have emerged as the most Kempian economist out there...always looking for the pony which we both know is there if we simply look hard and long enough. Long live liberal, democratic capitalism, small "l" and small "d", as Jack would always say.
It's not meaningless if you are one of the 6.35 million real people without a job to support their family. I guess it is how you look at it.
i agree that the MSM is totally wrong with the "new record high" stuff. they do that all the time and it drives me crazy. they are paid all that money and they won't do simple adjustments so the data they present/interpret is valid and in context. arrgh!
that being said, your adjusted chart is still depicts a very severe contraction in employment
Well, in the vein of comparing unemployment to the past, the REAL unemployment rate is closer to the U-6 rate.
U-3 just fudges the numbers and makes any rise in unemployment seem "less worse". U-3 doesn't count those that have been unemployed for so long that their UI has expired, or those that are seeking full time employment but are working part time.
The chart you show is still pretty bad. Worst since 1970s is pretty bad, I remember that one.
I wonder if the extended unemployment benefits people get now have something to do with how many people are out of work? Are the benefits more generous now in real dollars? That may have something to do with the high unemployment rate. Other things have changed since the 70s as well - people have more assets, more luxury items et cetera., and perhaps because society is much richer in general people can withstand unemployment for longer.
Also, there are now more services for the poor and out of work. And don't forget that many businesses are offering more generous separation packages because of the increased threat of litigation than in the 70s.
I was recently laid off and have a very generous separation package that I can live on for at least 6 months. I will be counted among the unemployed, but I am hardly as bad off as most. I am thankful for that (thankful that I went to law school and worked my ass off to get to this point).
Walt,
No one said it was meaningless. Mark is claiming that the comparisons used are not accurate.
You actually expect journalists to trouble themselves with proper relative measures when absolute measures are providing them new "records" to report?
Non-records don't sell newspapers. Then again, records aren't selling newspapers either.
I agree with Marko. Prolonging unemployment benefits combined with a benefit structure which overcompensates low-skilled former workers increases the opportunity cost of taking the first job that comes along. It encourages them to become more picky about the jobs they'll accept. The problem is worse if the low-skilled workers have a higher marginal utility of leisure.
When I was unemployed a year and a half ago, my unemployment check (at the maximum benefit level) was only 22.5% of my previous salary. I spent all day, every day looking for work. If a person's benefit is a much larger percentage of their former salary, they won't be in any hurry to take a low wage or undesirable job. The cost of defaulting on their financial obligations is also less for them.
I agree: the 'worst ever' and 'record high' claims are usually just used to get attention.
However, it is hard to deny that 600,000 newly unemployed workers is anything but troubling. Regardless of what terms you'd like to express it in.
Post a Comment
<< Home