17 Jul 2012
By Bill Britt
Alabama Political Reporter
Most people who study statistics understand that there are lies, damn lies and statistics.
This is also true when looking at unemployment numbers released by the government.
It is first important to understand the government does not know who is working and who is not. Each month, the Bureau of Labor Statistics estimates the number of unemployed based on a random sampling of the population. The feds conduct surveys of households and employers, which form the basis of the main employment statistics. The definitions of the survey date back to the Great Depression.
According to these parameters people count as employed if they are doing any work for pay. The unemployed are people who are not working but are trying to find a job. People who aren’t working but also are not trying to find work are not considered part of the labor force period.
The official unemployment rate is based on a survey of about 60,000 households, not on unemployment benefits, which are administered by the states.
Using a sampling model is not really a problem, to do it differently would be very expensive and labor intensive.
The problem occurs when a politician pretends that the estimate is an exact measurement. It is not, so, the gage is flawed and therefore misleading.
Next it is important to understand that each month, more people join the working age population than retire or die. As a result of these added individuals, the economy needs to add about 180,000 jobs a month just to keep up with population growth.
Once again when politician pretends that adding more jobs means there are fewer people out of work it is not accurate.
So, when someone says the economy added X amount of jobs, there must be 180,000 subtracted to have an accurate number.
The "labor force" is the number of employed and unemployed people.
The people who are capable of working but are no longer looking are called, non employed, the non employed are not counted in the official numbers released by the government.
Once again when politician claim that a lower unemployment rate means that more people are working, that is not really the case.
The numbers can’t be fully trusted to mean what politicians say they mean or put another way politicians who quote job numbers can't aways be trusted.
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