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Comment by ab5tract | Hacker News Reader

The rules regarding unemployment statistics are entirely designed to be favorable. Citizens who are unemployed for greater than X months (where X is a figure I don't currently recall) stop being considered unemployed for the sake of this stat.

Likewise, homeless populations are not counted. Not everyone who is homeless is necessarily unemployed, I guess, but it's patently ridiculous not to include any homeless in unemployment statistics.

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The statistic is not meant to be a trick and the BLS discloses exactly how the number is computed:

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

It's still a useful number for comparing unemployment over time as long as the rules for how it's computed don't change.

Also:

Some have argued, however, that these unemployment measures are too restricted, and that they do not adequately capture the breadth of labor market problems. For this reason, economists at BLS developed a set of alternative measures of labor underutilization. These measures, expressed as percentages, are published every month in The Employment Situation news release.

https://www.bls.gov/cps/cps_htgm.htm#def

Not really because you can have constant unemployment as the situation becomes worse. Or a rise in unemployment while the situation improves.

At best it allows you to compare snapshots in identical situations over very short time periods assuming nothing significant is going on.

It's a perfectly good statistic for economists, because they know those limitations. There are lots of other measures for wages, labor participation, etc, and 'unemployment' does capture useful info about the ease of finding a job after you leave a previous one.

It's just abused in the public sphere as a whole-story statistic.

It is perfectly good statistic for POLITICIANS because 4.4% uneployment rate does sound much better that 22.1% reported by ShadowStats. Former is typical for rich (e.g. G-7) countries, latter would make US look like 3rd world country in that regard.

You might be right that it does capture info about how hard it is to find a new job as the software developer, or a lawyer, but tells almost nothing about blue collar jobs.

Sorry but that's not true at all. You are counted as unemployed if you do not have a job and are actively looking for work. There is no "cut-off." Look up the definition at the BLS, there is no excuse for spreading this crap through laziness.

If you stop looking for jobs you are not considered unemployed as someone not actively seeking work is not considered to be in the labor force. That is a different issue entirely and you will have to look at a different statistic. There are different types of "unemployment rate" and maybe what you want is U-4 or U-5 which include discouraged workers. Either way you can not expect a single number to encapsulate something as large and complex as the US labor market.

    Either way you can not expect a single number to encapsulate something as large and complex as the US labor market.

This is true, but part of the problem is with the media and government communications often failing to engage with this fact properly, and instead focusing on a single metric which is often misinterpreted.

It depends on your media. On NPR whenever I hear unemployment discussed they almost always immediately follow it with changes in wage and the number of people who are not seeking employment. This doesn't give any particular number a "things are getting worse or better" black and white consequence but that is why I like getting my news there.

I do not disagree with you, but at least for me, the most telling is the labor force participation. The fact that we have a close-to-a-record number of people not being productive is alarming.

Oh, and I am not buying the "demographics" narrative (baby boomers retiring, not interested in working), because a lot of 60+ folks need to work, because they don't have enough savings.

"You are counted as unemployed if you do not have a job and are actively looking for work."

Don't you actually have to register with the government and tell them you are without a job and looking for work in order to count as unemployed?

A lot more people could be without a job and looking for work without having told the government about it. So the government figures likely underestimate true unemployment, even if we ignore those people who are without work and have given up hope of finding a job and so have stopped looking, and those people who are without work and don't want to work or can't work for some reason.

I remember hearing something on the radio years ago here in the UK that really caught my eye.

There was a government project to count the number of homeless on a particular day. When the stats came out, the number had fallen despite anybody who ever walked around a town centre knowing the numbers had gone up.

So the radio station interviewed a local outreach worker who had been tasked to get the stats in her town. She was told to only count people on public property - so, somebody sleeping on the Library steps was counted, somebody sleeping outside a supermarket was not.

I've seen a similar game played where the criteria was "have you been without housing for over a year?". Magically the number of homeless fell by half overnight!

Note: the government publishes several unemployment numbers, U3 is the commonly reported one (which is dumb) but there are wider metrics, for example you may prefer U5 or U6.

https://www.bls.gov/news.release/empsit.t15.htm

Yeah, I hate how the unemployment number is always so lazily used by media outlets. In contrast the employment rate (60.2%) is currently lower than it was from 1986 until 2008.

Let me see if I can spice this up -

"Look, here in America, there are plenty of people that have jobs, some people even have two or even three jobs! Now that's some great employment."

But you need to control for factors such as the age distribution of the population. Now that baby boomer's (a much higher percent of total population than one would expect) are retired, you wouldn't expect them to have a job, so why count them as unemployed?

If you look at Employment Population Ratio: 25 - 54 years (https://fred.stlouisfed.org/series/LNS12300060#0) we are below where we were for most of the 90s on that as well.

However the larger question is why we would necessarily want this ratio to be as high as possible. If we, for example, have a higher percentage of stay at home parents today then we had in the 90s is that a bad thing?

All statistics have some context they were created for, most get used outside that context.

Unemployment rate is job-seekers/(job-seekers + employed). Long term job seekers should technically be included (many are) but when they can't find a job long term, they tend to re-classify as students, stay-at-home parents, early retirees, disabled...

In practice, that statistic is usually most relevant for estimating the number of people receiving unemployment benefit. The data collection is intimately tied to this: you don't need to tell anyone you're unemployed unless you are applying for a benefit. Places (eg Ireland) with generous unemployment packages will generally register a higher unemployemnet rate because people have more of a good reason to register as unemployed, even if they expect to be re-employed quickly. Places (eg US) with much more generous disability benefits than unemployment payments will have a lower unemployement rate as people (that are borderline cases) have a strong need/incentive to be classed disabled. Australia has generous student welfare programs, this reduces measured youth unemployment. Etc. ad infinitum

Basically, unemployment is a measure of (more or less) unemployment welfare recipients/applicants. It can't be used to compare between regimes.

It also happens to be an unreliable lead indicator for short term labour market changes. I think this is what has given it its current usage.

What the press should be reporting on is employment rate: Employees/18-65_Adults. This is not gameable, and it means the same thing in every time and place. It measures what people care about when they report on unemployment rate. Alternatively, they could also report "total salary" for the country. That's how most markets get measured (eg total oil sold, total market returns, etc.).

From the article, "Only 78.6 percent of people age 25-54 are employed" yet we say unemployment is at 4.4. It very much smells like unemployment, as we count it, is a bad metric and that explains what looks like a paradox in economic principles.

Well the issue is that there isn't one metric.

There's unemployed and seeking work, unemployed and not seeking work, under-employed, and so on

Not to mention the composite figures derived from these.

Employment Reports list all of these, it's just people want to consume short sound bites, not complex social and statistical topics.

Not everyone outside that 78.6 is employable... disabled, students, retired (some are that lucky), stay at home moms, etc.

The question is: Who is employable (outside of disability, student, etc) and not for legitimate reasons.

The U3 (4.4), as I understand it, is more a "moving target" of recent numbers... it's the number of recently unemployed and still looking

the U6 (8.6%) should be closer to "real" unemployment since it includes discouraged, marginal and part time workers (those under utilized).

https://www.bls.gov/news.release/empsit.t15.htm

No. They are designed to reflect the job market. People not actively seeking work don't affect the supply of workers. There are separate statistics about participation.

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