Unemployment: It's All Relative

Nathan F · Post by **Nathan F** » 2004-03-02 01:04am

Is 5.6% unemployment high or low? Depends on who you are, apparently.

This blog entry (more like essay) was pointed out to me by a friend, and I thought I'd post it up here for all to see.

http://timblair.spleenville.com/archives/006086.php

February 29, 2004
IT'S ALL RELATIVE

Is 5.6 percent a low figure, or a high one? Depends. If only 5.6 percent of hamburgers are discovered to contain meat, that’s way low. But if 5.6 percent of teachers are using their students as drug mules in elaborate Asian heroin importing schemes, that’s sort of high.

We’re comparing apples and oranges here. Or junkies and burgers. What if we compare similar or identical figures on the same subject, and from the same source?

Here’s CNN in July 1996, as the Clinton-Dole election approached:

Economists didn't expect June's unemployment rate to be much different from May's, which was an already-low 5.6 percent. But in fact, it did fall -- to 5.3 percent. The unemployment rate hasn't been that low since June 1990.

So 5.6 percent is “already-low”. Now here’s CNN in December 2001:

The U.S. unemployment rate jumped to 5.7 percent in November - the highest in six years - as employers cut hundreds of thousands more jobs in response to the first recession in a decade in the world's largest economy.

Can you “jump” to a figure 0.1 percent above that already defined as “low”? More from CNN, this time in March 2002:

The U.S. unemployment rate fell to 5.5 percent in February and businesses added jobs for the first time since last summer, the government said Friday, as the labor market began to recover from a downturn that led to more than a million job cuts in 2001.

The jobless rate fell from 5.6 percent in January as employers added 66,000 jobs to payrolls ...

That should read “fell from an already-low 5.6 percent in January”, surely. In January, CNN’s Mark Gongloff decided that an unemployment rate of 5.7 percent was bad news for Bush:

Though the unemployment rate posted a surprising decline, and many economists believe the job market will improve in 2004, Friday's report probably will keep Fed policy-makers on hold and may put some political pressure on President Bush.

A weak job market could prove tough for President Bush as the November election approaches.

Gongloff repeated his line about Bush’s election chances earlier this month when a familiar number appeared:

The unemployment rate fell to 5.6 percent, the lowest level since January 2002, from 5.7 percent in December.

A weak job market could prove tough for President Bush as the November election approaches.

Why? It didn’t for Clinton.

(Via Phisher at Free Republic.)

Posted by Tim Blair at February 29, 2004 02:24 AM

Post by **Darth Wong** » 2004-03-02 01:13am

For a politician, unemployment rates are always compared to the numbers when you first took office. Anything else is really not considered important.

PS. Unemployment rates are a bit distorted anyway, because there are a lot more part-time and shit-work people than there used to be, and they get counted as "employed".

Master of Ossus · Post by **Master of Ossus** » 2004-03-02 01:31am

The real unemployment rate has risen considerably while Bush has been in office, though it's not clear how much of this is structural and how much is frictional.

The difference between this recession, which is VERY light in terms of unemployment for a recession, and previous recessions, is only in the people being hit most. This time, white-collar workers are suffering from prolonged unemployment, whereas previous recessions had heavily targetted blue-collar workers.

TrailerParkJawa · Post by **TrailerParkJawa** » 2004-03-02 02:06am

It is also regional, try finding a good job in the Seattle, Denver, San Francisco-Oakland-San Jose, Portland metros. Not much to be had and what is there would be considered "underemployment".
All I can say is at least it is not as bad as the Great Depression.

Howedar · Post by **Howedar** » 2004-03-02 02:39am

Yeah, I can personally vouch for Portland getting absolutely nailed.

EmperorMing · Post by **EmperorMing** » 2004-03-02 03:16am

If they keep moving the jobs overseas (which they will), I'm sure this will only get worse.

Nathan F · Post by **Nathan F** » 2004-03-02 09:37am

Another thing we must consider: Is this actually the presidents fault? What has he done, or failed to do, that was reasonably in his power?

The Kernel · Post by **The Kernel** » 2004-03-02 09:42am

Nathan F wrote:Another thing we must consider: Is this actually the presidents fault? What has he done, or failed to do, that was reasonably in his power?

The economy in general has little to do with any President, but he is still the only person the average American knows to go to during times of economic downturn. The status of the economy is one of the big killers for Presidential re-election and while it is most definetely unfair, it is just one of those things that comes with being President.

Durandal · Post by **Durandal** » 2004-03-02 10:30am

The Kernel wrote:
Nathan F wrote:Another thing we must consider: Is this actually the presidents fault? What has he done, or failed to do, that was reasonably in his power?
The economy in general has little to do with any President, but he is still the only person the average American knows to go to during times of economic downturn. The status of the economy is one of the big killers for Presidential re-election and while it is most definetely unfair, it is just one of those things that comes with being President.

While it's true that the president has little to do with the economy directly, he appoints the people who do. Also, spending hundreds of billions on nation-building is one of those things he can do which does have an effect on the economy.

Col. Crackpot · Post by **Col. Crackpot** » 2004-03-02 11:20am

The Kernel wrote: The economy in general has little to do with any President, but he is still the only person the average American knows to go to during times of economic downturn. The status of the economy is one of the big killers for Presidential re-election and while it is most definetely unfair, it is just one of those things that comes with being President.

unless of course there is just utter incompetence on the part of the administration. That, under Gerry Ford and Jimmy Carter caused the "stagflation" of the late 70's-early. A prolonged period of recession was drasticly worsened by the government's brilliant plan to keep long term interest rates in the double digits, stunting growth.

Post by **Darth Wong** » 2004-03-02 11:22am

One could easily argue that if President Bush had spent this huge $500 billion deficit differently than he did, that it would have created more jobs.

Col. Crackpot · Post by **Col. Crackpot** » 2004-03-02 11:26am

Darth Wong wrote:One could easily argue that if President Bush had spent this huge $500 billion deficit differently than he did, that it would have created more jobs.

one could also argue that if a frog had wings, it wouldn't bump its ass when it hopped.

General Zod · Post by **General Zod** » 2004-03-02 11:29am

TrailerParkJawa wrote:It is also regional, try finding a good job in the Seattle, Denver, San Francisco-Oakland-San Jose, Portland metros. Not much to be had and what is there would be considered "underemployment".
All I can say is at least it is not as bad as the Great Depression.

living in denver myself, i can tell you how hard it is to find any type of job. most of the time you'll have 50+ people applying for something with only 4-5 positions, and alot of them will often have more qualifications than yourself, leaving you fucked. plus so many of the jobs require personal transportation (ie - a working car), but without a job you can't have a car. after nearly a year i have yet to be hired by a decent job that i'm willing to work at for more than a few weeks (i don't consider telemarketing decent, personally.)

The Kernel · Post by **The Kernel** » 2004-03-02 11:45am

Crackpot, are you capable of carrying on a discussion without resorting to Al Sharpton level rhetoric?

Col. Crackpot · Post by **Col. Crackpot** » 2004-03-02 11:47am

The Kernel wrote:Crackpot, are you capable of carrying on a discussion without resorting to Al Sharpton level rhetoric?

Lighten up

Hamel · Post by **Hamel** » 2004-03-02 12:18pm

What's really funny about this is the supply side fantasy of tax cuts = more money for employers to create jobs with never came to pass.

BoredShirtless · Post by **BoredShirtless** » 2004-03-02 12:21pm

Hamel wrote:What's really funny about this is the supply side fantasy of tax cuts = more money for employers to create jobs with never came to pass.

Yes it did. What, New Delhi doesn't count?

theski · Post by **theski** » 2004-03-02 02:07pm

This is a interesting CNN slant on things.... 4 years later....

IT'S ALL RELATIVE

Is 5.6 percent a low figure, or a high one? Depends. If only 5.6 percent of hamburgers are discovered to contain meat, that’s way low. But if 5.6 percent of teachers are using their students as drug mules in elaborate Asian heroin importing schemes, that’s sort of high.

We’re comparing apples and oranges here. Or junkies and burgers. What if we compare similar or identical figures on the same subject, and from the same source?

Here’s CNN in July 1996, as the Clinton-Dole election approached:

Economists didn't expect June's unemployment rate to be much different from May's, which was an already-low 5.6 percent. But in fact, it did fall -- to 5.3 percent. The unemployment rate hasn't been that low since June 1990.

So 5.6 percent is “already-low”. Now here’s CNN in December 2001:

The U.S. unemployment rate jumped to 5.7 percent in November - the highest in six years - as employers cut hundreds of thousands more jobs in response to the first recession in a decade in the world's largest economy.

Can you “jump” to a figure 0.1 percent above that already defined as “low”? More from CNN, this time in March 2002:

The U.S. unemployment rate fell to 5.5 percent in February and businesses added jobs for the first time since last summer, the government said Friday, as the labor market began to recover from a downturn that led to more than a million job cuts in 2001.

The jobless rate fell from 5.6 percent in January as employers added 66,000 jobs to payrolls ...

That should read “fell from an already-low 5.6 percent in January”, surely. In January, CNN’s Mark Gongloff decided that an unemployment rate of 5.7 percent was bad news for Bush:

Though the unemployment rate posted a surprising decline, and many economists believe the job market will improve in 2004, Friday's report probably will keep Fed policy-makers on hold and may put some political pressure on President Bush.

A weak job market could prove tough for President Bush as the November election approaches.

Gongloff repeated his line about Bush’s election chances earlier this month when a familiar number appeared:

The unemployment rate fell to 5.6 percent, the lowest level since January 2002, from 5.7 percent in December.

A weak job market could prove tough for President Bush as the November election approaches.

Why? It didn’t for Clinton.

http://timblair.spleenville.com/archives/006086.php

Its always good to a Clinton a day post....

Master of Ossus · Post by **Master of Ossus** » 2004-03-02 03:11pm

Hamel wrote:What's really funny about this is the supply side fantasy of tax cuts = more money for employers to create jobs with never came to pass.

Nice strawman distortion of supply side economics. This is a classic misunderstanding of the central thesis of such economic policies. The point is to create jobs in the long-run, which we DID observe during the Reagan years, and which we're still enjoying right now. There are trade-offs associated with supply-side economics, as there are with any economic policy, and while supply-side economics are USUALLY not appropriate to be applied to an economy, under given conditions a society could be willing to accept those trade-offs in order to reap the benefits.

Contrary to the belief of many leftist editors, very few supply-side economists consider it to be the be-all, end-all of the dreary science. Instead, they consider it to be a limited but potentially useful economic tool that a government can use to stimulate long-term growth under given conditions. Almost all supply-side predictions HAVE been directly observed, which is pretty impressive given the unbelievable rarity with which politicians employ such tactics for the economy. While it's true that sometimes supply-side econ is not as effective as many politicians and economists hope, this is not to be mistaken for an indictment of the system as a whole. Much more conventional economic policies often suffer from very similar failure rates, but generate different returns.

Master of Ossus · Post by **Master of Ossus** » 2004-03-02 03:19pm

Darth_Zod wrote:living in denver myself, i can tell you how hard it is to find any type of job. most of the time you'll have 50+ people applying for something with only 4-5 positions, and alot of them will often have more qualifications than yourself, leaving you fucked.

Believe it or not, this is extremely common in the job market even in a "healthy" economy. I obviously don't know what industry you're in, but companies frequently get 7-15 applicants/position.

plus so many of the jobs require personal transportation (ie - a working car), but without a job you can't have a car.

Unfortunately, this is also very common.

after nearly a year i have yet to be hired by a decent job that i'm willing to work at for more than a few weeks (i don't consider telemarketing decent, personally.)

While I sympathize strongly with your position, I also don't see this as being particularly unusual. This also highlights the dangers of hiring someone who is over-qualified for a position--they will leave it almost immediately in search of a better job. As a result, they never remotely reach full productivity since they spend all their time training, and can seriously damage a firm's financial standing.

General Zod · Post by **General Zod** » 2004-03-02 03:25pm

Master of Ossus wrote:Believe it or not, this is extremely common in the job market even in a "healthy" economy. I obviously don't know what industry you're in, but companies frequently get 7-15 applicants/position.

it's mainly in customer service type jobs that i applied for. one of them was working the front desk at a condominium complex, and i was told there were around 30 applications at least for the position. which was also more than they were expecting, oddly enough. after roughly two weeks of waiting and calling back about interviews, nada.

Master of Ossus · Post by **Master of Ossus** » 2004-03-02 03:48pm

Darth_Zod wrote:
Master of Ossus wrote:Believe it or not, this is extremely common in the job market even in a "healthy" economy. I obviously don't know what industry you're in, but companies frequently get 7-15 applicants/position.
it's mainly in customer service type jobs that i applied for. one of them was working the front desk at a condominium complex, and i was told there were around 30 applications at least for the position. which was also more than they were expecting, oddly enough. after roughly two weeks of waiting and calling back about interviews, nada.

Yeah. That's a lot less normal. Usually, I would expect jobs like that to have about 5-10 applicants/position, rather than 30. Good luck with your job search!

TrailerParkJawa · Post by **TrailerParkJawa** » 2004-03-04 12:10am

Darth_Zod wrote:
Master of Ossus wrote:Believe it or not, this is extremely common in the job market even in a "healthy" economy. I obviously don't know what industry you're in, but companies frequently get 7-15 applicants/position.
it's mainly in customer service type jobs that i applied for. one of them was working the front desk at a condominium complex, and i was told there were around 30 applications at least for the position. which was also more than they were expecting, oddly enough. after roughly two weeks of waiting and calling back about interviews, nada.

Its worse in tech. Since a job is usually posted in the internet they end up getting at least several hundred applicants for a single job.