Will the Real Unemployment Rate Please Stand Up?

Big government types assert that the economy cannot recover without the government's help. The anemic, sluggish labor market is their main piece of evidence when arguing for more benefits for the poor, more taxes on the rich, higher minimum wages, and protection from international trade with impoverished Third World countries. The unwelcome sunshine on their gloomy parade for big government is the low rate of unemployment, currently at 5.6 percent.

Even pessimists know that 5.6 percent unemployment is close to what economists consider the "natural" rate or the non-accelerating inflation rate of unemployment. As a metric, the rate of unemployment is comparable to body temperature in that a sudden spike upwards is a powerful signal of ill health. But after a fever breaks, coming back to the normal level is healthy, and going much lower has risks of its own.

What is the Unemployment Rate? Instead of arguing that the unemployment rate could or should be lower, critics are questioning the integrity of the way the rate is calculated. The basic idea is that the economy is so bad that workers are not even in the labor force, and so the unemployment rate today is not comparable to the rate five or ten years ago. For example, on March 19th, a Washington Post editorial claims that the unemployment rate is "above 7 percent" if "you add in discouraged workers."

The Post has been misinformed. The authoritative data on unemployment come from the Bureau of Labor Statistics (BLS), specifically table A-12 of the household survey, which calculates several different unemployment rates. Each is based on a nuanced definition of who is actually unemployed. http://www.bls.gov/webapps/legacy/cpsatab12.htm. Unemployment peaked in June 2003, and that peak is lower than the level of unemployment in the early 1990s for all measures of unemployment.

The rate of unemployment that includes discouraged workers is known as "U-4." It is currently 5.9 percent, which is 0.3 percent higher than the official rate, not the 1.4 percent gap imagined by the Post. Actually, the present gap between U-4 and the official unemployment rate is quite close to the historical average of 0.23 percent.

An effective government initiative to lower the unemployment rate should be designed...

Past experience seems to show that when unemployment goes below the range we're in right now (click on the box) that prices go up because employers have too much difficulty in finding workers to meet demand. Lower unemployment now will mean inflation and higher interest rates.

Maximum EmploymentMaximum employment doesn't necessarily mean that everyone is working. Economists have a "natural rate" of unemployment that is ultimately the goal. If the unemployment rate is pushed too low -- below 5% or so -- inflation rises because more money is in the economy, and that goes against the long-term Fed goal of stable prices.

Nobody called for expanding the federal government back in '96 for the purpose of lowering unemployment. The Republicans were trying to slow down government growth, and the Democrats were saying that 5.6% was full employment. Just the same, wouldn't the initiative you describe have been more needed during the Clinton years when unemployment was higher?

Everything is framed in R v. D. What about us Americans?

So whose fault is it that there are lags? Nobody's. Our economy is going through changes due to "globalization" or whatever. A few million Americans are bearing more of the load. Why cannot both Parties put America ahead of Party? Concentrate on these changes.

People did not move from the farms to the factories over a weekend a hundred years ago.

Is it only discouraged workers who should be added to the official unemployment rate (makes it 5.9 percent)? There are almost four-and-one-half million Americans working part time until they can get full-time work. Jobs is jobs, I know, but. . . .

Employment Situation Summary for Feb., 2004. BLS

"The number of persons who work part time for economic reasons edged down in February to 4.4 million, seasonally adjusted. This category includes persons who indicated that they would like to work full time but were working part time because their hours had been cut back or because they were unable to find full-time jobs." [end excerpt]

BTW, if you look up how the household survey is used to develop the official unemployment rate you'll see that working 15 hours a week UNPAID can count as employed.

how the government calculates unemployment

http://www.bls.gov/cps/cps_htgm.htm

America is far more important than either of the stupid Parties, though saving us from the Rat Party (formerly the traditional, patriotic Democrat Party) is a noble goal without doubt.

One of the good things about this forum is that while the majority of participants may be to one side on an issue, there usually is representation from other sides.

The reminder that there are those among us dealing with employment issues is good. Our economic recovery remains tentative. We continue to await a vigorous expansion to include not only job creation, but also job mobility and job security.

The question of the number of jobs is legitimate, because people should not use statistics to misrepresent the truth. This is not the worst economy in 75 years, and Kerry and his economists who say that it is are engaged in "spin".

This is the real lesson that should be learned. Democrats are experts in misrepresentation. Even when they are under oath, they try to stay just inside the line separating perjury from misrepresentation (and even then, sometimes slip up).

And, when they are not under oath, there is no holding them back.

Just look at the debate about the economy. Is the Bush Administration arguing that our economy is in good shape? Technically, we are in recovery, and our unemployment rate is low, so there is a good side that could be "spun." But, no, the Bush Administration is not making that argument, because we continue to deal with the after-wash of the recession we started to fall into prior to the Bush Administration taking office.

Furthermore, the Bush Administration had and has a plan that helped keep the economy from falling into a worse recession, for spurring recovery, and for sustaining recovery. This includes tax cuts (that should be made permanent), a sound monetary policy, litigation reform, and so forth.

What did and does Kerry offer? For one thing, he voted against all the tax cuts and he opposes making them permanent. He says he's against raising taxes on the middle class, but what he means by this is allowing the tax cuts, like the child tax credit, to expire. He also wants to raise taxes on those earning more than $200,000. But, these people are our small business people who are the source of job creation in our economy! How is raising taxes on small business supposed to spur job creation?

Consider Iraq, is the Bush Administration saying that we found weapons of mass destruction. Well, we did find evidence of WMD programs, but that's not the same thing. In terms of the intelligence we had, we - the President, our Congress, and the UN Security Council - thought there was an imminent threat. But, thusfar, we have not discovered the WMD, and - at this point - we may never know what happened to the WMD we know was there. Was it destroyed? Was it hidden? Or, was it removed to another state?

Even so, Huissen was in violation of UN resolutions and the truce ending the Persian Gulf War, we and that region of the world are safer, and the Iraqi people have been liberated from a brutal dictatorship.

What does Kerry offer? Well, first of all, he opposed us going to war with Iraq back in 1991, even when we did so as part of the UN. Can anybody imagine what the world would be like today if Saddam Huissen had absorbed Kuwait? With the distinct possibility Saudi Arabia and the Gulf States were next?

We have the evidence in front of us of the torture chambers and rape rooms of Saddam Huissen. He was a truly evil man. And, when confronted by Saddam Huissen, John Kerry said, "not me." He may have been awarded medals for bravery in Viet Nam, but he did not have the courage to face up to evil back in 1991.

And what is his plan for Iraq today? Based on his vote to de-fund the reconstruction of Iraq, we can presume that he would do to Iraq what the Democrats did to Viet Nam after they rolled up overwhelming majorities in the Congress in the elections of 1974. Kerry would vote to de-fund the reconstruction of Iraq, so that country would fall back under dictatorship, the same way that the Democrats de-funded South Viet Nam, so that place would fall under communisn.

With John Kerry, we could have another wall on the mall, another wall dedicated to the soldiers who gave their lives in a cause udermined by the Democrats. Regardless of whether we should have gotten involved in Iraq War (or in Viet Nam), once we got involved, we should have used our military superiority to win the war with the minimum loss of life (which, thankully, we did in Iraq), and then we should work to reconstruct the country on a democratic basis. This is the proper way to honor the sacrifice of our soldiers.

The Bush Administration is asking a hard thing of the American people: To accept that there are some things we have to work through. So that while things are less than where we want them to be, in terms of our economy recover, and in terms of the war on terror, we will perservere in our work. What is John Kerry asking of us?

The real crux of the issue is what has happened to family income.

America is in the process of losing its middle class. If a million jobs are created because wage earners have to work two or three low-paying jobs at a time just to pay bills, where is the improvement in standard of living in the job numbers?

Middle class jobs paying decent wages are disappearing at a much faster rate than the lower-paid jobs supposedly replacing them. Americans are in a race to the bottom because of globalization. It is not so much about government regulation as it is about exploitation of the world's poorest people.

The old Soviet Union had virtually full employment but look at the poverty under which those people lived.

People on this site often argue from textbooks instead of asking real people about their real-world experiences.

Doing away with OSHA, for example, will not make American workers more competitive with the desperately poor people of the third world who will work for almost nothing.

Some of you ought to listen to yourselves. Do you want an America with the crushing poverty and cheapness of life found routinely in these pigsty countries? By sending all our jobs over there, they are NOT MOVING UP to join us, we're moving our society down to join them in the despair in which they wallow.

: This website is different than a lot of them because we try to focus on facts rather than emotions. Go to this link for the government's most recent Census Reports .http://www.census.gov/hhes/income/income02/prs03asc.html.. The supporting narrative states: The most recent reports on money income for all households fell 1.1 percent between 2001 and 2002 to $42,400. These estimates reflect the effect of the recession that began in March 2001 and ended in November 2001 (often referred to as the Clinton-Gore recession because it preceded the election of George Bush - my comment). Real median household money income has declined 3.4 percent between 1999 and 2002, statistically the same as the decline in money income in a comparable period (1989 to 1992) covering the July 1990-March 1991 recession. Overall, real median household money income is up 30.1 percent since 1967, the first year median household money income was computed. Not a doom and gloom picture, we are probably not 'losing the middle class'. Have you heard that average hourly income has shot up from $ 14.00 to $ 15.35 during Bush's term? </Calm response>

<Calm response>: This website is different than a lot of them because we try to focus on facts rather than emotions.

Go to this link for the government's most recent Census Reports .http://www.census.gov/hhes/income/income02/prs03asc.html..

The supporting narrative states: The most recent reports on money income for all households fell 1.1 percent between 2001 and 2002 to $42,400. These estimates reflect the effect of the recession that began in March 2001 and ended in November 2001 (often referred to as the Clinton-Gore recession because it preceded the election of George Bush - my comment). Real median household money income has declined 3.4 percent between 1999 and 2002, statistically the same as the decline in money income in a comparable period (1989 to 1992) covering the July 1990-March 1991 recession. Overall, real median household money income is up 30.1 percent since 1967, the first year median household money income was computed.

Not a doom and gloom picture, we are probably not 'losing the middle class'. Have you heard that average hourly income has shot up from $ 14.00 to $ 15.35 during Bush's term? </Calm response>

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