How Did unemployment Drop with Job losses at 250,000?

Discussion in 'Economy' started by PLYMCO_PILGRIM, Aug 7, 2009.

  1. PLYMCO_PILGRIM
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    PLYMCO_PILGRIM Gold Member

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    As a man who is very good at math and has a BBA I simply dont understand how this works. It looks like someone either made an editorial error or is intentionally fudging the numbers.

    If we lost 247,000 jobs yet unemployment dropped by from 9.5 to 9.4 percent then that would mean our country would have to have a net population loss of at least 500,000 people.

    Did 500,000 more people die than were born last month or did 500,000 people on top of the net population growth leave the country?

    It doesn't add up.
     
  2. mascale
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    mascale VIP Member

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    Federal statistics are generally not created in a Sinai Scenario--if ever there was one(?), or two(?). These are not about rocky stuff--or even about rocket stuff(?).

    Survey one is about the federal count of payrolls. Survey Two is about the federal count of the labor force: Which is people who are working, or are looking for something gainful to do. People asleep under the bridges of America are not included in either survey. Many analysts think that their neighbors, under the bridges, should be included. Analysts like to thnk that they do something gainful.

    What gives the federal statistics credibility is the continuing consistency of the methodologies involved.

    What gives the Sinai Scenario credibility is the continuing consistency of the methodolgies not involved.

    "Crow, James Crow: Shaken, Not Stirred!"
    (The West Wing clearly: Can understand about these matters, even letting Medals of Freedom ring! A little pro-Palestinian, anti-Israel, propaganda works for some people--seeking outreach with the Moslems--likely instead--understanding about South Chicago!)
     
  3. editec
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    editec Mr. Forgot-it-All

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    Possibly a good question.

    The rate of unemployment is based on a SURVEY (rather than actual numbers based on who isn't working, it's based on numbers of who said they're out of work and looking for work) .

    The number of jobs lost is based on a tally of companies which report job loses and hires to the government.
     
  4. pinqy
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    pinqy Gold Member

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    It does, you just don't understand the equation used. The Unemployment rate is NOT based on the population, but on the Labor Force, which is the sum of employed and unemployed.

    Short version...the population for the sample is all people 16 years and older not in prison, mental or other long-term health care facility, or in the military. Out of this population there are 3 groups:
    1. Employed = worked for pay for at least 1 hour during the reference week or 15+ hours unpaid in a family business/farm (or was on leave or sick or other temporary absence). Charity or volunteer work doesn't count.
    2. Unemployed = did not work 1 hour for pay or 15+ hours family business/farm, AND actively looked for work in the previous 4 weeks. Those on temporary layoff need not have looked for work.
      These two categories together comprise the Labor Force.
    3. Not in the Labor Force = Did not work and did not look for work in the previous 4 weeks.

    Now, these numbers are from a household survey, the Current Population Survey (60,000 households every month), and include everybody under the definition of population I already gave. The -247,000 is from an establishment survery of 160,000 non-farm businesses (400,000 worksites) and does not include the self-employed, or domestic workers or agricultural workers. It's more accurate because it's a larger survey, but it's a narrower definition of employed.

    Back to the math....Using the CPS numbers, the Employment rate is Unemployed/Labor Force, and Labor Force = Unemployed + Employed. So in June, the rate was 14,729,000/(140,196,000+14,729,000) = 9.5% In July, the rate was 14,462,000/(140,041,000+14,462,000) = 9.4% Note that both the numerator and the denominator have gone down...both the number of unemployed and the number of employed have gove down. At the same time the number of people Not in the Labor Force went up. So while a drop might seem hopeful, participation in the labor force has gone down and employed as a percentage of the population has gone down.

    Basically, it's too early to say anything yet...the margins of error are pretty large (I'll work those out later...the rough sampling errors and the full equations are given in Employment and Earnings on page 184 of the journal.)
     
  5. PLYMCO_PILGRIM
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    PLYMCO_PILGRIM Gold Member

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    Ok thats easy enough to understand.

    The number of people unemployed increased. Simple.
     

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