Tag Archives: Unemployment

Unemployment – Are the numbers right?

Last week I posted about Unemployment. I  talked about how the government gets the numbers that we hear in the news. Today I want to start talking about a couple of places where these numbers get off track from the jump.

When you boil it all down, it really comes down to one thing: PEOPLE LIE!

 They may lie because they are proud or they may lie because they are greedy. When it comes down to it, the lack of absolute truth when someone from the BLS calls to inquire about your employment status causes the numbers to be wrong.

Liar’s in this case come in two forms – the Cheater and the Proud.

The Cheater creates what we call Phantom Unemployment.  These are people who say they are unemployed but aren’t really seeking work. They cause the Unemployment figures to be quoted higher than they really are.

Let’s say you are, umm, I dunno, my sister. You have a history of taking temporary jobs and working just enough that you don’t get fired, but not enough for the job to rehire you at the end of your term. Once they don’t re-up your contract, you qualify for unemployment.

You like free money as much as the next girl, so you do the bare minimum to “look” for a job so that you can continue getting your unemployment benefits, not really planning on actually finding a job and ***having*** to work.

When the government calls you randomly and asks if you have a job. What do you tell them?  You tell them you don’t have a job. Duh

 

Next they ask you, “Are you looking for work?” Here you have two choices as a rational individual.

  • Do you tell them you are chilling at home and not looking for a job? Of course not – you are getting unemployment benefits. Telling the truth risks losing your unemployment benefits as well as possible criminal charges because every time you claim your unemployment check, you certify that you are looking for work.
  • Do you tell the easy lie? Yes you mess up the numbers, but you are looking out for #1 or your happy ass would have really been looking for a job in the first place.

Once you go with the lie as most people will, you end up being classified as Unemployed as opposed to NILF (that’s Not In Labor Force for all of you American Pie Fans). This means that you have Inflated Unemployment Rate to be reported as HIGHER than it should be.

Next time we will look at the Discouraged Worker and how pride causes the Unemployment numbers to be reported  lower than they really should be.

Advertisements

So What’s up with Unemployment?

I think that everyone would agree with me that unemployment is pretty darn high these days. I wanted to explain how they calculate the unemployment statistics, some of the places that it can go wrong, and how we can start to unwind why it is so high still. Today I’m going to focus on how they get to the number you hear quoted in the news.

Unemployment data is gathered by having the BLS call 60,000 households monthly.They believe that this is a large enough sample size that it gives you a good representation of the economy as a whole. Once you take spouses and what not in to account, you end up with about 110,000 people who report monthly.

Basically when you get the phone call you are asked a series of questions to determine:

  • Are you employed
  • Do you want a job, and
  • Are you able/available/looking for work?

If you are able, available and looking for work, but do not have a job, that is when you get classified as unemployed.

The way they calculate the actual percentage statistic that you hear quoted is by taking the number of unemployed and dividing it by the total number of people in the labor force (employed + unemployed).

If you don’t want a job, you are classified as “Not in Labor Force” or NILF as like to call it. Hey it rhymes with MILF and gets a good giggle out of a room of 20-year-old boys. Do you see why I don’t want my employers to know about this blog???