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Saturday, February 02, 2008


The "unemployment rate" myth

I've written before about what I've termed "job-inflation employment" or "population-inflation adjusted employment," the fact that 150,000 (roughly) new jobs need to be created in a country growing at the rate of the United States each month in order to keep pace with population growth ("population inflation"). So when a headline reads "U.S. loses 17,000 jobs," it's just as misleading as a headline trumpeting "Wages rise 2%" in a year in which inflation is 4%. The jobs headline really should read, "167,000 job shortfall last month."

But when it comes to the "unemployment rate," it's even worse, as these paragraphs from the article shows:

The unemployment rate actually dipped slightly to 4.9 percent, from 5 percent in December, as people left the labor force.

"Discouraged by a sluggish job market, many more adults are sitting on the sidelines," said Peter Morici, an economist and business professor at the University of Maryland.
So, according to the "experts" and the media, we didn't really need those extra 150,000 jobs last month at all, because that many people (and more, actually) just decided to "sit on the sidelines." They're not "unemployed" at all, just "discouraged." Discouraged by the fact that there chance for reemployment is zero.

On the wage side, the media does generally (though not always) recognize inflation:

Average hourly earnings for jobholders rose to $17.75 in January, a 0.2 percent increase from the previous month. It was half the pace logged in December. Over the past 12 months, wages went up by 3.7 percent. With high energy and food prices, though, workers may feel like their paychecks aren't stretching as far.
Note that the article, while mentioning rising prices, doesn't actually quantify the "inflation rate," That's because the "core inflation rate" is just as anti-worker as the "unemployment rate" in that it excludes the cost of food and energy, two of the three major things (housing being the third) that workers spend their money on. And note the implicit pejorative tone of the phrase "workers may feel like their paychecks aren't stretching as far." No, their paychecks aren't stretching as far. There's no "feeling" about it.

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