What is the "Real Unemployment Rate"

[edthecynic]

I used to teach labor economics and try to keep up with the literature. There is no single measure of employment that is best for all purposes. For most purposes (especially if you are using an employment variable in a regression equation), you get most of the explanatory power using a combination of U-6 and the employment-to-working age population ratio, both reported monthly by BLS. If you want to do better than this, you need to measure the "quality" of employment. The most common variables used are the length of the work week and median weekly earnings. More recently, adding a measure of part-time employment helps. This is all econometrics, what is statistically related to what.

If you are interested in other specific questions, other measures can be important. The dispersion index of employment changes is a good measure of how widespread throughout the economy changes are. Unemployment rates for youth may be better measures if your examining crime statistics. Ethnic breakdowns can help in explaining poverty and regional variations.

So it really boils down to why you want to measure employment. I suspect that some politically motivated "analysts" misuse statistics and are inconsistent, but the BLS and Census are pretty professional and all of the data is pretty transparent. Researchers can and do have access to the raw data and can develop statistics outside the reported series and create new measures for specific research projects. So I don't have much sympathy for critics who trash the agencies but have no alternative measures that can be subject to peer review.

The employment-to-working age population ratio is easily the most worthless stat for unemployment that the BLS puts out. It assumes that students over 16, stay at home spouses, the retired and the disabled want jobs.

 

[EdwardBaiamonte]

I used to teach labor economics and try to keep up with the literature. There is no single measure of employment that is best for all purposes. For most purposes (especially if you are using an employment variable in a regression equation), you get most of the explanatory power using a combination of U-6 and the employment-to-working age population ratio, both reported monthly by BLS. If you want to do better than this, you need to measure the "quality" of employment. The most common variables used are the length of the work week and median weekly earnings. More recently, adding a measure of part-time employment helps. This is all econometrics, what is statistically related to what.

If you are interested in other specific questions, other measures can be important. The dispersion index of employment changes is a good measure of how widespread throughout the economy changes are. Unemployment rates for youth may be better measures if your examining crime statistics. Ethnic breakdowns can help in explaining poverty and regional variations.

So it really boils down to why you want to measure employment. I suspect that some politically motivated "analysts" misuse statistics and are inconsistent, but the BLS and Census are pretty professional and all of the data is pretty transparent. Researchers can and do have access to the raw data and can develop statistics outside the reported series and create new measures for specific research projects. So I don't have much sympathy for critics who trash the agencies but have no alternative measures that can be subject to peer review.

The employment-to-working age population ratio is easily the most worthless stat for unemployment that the BLS puts out. It assumes that students over 16, stay at home spouses, the retired and the disabled want jobs.

far more importantly does the liberal know how liberalism causes unemployment????????????

 

[lynn63]

The real rate of unemployment can be determined by how many firms or establishments there are that have employees in the U.S. The average number of employees each business maintains on a yearly basis with someone from the census bureau keeping track of unfulfilled positions on a quarterly basis from each employer reported in.

If it was done in this manner, the government could then have more control of lending for new businesses to start up that align with the population growth that require jobs. It could also be used to restrict large firms from leaving the U.S. that would harm the economy if they left.

 

[EdwardBaiamonte]

It could also be used to restrict large firms from leaving the U.S. that would harm the economy if they left.

we're better off letting them leave so they can compete in the globalized world rather than let them go bankrupt here under the highest tax rates and worst unions in the world

 

[oldfart]

The employment-to-working age population ratio is easily the most worthless stat for unemployment that the BLS puts out. It assumes that students over 16, stay at home spouses, the retired and the disabled want jobs.

But the ratio has the advantage that it removes most of the subjective elements that come with defining a civilian labor force. Changes in the four groups you mention will not change the statistic. But you have a point, and I would agree that the ratio is a better measure of demand for labor than supply for labor.

 

[pinqy]

What is the "Real Unemployment Rate"

Including those unemployed, unemployable, under employed or who have just flat out given up looking for jobs because they know they won't find anything that supports them?

About 25% would be my guess.

Now try actually reading the OP. And justify your definition and defend why it's "real."

 

[pinqy]

I used to teach labor economics and try to keep up with the literature. There is no single measure of employment that is best for all purposes. For most purposes (especially if you are using an employment variable in a regression equation), you get most of the explanatory power using a combination of U-6 and the employment-to-working age population ratio, both reported monthly by BLS. If you want to do better than this, you need to measure the "quality" of employment. The most common variables used are the length of the work week and median weekly earnings. More recently, adding a measure of part-time employment helps. This is all econometrics, what is statistically related to what.

If you are interested in other specific questions, other measures can be important. The dispersion index of employment changes is a good measure of how widespread throughout the economy changes are. Unemployment rates for youth may be better measures if your examining crime statistics. Ethnic breakdowns can help in explaining poverty and regional variations.

So it really boils down to why you want to measure employment. I suspect that some politically motivated "analysts" misuse statistics and are inconsistent, but the BLS and Census are pretty professional and all of the data is pretty transparent. Researchers can and do have access to the raw data and can develop statistics outside the reported series and create new measures for specific research projects. So I don't have much sympathy for critics who trash the agencies but have no alternative measures that can be subject to peer review.

The employment-to-working age population ratio is easily the most worthless stat for unemployment that the BLS puts out. It assumes that students over 16, stay at home spouses, the retired and the disabled want jobs.

No it doesn't. It's employment as a percent of the population.How are you getting any assumption about the non-employed? It's not meant to say anything about unemployment as such, but watching the trend of how much of the population is working tells us the general health of the Labor market.

 

[edthecynic]

I used to teach labor economics and try to keep up with the literature. There is no single measure of employment that is best for all purposes. For most purposes (especially if you are using an employment variable in a regression equation), you get most of the explanatory power using a combination of U-6 and the employment-to-working age population ratio, both reported monthly by BLS. If you want to do better than this, you need to measure the "quality" of employment. The most common variables used are the length of the work week and median weekly earnings. More recently, adding a measure of part-time employment helps. This is all econometrics, what is statistically related to what.

If you are interested in other specific questions, other measures can be important. The dispersion index of employment changes is a good measure of how widespread throughout the economy changes are. Unemployment rates for youth may be better measures if your examining crime statistics. Ethnic breakdowns can help in explaining poverty and regional variations.

So it really boils down to why you want to measure employment. I suspect that some politically motivated "analysts" misuse statistics and are inconsistent, but the BLS and Census are pretty professional and all of the data is pretty transparent. Researchers can and do have access to the raw data and can develop statistics outside the reported series and create new measures for specific research projects. So I don't have much sympathy for critics who trash the agencies but have no alternative measures that can be subject to peer review.

The employment-to-working age population ratio is easily the most worthless stat for unemployment that the BLS puts out. It assumes that students over 16, stay at home spouses, the retired and the disabled want jobs.

No it doesn't. It's employment as a percent of the population.How are you getting any assumption about the non-employed? It's not meant to say anything about unemployment as such, but watching the trend of how much of the population is working tells us the general health of the Labor market.

Maybe that's how you see it, but the Right "reports" it this way.

With 89 Million Americans Not Working, Obama Decides to Eliminate Jobs Council | FrontPage Magazine

 

[pinqy]

The employment-to-working age population ratio is easily the most worthless stat for unemployment that the BLS puts out. It assumes that students over 16, stay at home spouses, the retired and the disabled want jobs.

No it doesn't. It's employment as a percent of the population.How are you getting any assumption about the non-employed? It's not meant to say anything about unemployment as such, but watching the trend of how much of the population is working tells us the general health of the Labor market.

Maybe that's how you see it, but the Right "reports" it this way.

With 89 Million Americans Not Working, Obama Decides to Eliminate Jobs Council | FrontPage Magazine

Well, yeah, that's dishonest portrayal by people who don't understand that most of the people not working don't want to work.

 

[edthecynic]

No it doesn't. It's employment as a percent of the population.How are you getting any assumption about the non-employed? It's not meant to say anything about unemployment as such, but watching the trend of how much of the population is working tells us the general health of the Labor market.

Maybe that's how you see it, but the Right "reports" it this way.

With 89 Million Americans Not Working, Obama Decides to Eliminate Jobs Council | FrontPage Magazine

Well, yeah, that's dishonest portrayal by people who don't understand that most of the people not working don't want to work.

Oh they understand all right, they know they are being dishonest. And the most dishonest of all puts a sinister twist on it to boot. Reminds me of the famous "useless eaters."

May 25, 2012
RUSH: And I know that 88 million Americans are not working but they're eating, and it's a statistic that worries me.
It's quite telling that 88 million are not working but they're eating.

 

[pinqy]

What is the "Real Unemployment Rate"

Including those unemployed, unemployable, under employed or who have just flat out given up looking for jobs because they know they won't find anything that supports them?

About 25% would be my guess.

Oh, and to get your 25%, you're adding over 23 million to the U-6. I'd like to know how you're getting that number of people.

 

[itfitzme]

What is the "Real Unemployment Rate"

Including those unemployed, unemployable, under employed or who have just flat out given up looking for jobs because they know they won't find anything that supports them?

About 25% would be my guess.

Those people are included in "would take a job if offered but I haven't looked recently because I can't stand sending out another resume and never hearing back." They are in U-5

 

[itfitzme]

I used to teach labor economics and try to keep up with the literature. *There is no single measure of employment that is best for all purposes. *For most purposes (especially if you are using an employment variable in a regression equation), you get most of the explanatory power using a combination of U-6 and the employment-to-working age population ratio, both reported monthly by BLS. *If you want to do better than this, you need to measure the "quality" of employment. *The most common variables used are the length of the work week and median weekly earnings. *More recently, adding a measure of part-time employment helps. *This is all econometrics, what is statistically related to what. *

If you are interested in other specific questions, other measures can be important. *The dispersion index of employment changes is a good measure of how widespread throughout the economy changes are. *Unemployment rates for youth may be better measures if your examining crime statistics. *Ethnic breakdowns can help in explaining poverty and regional variations.

So it really boils down to why you want to measure employment. *I suspect that some politically motivated "analysts" misuse statistics and are inconsistent, but the BLS and Census are pretty professional and all of the data is pretty transparent. *Researchers can and do have access to the raw data and can develop statistics outside the reported series and create new measures for specific research projects. *So I don't have much sympathy for critics who trash the agencies but have no alternative measures that can be subject to peer review.

This is an excellent post. *Much of the raw data is available publicly. *I had it in MSAccess.

All by itself, any one stat doesnt mean anything.

It all comes down to the fact that there is no absolute frame of reference.*

The most basic reference is the comparison of a rate to itself, as the months progress. *Is it getting larger or smaller? *Relative to how it has trended before, how *is it trending now?

Other frames of reference are normative, that is comparing it to what it ought to be. *U-5 references the "every one that would take a job should have one." *U-6 references "Everyone that wants full time work should have that".

Using U-3, along with the employment ratio gives a better sense from just two stats. *U-3 is the basic reference to those actively looking. The limitation of U-3s dependency on a variabe labor force size is eliminated with the employment ratio. *The employment ratio references the total population. *And how they trend compared to each other means different things. If the employment ratio is rising, the economy is adding jobs ahead of pop growth. *We would expect U-3 to fall. If it rises instead, then people are joining the labor force.

For me, I find the employment to pop ratio the most informative as my "should be" reference point is that everyone should be working. *And, for whatever the "reason" given, they would be and could be, the rest is just social norms. *The more people working, the more gets built and accomplished giving a better standard of living.

 

[edthecynic]

I used to teach labor economics and try to keep up with the literature. *There is no single measure of employment that is best for all purposes. *For most purposes (especially if you are using an employment variable in a regression equation), you get most of the explanatory power using a combination of U-6 and the employment-to-working age population ratio, both reported monthly by BLS. *If you want to do better than this, you need to measure the "quality" of employment. *The most common variables used are the length of the work week and median weekly earnings. *More recently, adding a measure of part-time employment helps. *This is all econometrics, what is statistically related to what. *

If you are interested in other specific questions, other measures can be important. *The dispersion index of employment changes is a good measure of how widespread throughout the economy changes are. *Unemployment rates for youth may be better measures if your examining crime statistics. *Ethnic breakdowns can help in explaining poverty and regional variations.

So it really boils down to why you want to measure employment. *I suspect that some politically motivated "analysts" misuse statistics and are inconsistent, but the BLS and Census are pretty professional and all of the data is pretty transparent. *Researchers can and do have access to the raw data and can develop statistics outside the reported series and create new measures for specific research projects. *So I don't have much sympathy for critics who trash the agencies but have no alternative measures that can be subject to peer review.

This is an excellent post. *Much of the raw data is available publicly. *I had it in MSAccess.

All by itself, any one stat doesnt mean anything.

It all comes down to the fact that there is no absolute frame of reference.*

The most basic reference is the comparison of a rate to itself, as the months progress. *Is it getting larger or smaller? *Relative to how it has trended before, how *is it trending now?

Other frames of reference are normative, that is comparing it to what it ought to be. *U-5 references the "every one that would take a job should have one." *U-6 references "Everyone that wants full time work should have that".

Using U-3, along with the employment ratio gives a better sense from just two stats. *U-3 is the basic reference to those actively looking. The limitation of U-3s dependency on a variabe labor force size is eliminated with the employment ratio. *The employment ratio references the total population. *And how they trend compared to each other means different things. If the employment ratio is rising, the economy is adding jobs ahead of pop growth. *We would expect U-3 to fall. If it rises instead, then people are joining the labor force.

For me, I find the employment to pop ratio the most informative as my "should be" reference point is that everyone should be working. *And, for whatever the "reason" given, they would be and could be, the rest is just social norms. *The more people working, the more gets built and accomplished giving a better standard of living.

Again, the employment to population ratio is the most useless and misleading stat. Right now more people are retiring than entering the workforce, so the economy IS adding jobs in addition to replacing the retirees as the ratio falls and will continue to fall until the Boomers finish retiring.

 

[editec]

All these statistics are based on self reportin surveys,not on any hard numbers from employers

How does one tally up the unemplymentffactor of the underemployed to arrive at a single TOTAL unemployment?

My "GUESS" of 25% is just that...a guess.

My 25% GUESS is meant to suggest that we have about 3/4s of all workers working to their DESIRED POTENTIAL.



This isn't chemistry kids this is SOCIAL SCIENCE.

Hard numbers do not come easily in this case.

Everything is a forking estimate.

 

[pinqy]

All these statistics are based on self reportin surveys,not on any hard numbers from employers

How does one tally up the unemplymentffactor of the underemployed to arrive at a single TOTAL unemployment?

My "GUESS" of 25% is just that...a guess.

My 25% GUESS is meant to suggest that we have about 3/4s of all workers working to their DESIRED POTENTIAL.



This isn't chemistry kids this is SOCIAL SCIENCE.

Hard numbers do not come easily in this case.

Everything is a forking estimate.

"Estimate" does not mean "to pull out of your ass." You are claiming 25%. So define your terms. Your 25% is what as a percent of what? It's obviously not just unemployed, which is odd by itself since you were responding to a question about unemployment.

 

[Dugdale_Jukes]

What is the "Real Unemployment Rate"

Including those unemployed, unemployable, under employed or who have just flat out given up looking for jobs because they know they won't find anything that supports them?

About 25% would be my guess.

far more important dear is to realize that libtards are responsible for 100% of it because they interfere with the the capitalist law of supply and demand which states that the supply of jobs must equal the demand for jobs.

Over you liberal head as per usual??

One continues to be stunned by the je ne sais quoi of your insights, Edouard.

 

[Dugdale_Jukes]

What is the "Real Unemployment Rate"

Including those unemployed, unemployable, under employed or who have just flat out given up looking for jobs because they know they won't find anything that supports them?

About 25% would be my guess.

That is as good of a guess as the government's.

The header stuff is true as far as it goes. No question the folks preparing the data report it without proved political bias. But reports are subject to structural and subjective limits.

A structural problem is BLS numbers ignore individuals not active in state employment office systems, which brings validity into question. Not counting people doesn't make them go away; in real life they still exist and still don't have work. The structure of the reporting system makes Rube Goldberg constructs look like models of efficiency and integrity.

Adjustments represent another problem. Adjustments at best diminish reliability; at worst, adjustments destroy reliability. "What adjustments?" get made are qualitative decisions, aka subjective decisions. Worse, numbers in adjustments are aggregations of history and can be wildly inaccurate in atypical situations, which in the course of human events occur frequently.

Again, government employees do what they are told. Since the 1980s less and less of the whole story is told.

 

[editec]

All these statistics are based on self reportin surveys,not on any hard numbers from employers

How does one tally up the unemplymentffactor of the underemployed to arrive at a single TOTAL unemployment?

My "GUESS" of 25% is just that...a guess.

My 25% GUESS is meant to suggest that we have about 3/4s of all workers working to their DESIRED POTENTIAL.



This isn't chemistry kids this is SOCIAL SCIENCE.

Hard numbers do not come easily in this case.

Everything is a forking estimate.

"Estimate" does not mean "to pull out of your ass." You are claiming 25%. So define your terms. Your 25% is what as a percent of what? It's obviously not just unemployed, which is odd by itself since you were responding to a question about unemployment.

Yup it is a SWAG, I quite agree.,Pinqy

One mostly based on having lived through so many other recessions it is therefore it is MY SWAG by comparison to other recessions I've seen.


And you must realize that the numbers you are getting from the BLS are ALSO SWAGS<too, right?

No, based on the venom with you responded to my previous posts apparently you do not understand how SOFT those estimates really are.

 

[Dugdale_Jukes]

I used to teach labor economics and try to keep up with the literature. There is no single measure of employment that is best for all purposes. For most purposes (especially if you are using an employment variable in a regression equation), you get most of the explanatory power using a combination of U-6 and the employment-to-working age population ratio, both reported monthly by BLS. If you want to do better than this, you need to measure the "quality" of employment. The most common variables used are the length of the work week and median weekly earnings. More recently, adding a measure of part-time employment helps. This is all econometrics, what is statistically related to what.

If you are interested in other specific questions, other measures can be important. The dispersion index of employment changes is a good measure of how widespread throughout the economy changes are. Unemployment rates for youth may be better measures if your examining crime statistics. Ethnic breakdowns can help in explaining poverty and regional variations.

So it really boils down to why you want to measure employment. I suspect that some politically motivated "analysts" misuse statistics and are inconsistent, but the BLS and Census are pretty professional and all of the data is pretty transparent. Researchers can and do have access to the raw data and can develop statistics outside the reported series and create new measures for specific research projects. So I don't have much sympathy for critics who trash the agencies but have no alternative measures that can be subject to peer review.

No one wants your sympathy. It is not relevant.

How about a link to the raw data?