When Ignorance Is Bliss

By Big Tent Democrat, Section Economy
Posted on Sun May 08, 2011 at 09:26:06 AM EST
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Writing about the the ignorance of the WaPo Ed Board, Dean Baker writes:

The piece got off to a bad start early, telling readers: "The unemployment rate remains stuck at 9 percent of the workforce, up from 8.8 percent in March. But, good news: The higher rate reflects job-seekers reentering the market because their prospects are better."

Actually, this is not the reason that the unemployment rate increased to 9.0 percent. The Labor Department's household survey showed a 205,000 increase in the number of people categorized as unemployed and a drop of 190,000 in the number of people reported as working. So, almost the whole change from March to April is explained by people going from being employed to unemployed, not new entrants to the labor market.

One basic mistake folks make when discussing the unemployment rate and the monthly jobs information is not knowing that these are two complete different and independent surveys (see David Leonhardt.) You would not know it from general reporting, but the household survey, from whence the unemployment rate is produced, reported a loss of 200k jobs last month (in stark contrast to the establishment survey which reported 268k jobs gained.) Consider Steve Benen:

The unemployment rate ticked higher, from 8.8% to 9%, but as we’ve talked about before, that’s not the most reliable gauge. Indeed, as April’s report helps demonstrate, the unemployment rate can go up when more jobs are created, and go down when fewer jobs are created. It’s just quirky that way.

Of course the April report demonstrated nothing of the sort, as Baker explained. Sometimes ignorance is bliss I suppose.

Speaking for me only

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When Ignorance Is Bliss | 54 comments (54 topical)

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Real unemployment (5.00 / 1) (#1)
by MO Blue on Sun May 08, 2011 at 09:56:14 AM EST

Summary of U.S. Real Unemployment - April 2011
May 6, 2011 in Homepage, Recent News by Joyce Bond
by Leo Hindery, Jr., Chairman of the Economic Growth/Smart Globalization Initiative at the New America Foundation
Our Summary of U.S. Real Unemployment makes these three adjustments. It also identifies average weeks unemployed, job openings, and the "Jobs Gap" that needs to be filled in order to be at full employment in real terms. With the three adjustments made, in April:

The number of real unemployed workers in all four categories - official BLS, part-time-of-necessity, marginally attached, and discouraged - increased by 604,000 workers to 28.8 million , which remains more than twice BLS's official figure of 13.7 million. The private services sector increased by 224,000 jobs, swamping the critical manufacturing sector which grew by only 29,000 jobs; construction employment was again flat; and government employment, mostly state and local, declined by 24,000 jobs.

The real unemployment rate is 18.0% , which compares to last month's real unemployment rate of 17.7%, and it is exactly twice BLS's `official' rate for April of 9.0%. link

Many believe that Hindery's method of determining unemployment is more accurate and consistent.

The cuts in state government (5.00 / 2) (#21)
by oldpro on Sun May 08, 2011 at 03:14:04 PM EST

have sent experienced and educated folks into the workforce to compete for available jobs with some of the very folks who demand that government 'get smaller.'

I'd like to know more about the irony of this 'be careful what you wish for' category. It has to affect both the unemployed and underemployed and their children entering the workforce as well.

Competition for available jobs can depend heavily on connections and good employees are good at networking...an advantage in governmental circles.


In order to gauge the state of employment (none / 0) (#8)
by MKS on Sun May 08, 2011 at 12:26:10 PM EST

....one needs to use the same measure.

The standard gauges may be flawed but they let us know what is happening....


I think the truth trumps ... (5.00 / 2) (#10)
by Robot Porter on Sun May 08, 2011 at 01:13:13 PM EST

any fiction. No matter how pervasive that fiction is.


You miss the point (none / 0) (#13)
by MKS on Sun May 08, 2011 at 02:16:11 PM EST

The issue is how do you measure the truth. You need to make apples to apples comparisons.....

If you are going to use the broader measures, you need to use those consistently......The problem is that the broader measures are not necessarily accepted or deemed the truth....

The truth would be ... (5.00 / 2) (#23)
by Robot Porter on Sun May 08, 2011 at 04:16:50 PM EST

how many people are actually unemployed. This ain't rocket science.

I know most liberals have jumped off the "reality based" bandwagon of late. But let's try not to do that here. Especially when it comes to something this simple.


: To be reality based, you have to (none / 0) (#25)
by MKS on Sun May 08, 2011 at 06:57:44 PM EST

use actual data. You pick a measure that you think supports your theory---you just say, gee, that is really high, much higher than the other measure. But you do not compare it to prior months or to historically where that measure was during boom times. So, your use of the broader measure is meaningless.
I use a measure that is and has been the standard for decades. It is not without flaws but it can tell you the trends....
Of course, people are unemeployed, and you may anecdotally know some of them, but that observation of yours means diddly in terms of where the economy is heading.....

You may want to stick with a "flawed" (5.00 / 0) (#26)
by MO Blue on Sun May 08, 2011 at 07:41:29 PM EST

system that ignores all the "discouraged workers" who just stop trying to get new jobs and those who are "under-employed", i.e., partially but not completely employed but many people are looking for a more accurate reporting system and have started to look at Hindery's monthly memo to determine the real unemployment numbers.

Every month, media business executive and former Obama for President finance committee member Leo Hindery puts out a very detailed memo breaking out the national unemployment data -- showing what is real and what is not regarding the Bureau of Labor Statistics' monthly release of jobs data.
One of the chief data abuses that Hindery has focused an enormous, hot, raging spotlight on is the giant gap between official unemployment (now pegged at 8.8% of the population) and "real unemployment" which Hindery documents at 17.7% of the population.
I've read these memos every month and try to post them when I can. Hindery has changed the national discourse with this framing of unemployment -- and more and more national economic and political commentators are using his term of real unemployment. Even today when I was listening to the Diane Rehm Show on National Public Radio, one of the commentators made the point that the government data wasn't only a function of workers who were discouraged falling off the radar screen but actually there was some real hiring and adding of people to payrolls. link

BTW, consistently using the BLS unemployment rate does not allow you to compare apple to apples due to the fact that they change their survey methods and calculations so that their methodology is not consistent.


BLS methods don't change that much (none / 0) (#31)
by MKS on Mon May 09, 2011 at 12:16:11 AM EST

And, you still need a historical reference--otherwise, the Hindery numbers will be of limited use......


The calucaltion method that (none / 0) (#34)
by MO Blue on Mon May 09, 2011 at 06:57:38 AM EST

Hindery uses is the same method that the BLS used before the real unemployment rate became too real and they changed to a variation of the current method. Due to the various changes to survey and calculation methodology the latest method the BLS uses is both inaccurate and of limited use to compare historical data.


: Hindery showed an increase of 224,000 jobs (none / 0) (#43)
by MKS on Mon May 09, 2011 at 02:57:01 PM EST

Good grief--he agrees with the BLS that put the number at 244,000.
You miss the point that was being made about jobs growth.
You want to talk about rising wages being less than 2%, fine, knock yourself out, but that is a different subject....
Admit that jobs growth was good in April, then an honest discussion can occur....Otherwise, is just cherry picking for bad data...

: After all the smoke and fire, (none / 0) (#53)
by MKS on Mon May 09, 2011 at 03:58:25 PM EST

Hindery shows a gain in jobs of 224,000-very similary to the BLS figures....
That would seem to be a salient point, no?

thank u. i love the (5.00 / 2) (#7)
by observed on Sun May 08, 2011 at 12:06:29 PM EST

Students where i am now, but the school is run like a joke. I am by far the best math person they have ever had, but they dont want me. The students like me. I am sorry they wont have me, for their sake.

I wish I understood why people (5.00 / 2) (#11)
by Anne on Sun May 08, 2011 at 01:14:09 PM EST

spend so much time trying to make good news out of these numbers, instead of digging into them and really getting an understanding of what's going on.

It's particularly frustrating when this kind of misinformation fairly permeates the media - to what end, is what I always wonder. Will their it's-not-so-bad and actually-things-are-getting-better reports convince anyone other than those with good jobs? Because I think, for the most part, they just land with a thud for people who know that it is that bad and it's not getting better.

And what makes even less sense to me is that these reports that are so numbers-centric seem to be devoid of any discussion of real unemployment - is it because 9% is a lot less shocking than 18%, or that the people writing about it don't understand what real unemployment is? And, these articles are pretty much devoid of any discussion about what can be done to reverse the spiral. Other than tax cuts at the high end and for corporations - and considering that we have tons of historical evidence that show tax cuts don't create jobs, the selective absence of that part of the discussion seems designed to serve the corporations and the elite.

I guess it's just our imagination that things pretty much suck for a lot of people, and that those who have the power to do something about it are just shrugging their shoulders and pleading helplessness.

Trying to find the black lining (5.00 / 1) (#16)
by MKS on Sun May 08, 2011 at 02:25:19 PM EST

in the silver cloud.

These jobs numbers are generally good. Even the article that BTD links to says:

Job growth was unexpectedly strong last month. The unemployment rate rose to 9 percent, from 8.8 percent, its biggest one-month increase in more than a year-and-a-half.
Which of the two numbers should you believe? The short answer is the job-growth number. The labor market appears to be improving. The rise in the unemployment rate is mostly a reflection that the rate fell by an artificially large amount over the previous several months.

Even the Republicans recognized that these were generally good numbers.....

The myth that these numbers punctured was that the household surveys were accurately picking up a strong increase in jobs that was not being picked up in the employment numbers--a hidden increase in jobs....


What kinds of jobs are being created? (5.00 / 1) (#28)
by Anne on Sun May 08, 2011 at 08:46:35 PM EST

Good-paying, full-time? Or low-wage, part-time?

It matters what kinds of jobs are being created.

ALL the numbers need to be looked at and discussed; context is important.


And don't forget the seasonal job (5.00 / 1) (#29)
by nycstray on Sun May 08, 2011 at 08:54:54 PM EST

hiring happening now . . .

The new Target coming to the area here will create several hundred new construction jobs. But they are temp, the several hundred new perm jobs created will be mostly ringing the cash register . . .


Sure (5.00 / 1) (#30)
by MKS on Mon May 09, 2011 at 12:10:36 AM EST

But more jobs is good, no?

The quality of jobs is a long term problem involving loss of our industrial base and issues of education. Those problems willtake a long time to solve.....It is not just a matter of Obama standing up to the Republicans.


People can't support themselves, (5.00 / 1) (#35)
by Anne on Mon May 09, 2011 at 07:03:07 AM EST

or their families, on minimum wage-paying jobs, or on part-time work that varies from week to week.

And I know from the experience of a co-worker's daughter that some companies are over-hiring, with no guarantee of hours, and schedules subject to last-minute change: "oh, sorry - we just don't need you today."

Those people count as being employed - a person counts as being employed if they work one hour a week, for heaven's sake, so between jobs created that companies are using muliple people to fill, and those employed not being able to get full-time hours or more than minimum wage pay, the demand level just isn't moving.

There is no jobs program, and it doesn't appear that one is even on the radar, and why is that? Because the government would have to spend to create one, and we're all about not spending? We're just waiting for these corporations that are sitting on enormous profits and huge cash balances to magically start spending? Why would they do that - out of the goodness of their hearts? What hearts?

This isn't just about standing up to Republicans, it's about understanding what the government's role should be in difficult economic times, and leading the naysayers over to understanding that, too.

It's also about holding accountable those that got us into this mess - and that not only hasn't happened, we're actually treating these people as if they hold the answers for getting us out of this mess.

That does not bode well for economic recovery, I don't think.


You already said that (none / 0) (#42)
by MKS on Mon May 09, 2011 at 02:52:59 PM EST

The discussion was about the gain of 244,000 jobs being a good thing....

Sure, there are other problems, but a gain in 244,00 jobs is a good sign. It may or may not last. But by itself it is a good sign. If one does not admit that, then an honest conversation cannot occur.

What can be done now? Not much. The Republicans control the House. So, politically the best that can be done is to avoid the loss of public sector jobs....

As to the deal cutting spending for this year's budget, the CBO did indicate that less $1 billion would be trimmed this year....Many here pooh-poohed that in their knee-jerk Obama bashing, reasoning that the cuts would be substantial in subsqeuent years.....But, this year, during the climb out of the recession, Federal outlays will not be cut by much of anything. That is a very good thing for a recoverying economy.


You're just not getting it, MKS. (5.00 / 0) (#54)
by Anne on Mon May 09, 2011 at 04:13:47 PM EST

If I create a job that's only a 10-hour a week position, that goes into the job creation number, but no one can live on what a 10-hour a week job pays.

You have to look at what kinds of jobs are being created, and we have to find solutions - now - to creating good ones.

That's where the government should come into this picture, but it's not. And that's why things are going to keep sucking, regardless of "the numbers."


: I am not sure that (none / 0) (#55)
by MKS on Mon May 09, 2011 at 07:02:46 PM EST

part time positions are counted as you say.
But, no matter, I agree with your general point....
I still have a problem with saying that a gain of 244,000 jobs is not good news. One cay say that there are other problems, such as the ones you raise, or that the good news is qualified by other bad news....But it is still good news.....And if you cannot bear to admit it as such, there is no basis of rational discussion on the economy.

Are you serious? (2.00 / 0) (#36)
by sj on Mon May 09, 2011 at 09:57:07 AM EST

The quality of jobs is a long term problem ...

That may be true for you in your little conceptual world. But if you're one of those can't support your family or meet your obligations then the quality of jobs is an immediate concern.


No, are you kidding? (none / 0) (#37)
by gyrfalcon on Mon May 09, 2011 at 12:35:48 PM EST

OF COURSE it's an immediate concern. It's also a long-term problem, and it's one that can't be solved by waving a magic wand. This is what this country has been descending into for decades now, and I see no indication of any kind of will to set us on a path that improve it.

Welcome to the 21st century.


I know that (none / 0) (#38)
by sj on Mon May 09, 2011 at 12:49:17 PM EST

OF COURSE it's an immediate concern

Make your argument to MKS.

But if there is no sense of the immediacy there will be no action on the long term.

Frankly, it's not the century that's the problem, it's myopic vision.


I have no argument with what MKS said (none / 0) (#46)
by gyrfalcon on Mon May 09, 2011 at 03:35:54 PM EST

My argument is with your attempt to smear anybody who thinks this is a long-term problem with indifference to short-term misery.


: oh I see (none / 0) (#50)
by sj on Mon May 09, 2011 at 03:39:09 PM EST

so reminding MKS that this problem affects people today is a smear.
Good to know.

and by myopic vision (none / 0) (#39)
by sj on Mon May 09, 2011 at 12:53:36 PM EST

I include those who are satisfied that any old jobs are being created.

Those jobs would be great if those in the unemployed ranks were mostly made up of graduating high school students. Although time was a HS grad could make a good living in the trades.

So I guess those jobs would be great if those in the unemployed ranks were mostly made up of high school students. Who haven't graduated. Yet.


I have not even heard (none / 0) (#48)
by gyrfalcon on Mon May 09, 2011 at 03:37:16 PM EST

right-wingers on the business channels expression "satisfaction" with the kinds of jobs being created.

You're throwing up a whole bunch of strawmen to rage against.


: Point taken (none / 0) (#52)
by sj on Mon May 09, 2011 at 03:45:57 PM EST

"Satisfied" may have been the wrong word.
What word would you use to describe this?

But more jobs is good, no?

Yes, SJ, I am serious (none / 0) (#40)
by MKS on Mon May 09, 2011 at 02:37:15 PM EST

To improve wages takes a long term solution. The short term is unemployment benefits and publics works programs....imo.

The decline and/or stagnation of real wages is a long term problem decades in the making. It will not be permanently solved in the short run.....

If you want to discuss long term solutions, fine.

But I never said there were not immediate problems....


: This I most definitely (none / 0) (#51)
by sj on Mon May 09, 2011 at 03:40:30 PM EST

agree with. As long as today's implications are not lost I completely agree with you.

These "actually-things-are-getting-better (5.00 / 0) (#27)
by MO Blue on Sun May 08, 2011 at 07:51:34 PM EST

reports" allow the government to spend their time creating their austerity programs and devising ways to cut corporate taxes.

It also provides conservative state governments the excuse to devise ways of cutting off unemployments benefits.

Michigan started things back in March but has since been followed by Missouri and now Florida. (Other states may have done so as well, these three are the ones I know for sure have done this.) Florida's new law actually goes beyond Michigan and Missouri, as bad as their laws are. Where MI and MO cut the maximum period for collecting state level unemployment compensation from 26 weeks to 20 weeks, Florida ties the benefits to the overall state unemployment rate. Via the Tampa Tribune article linked above:

TALLAHASSEE -- Out-of-work Floridians would receive fewer state benefits while businesses pay less tax under a controversial proposal approved Friday by a divided Legislature.
The deal, which Gov. Rick Scott is expected to sign into law, immediately cuts unemployment benefits by 11.5 percent.
Jobless Floridians would continue to receive a maximum payment of $275 per week, among the lowest of any state in the country. But they would be paid for no more than 23 weeks, instead of 26.
...snip...
The bill also creates a sliding scale that cuts and adds weeks of benefits based on the unemployment rate. Unemployment compensation would drop to as low as 12 weeks if the average unemployment rate drops to 5 percent or lower. A week would be added for every 0.5 percent the jobless rate climbs. link

i will be unemployed (none / 0) (#2)
by observed on Sun May 08, 2011 at 11:12:02 AM EST

By aug 1, altho my prospects are good. In fact, i am applying for a good job which may set the record for distance to tl headquarters..more than 10,000 miles, if not much more.

Lunar colony assignment? (5.00 / 1) (#4)
by Dadler on Sun May 08, 2011 at 11:47:11 AM EST

That's a long way. Best of luck.


: its the water, baby (5.00 / 1) (#6)
by observed on Sun May 08, 2011 at 11:56:36 AM EST

The job is in fiji. It actually starts june 1. Wish me luck.

Good luck (5.00 / 3) (#5)
by MO Blue on Sun May 08, 2011 at 11:54:07 AM EST

on getting the job you are applying for and that it is better than the one you lost.


Intriguing! Hope you can give us (none / 0) (#3)
by ruffian on Sun May 08, 2011 at 11:42:26 AM EST

some good news soon.


Household survey is smaller, more volatile sample (none / 0) (#9)
by MKS on Sun May 08, 2011 at 12:38:58 PM EST

according to this article

Payroll jobs numbers and the unemployment rate are calculated from two separate surveys, which helps explain the conflicting readings of faster job growth and higher unemployment. The precise reason for the discrepancy isn't yet clear, but the unemployment survey has a smaller sample size and tends to be more volatile than payroll numbers, which are generally a more reliable indicator of labor market health.
April's unemployment-rate rise also followed a steep, full percentage-rate drop over the prior four months, which had surprised analysts as being stronger than expected.

I guess (none / 0) (#12)
by Ga6thDem on Sun May 08, 2011 at 01:37:14 PM EST

the bottom line is that neither number is really good enough to change the economic situation in this country.

Nope (none / 0) (#14)
by MKS on Sun May 08, 2011 at 02:18:37 PM EST

A gain of 244,000 jobs per month is good news, and if the pace were kept over a year or so, it would be very good news.....


Yes (none / 0) (#17)
by Ga6thDem on Sun May 08, 2011 at 02:36:42 PM EST

but not when you put it up to the 400K that were lost.


I have no idea what you are talking about (none / 0) (#18)
by MKS on Sun May 08, 2011 at 02:39:35 PM EST

You are not reprising the uninformed argument that the jobs number is not a net number, are you?

Not true.

Good grief....


No (none / 0) (#19)
by Ga6thDem on Sun May 08, 2011 at 02:41:31 PM EST

right after that number came out was the report that there were over 400K new unemployment claims that were filed.


Why don't you try an apples to apples (5.00 / 1) (#20)
by MKS on Sun May 08, 2011 at 03:02:49 PM EST

comparison.

Even in boom times you will have hundreds of thousands of new unemployment claims.....

Trying to extrapolate from weekly job claims is a trickcy business. That is why the broader numbers of jobs added and the monthly rate are more widely used.

But, heh, keep straining at a gnat....


The jump (none / 0) (#22)
by Ga6thDem on Sun May 08, 2011 at 03:42:54 PM EST

in unemployment claims is indicative of where things are heading is it not? The economists are saying that number indicates that things may not be so rosy and we might be headed downward. Yeah, there were jobs created but then the next report says a jump in new claims.

Do you really think the economic situation in this country is good right now?


The problem with weekly jobless claims (5.00 / 1) (#24)
by MKS on Sun May 08, 2011 at 06:49:12 PM EST

is that they are volatile and not necessarily indicative of job loss or growth. Prognosticators have been burned in the opposite direction in the recent past: a drop in weekly unemployment claims did not presage a drop in the unemployment rate or a significant increase in jobs.

The rolling four week average can be more helpful.

As to where the economy is right now, I'd say it is okay and improving with gas prices the greatest threat.

You really have no idea what you are talking about, except to constantly echo your comments in March 2009 that you thought the people would rise up and demand Obama's resignation, which I think was just your projection of your own views onto the people akin to the "some say" formulation writers use when they have no data.


Again (none / 0) (#32)
by Ga6thDem on Mon May 09, 2011 at 05:48:36 AM EST

do you think the economic situation is good in this country right now?


You must (none / 0) (#33)
by Ga6thDem on Mon May 09, 2011 at 05:52:01 AM EST

have missed this:

It wasn't just one week, it has been a series of weeks rising new claims.


You prove my point (none / 0) (#41)
by MKS on Mon May 09, 2011 at 02:44:40 PM EST

Your link to the BTD diary shows jobless claims rose in April.....

And, the jobs numbers in April? Highest gain in 5 years. As I said, the correlation is not exact and can be tricky....

You show you still have no idea what you are talking about....Just fishing around for any bad news...without connecting the data.

You started this conversation by saying that an increase of 244,000 jobs would not if going forward be a good sign. That is absurd....You had no idea what you were talking about..

So, you change the subject to whether the economy is generally good or if the employment data will hold in the future.....different issues....


You (none / 0) (#44)
by Ga6thDem on Mon May 09, 2011 at 02:57:30 PM EST

are missing my point. My point being that while the jobs went up one month, immediately after it was announced that jobs went up that we had an increase in jobless claims.

You are the one that is not looking at the big picture. You want to just focus on one month without looking at the data that's most recent too.

Do you really think the economy is in good shape?


Let's stay on one subject before (none / 0) (#45)
by MKS on Mon May 09, 2011 at 03:10:15 PM EST

we change subjects, shall we?

You still don't get it about April jobs numbers. The weekly jobs claims went up in April. But the increase in jobs were also very high--in recent history at least.

So, if there were high numbers of layoffs in April, why did we have a banner month in terms of new jobs....We are talking the same month.....

The trend going forward.....The GDP is a better gauage I would argue, or wage increases....The jobless claims are, I repeat, tricky in the shortun....

You still won't admit the jobs numbers from April are good? Still?

You just jump up and down shouting "but tell me is the economy good?" That is a different question, and I already told you my answer.

It is not possible to have an honest discussion with you about the economy because you don't understand the basics about jobs numbers, and try to twist the numbers into something they are not, and because you are so hopelessly biased against Obama it is not possible for you to even pretend to be objective....

You change the subject when you can no longer stay on your anti-Obama message.


: You obviously (none / 0) (#47)
by Ga6thDem on Mon May 09, 2011 at 03:35:57 PM EST

think one month means everything and I don't.

: You think (none / 0) (#49)
by Ga6thDem on Mon May 09, 2011 at 03:37:54 PM EST

the economy is "okay"? LOL. It's horrid. And i'm not alone in that thinking.
I think 9% unemployment in this county is abysmal.You obviously disagree.