Reports Distort Level of Joblessness PDF Print E-mail
Written by Keming Liang   
Wednesday, 10 December 2008 00:00

The Weekend Edition of the Wall Street Journal for December 6-7 features a front page story headlined

"Job Losses Worst since '74: 533,000 Shed in November."

As the Journal reported, nonfarm payrolls declined 533,000 for the month, which was the largest one-month drop since 1974. The newspaper went on to say that revisions to earlier figures showed that employers shed almost 1.3 million jobs since September. In addition, the tally of 1.9 million jobs pared thus far in 2008 surpasses the losses of the past two recessions, signaling that the current downturn could be the worst since the years immediately following World War II.

While such headlines are certainly attention getters, a key piece of information is missing that would put the current job losses in proper perspective—the size of the labor force.

In December 1974, total nonfarm employment decreased by 602,000, slightly more than the one-month drop in November of this year. But, the labor force at that time was 93 million, as opposed to 155 million today, or two-thirds larger.

A better measure for contrasting the employment situation is the unemployment rate, the percentage of labor force who are unemployed. As shown in the accompanying chart, the current rate of 6.7 percent is not out of line with the experience of other 10 post World War II recessions. The unemployment rate for those 10 downturns averaged 7.6 percent.

Unemployment Rates and Recessions

Thus far, the recession has not been extraordinary in terms of employment changes.

 

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Comments (5)
Economy Statistics and Claims
5 Friday, 19 December 2008 12:47
Gorby
Our moral compass in this nation is damaged. Until we get it back I will continue to be very concerned for our nation's health and viability. The media could provide a great servide, but they won't. All they think of are ratings. There are few jounalists.
Unemployment - Really
4 Monday, 15 December 2008 14:01
poor_clyde
There exist no real numbers on unemployment whether in the form of percentages or absolute numbers because of two factors. One, the governments numbers are not the people who are unemployed, they are the number of people collecting unemployment, and the two are not the same. Two, governments have a nasty habit of solving the unemployment problem by making jobs in their respective bureaucracies which are neither supported by their respective Constitutions nor amount to any productive type jobs for which the community can show a proper return from the tax funds consumed.
Two philosophical areas seem to be the umbrella under which such labor sumps are built; policing morality and administering altruistic endeavors. Morality is used here to mean human behavior that does not interfere with the life of another human being without the other’s consent. Both areas you will notice are actually functions of the Church, not the state. If one were to tabulate by percentages all the people employed in the services of provide moral policing, including those being warehoused for such crimes stemming therefrom, plus those managing and implementing the giveaways, both domestic and foreign, we would start to get an honest picture of just how many people we actually have unemployed and what the cost really is for society to underwrite the “make job/unemployment” industry. Back in the 20’s and 30’s there existed a group of men who ran what has been called a “protection racket.” While the government worked very hard and diligent to rid society of this inhuman practice, on the heels of its success it happened to notice that the scheme they had just eliminated was an excellent way to collect taxes, pay up or we’ll take your property and/or send you to jail. That, I think, is a little more realistic picture of the actual status of unemployment in this Republic.
Jobless Claims
3 Wednesday, 10 December 2008 15:45
Jsteelman
The journalists and media talking heads are looking for headlines to attract readers and viewers. The media is a business as any other and they engage in marketing and promotion to gain customers. The real skepticism I have is the numbers since the numbers are furnished by the government who are chronic liars and manipulators of information to achieve their political agendas. In contrast to the 6.7% unemployment in the US the unemployment rate in Australia is still well under 4.9%
Integrity
2 Wednesday, 10 December 2008 14:30
B Hughes
There is little honesty and integrity in the news media however, the same can be said for Washington. I am 71 and I never worried about this country's future as I do now.

Regardless of the financial crisis this country seems to have lost the moral code that binds it. I would not place a bet on it's future.
Statistics and Damn Lies
1 Wednesday, 10 December 2008 11:59
jvc
This story illustrates a pet peeve of mine with media reporting. To sensationlize their story, journalists resort to the percentage - numbers game played in comparative ananlyses. As you point out, when percentages are used vs. absolute numbers, a different picture results. Then again, more games can be played in the calculation of percentages. This reminds me of a popular statement often made by statisticians - you can use statistics to tell any story you wish to be told. I am surprised that a WSJ journalist would resort to these tactics

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