Big Red Car here. The Boss has been driving me hard because of the perfectly lovely weather here in the ATX. I love it. Wind whipping around and growling along.
So The Boss is talking with his friend about unemployment. Suddenly, The Boss says: “Cut the crap, unemployment is still a huge problem. Let me show you.”
The inanity of “adjustments”
No government bean counter is ever happy to just give you the raw data — they have to adjust it because you are too stupid to understand the raw data. OK?
In the course of making adjustments, some adjustments get made and institutionalized for reasons that are just dumb. How dumb?
One man alone can be pretty dumb sometimes, but for real bona fide stupidity, there ain’t nothin’ can beat teamwork.
Adjustments and other sleight of hand
Well, maybe not. Here goes.
There are two common measurements of unemployment that sometimes work their way into polite conversation: U-3 and U-6.
1. U-3 is what I call the stupid standard as it is absolutely NOT accurate. It is what is in the newspapers and what the government wants you to think is the right standard.
You may call this the T-ball standard. Everyone gets a hit, everyone gets on base, nobody is ever out, everyone goes out for ice cream and everybody gets a big trophy.
Like T-ball, it is not really true to life.
2. U-6 is the standard for folks who can handle a bit of the truth but really need sunglasses to look directly at it.
The Boss calls it the — “hey, does my unemployment look fat in these numbers?” Hell, yes!
U-6, what the heck is it, Big Red Car?
U-6 is U-3 as your main course plus a couple of side dishes.
1. U-6 includes “marginally attached” workers — folks who have looked for work sometime in the last year.
2. U-6 includes “discouraged” workers — folks who have given up looking for work.
3. U-6 includes folks who have had to settle for “part time” work because they cannot find full time work. This is the nuclear physicist flipping hamburgers.
But what it still does not include are workers who do not fit in the above categories but who have been on the unemployment rolls for more than 52 weeks.
Hmmm — so if you are unemployed for more than 52 weeks, then you are dropped off the rolls? YES, says the Big Red Car.
Now why is that important?
Here’s why it is important.
Today you can receive up to 99 weeks of unemployment. That is right — 99 weeks of unemployment but they disappear you off the rolls at week 52.
One more time — if you are unemployed you can get 99 weeks of payments but you are considered MIA at week 52 as if you had MAGICALLY become employed.
But even better — you are no longer considered as part of the unemployed and you are no longer in the workforce.
U-7 the right number
U-7, the older and smarter sister of U-6, adds back in the magical number of folks who are still unemployed after week 52 meaning those folks who MAGICALLY disappeared when they hit week 52. The unemployed, still collecting benefits, Missing in Action.
Well, Big Red Car, this is a very discouraging little graph, is it not?
What is shows is that some realistic measure of unemployment in the United States — this meanspirited little U-7 which apparently counts the actual unemployed — is almost 22% of the labor force in the United States.
Why, Big Red Car, that’s more than twice the 7.9% U-3 rate that was in the newspaper. Indeed. U-3 is unemployment if it looked like say, Kate Upton. Tarted up a bit. Made to look much better than it really is. U-7’s sluttly little sister and not the girl YOU are going home with tonight.
Did you see that sexy…………………………………………………………convertible? Haha, you crack me up, Big Red Car.
But, hey, what the Hell do I know anyway? I’m just a Big Red Car and I’m hustling to keep this job.
So be kind to yourselves and truthful.
Another thing. Put people to work improving our aging infrastructure. Roads, bridges, etc.
Great summary. Was not aware of differences but have always been suspicious about govt economic figures.
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In these difficult times, the government is unreliable because they are a political beastie and constantly have their thumb on the scale because of their unholy desire to be re-elected and to divert public scrutiny.
Be skeptical of EVERYTHING.
If you fudge the numbers and you want them — desperately want them — to prove an unprovable or unfounded thesis, the heights of deception to which you are prepared to go are literally limitless.
BRC
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Here’s a story that may interest you from today’s WoPo:
http://www.washingtonpost.com/blogs/the-fix/wp/2013/02/07/are-we-in-the-end-times-of-trust-in-government/?hpid=z2
It quotes a recent Pew Research Center Study. Key chart shows decline — for no apparent “big” reason since 2001:
BRC / JLM — Next time, lead with the Kate Upton video. Kay? But, thanks for continuing to harp on this subject. WDC (collectively) can’t deal with the real issues like access to capital for entrepreneurs. That’s why we’ve got to do more to open up new avenues such as crowdsourcing (with safeguards, of course).
Oh, and HBD, too!
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I agree more with you than you do with yourself.
Getting out of the way may be the battle cry that is so desperately needed.
Even when the gov’t gets something right — JOBS Act — they muck it up by not writing the Rules in a timely manner and allowing the staff to inject their own prejudices.
If I were President I would call the SEC in: “Fellows, you’ve got 3 weeks to publish the JOBS Act Rules or you are fired. Everybody understand? Get out of my office.”
BRC
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All I saw was the patty melt, I swear.
(ps happy birthday to your boss)
I suspect it’s a new norm with respect to unemployment levels, until large systematic changes occur (new high growth industries that propel employment rates up).
What those industries may be I have no idea. I’m one of the guys working to automate everything automatable. Kick off your shoes and let the robots mow your lawn.
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There is a bunch of work that can be done to create entry level, craftsman level and even mundane jobs. First you really have to want to do just that.
Today the entire Clan DC is lost in the weeds on immigration and guns. Nobody is talking about jobs and the economy.
The SBA runs out of money — guaranties — in the first 90 days of each new FY. Then they shut down until the next year.
Fully fund the SBA. It is a loan guaranty program and therefore really does not cost real money in the short term.
Identify the 25% top SBA lenders based on 10-year historic default rate and slap them with a big checkbook (guaranty book, really).
The jobs will multiply like rabbits. This portfolio of cumulative bets is incredibly diverse and safe.
If we don’t do some things like this, the current level of unemployment will become the new norm and that will be fatal.
BRC
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How can we aid our most important employers, small businesses?
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Damn good question. I guess one thing is buying local.
The political issue as it relates to the SBA is a perfect example of tone deafness by the Administration.
Why are they so tone deaf?
Not listening and no experience in that arena.
BRC
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Wow. It looks like unemployment was so much lower under Bush. So, there was a recession in 2008 but then after they all wanted to sugar coat it as a “jobless recovery”. But that’s an oxymoron! How could it be a recovery if unemployment is so high.
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I have been studying this quite a bit and here’s what I conclude — it is the time of unemployment that is different. Folks were filing for unemployment but getting a job quicker under Bush.
Now folks are unemployed for approximately 40 weeks, so the internal churn is gone.
Also, the fiction of dropping off the rolls was gone because they were not getting to 52 weeks.
The numbers are being “adjusted” so inaccurately that folks do not really understand we are practically 1 in 4 is under- or unemployed.
BRC
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Yup. The labor participation rate is dropping with every number-but the economic incentives to participate are pretty low. I think it’s in Mississippi where if you work it just right, the trade off between trying to find work and earn 50k per year vs getting govt benefits doing nothing that value 50k per year is there.
Nice on Kate Upton. I think that’s a “car” you rent.
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I saw the article on the woman in Mississippi for whom the numbers worked out exactly as you noted. That is nuts. Nuts.
Big Red Rule: flies, floats, fornicates — rent it.
BRC
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