Newsroom Insider: When Unemployment Isn’t

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The Chinese philosopher Confucius once said that the first step toward wisdom is to call things by their right name. If that’s true the mainstream media has a very long way to go when it comes to effectively reporting the number of Americans who don’t have a job right now.

This problem was illustrated by coverage of the monthly payroll report for June.

Mainstream media organizations continued to cling too closely to the official script, making it impossible for average Americans to see the big picture. Instead of analyzing the press release from the Bureau of Labor Statistics they just repeated it.

The problem is that business reporters lean almost exclusively on the published unemployment rate in the federal press release, which ticked up to 9.2 percent in June from 9.1 percent, as a measure of joblessness. It’s not. It’s really a measure of short-term job loss written by trained economists for trained economists, rather than for a newspaper audience with an average reading level of sixth grade.

The unemployment rate measures a lot of things, but true unemployment is not one of them. It doesn’t include the number of people who have lost jobs and stopped actively looking for work at a time when so many of the career opportunities listed on job websites are going unfilled, which is a great incentive to stop looking. Most non-economists consider those people unemployed.

I know I do.

pink slipThe unemployment rate also doesn’t tell us how many people have lost full-time jobs and replaced them with part-time gigs, a group that often considers itself unemployed. These people are counted as employed, even though that they may be making $18,000 a year now instead of $60,000.

A better measure of U.S. job loss is a line in the payroll report called the “employment-population ratio,” which is simply a percentage of all Americans who have work. It was 58.5 percent in June.

The flip side of that ratio reflects the percentage of Americans who don’t have work. It’s something I like to call the “Will Work for Food” number, or WWF.

These are the people who might soon be holding up signs at your local intersection begging for spare change.

The WWF ratio was 41.5 percent in June – the highest monthly tally since 1983, according to Bureau of Labor Statistics data. That’s bad news.

The problem with these ratios is that they look at our entire population, including kids in school and retirees. That said, they’re still a better measure of who has a job and who doesn’t than the unemployment rate.

line 2The ideal measure of unemployment would be an unemployment-population ratio for people ages 16-64 that considers only full-time jobs as employment. I can’t generate that monthly percentage from the data available on the BLS site, but I can estimate the annual percentage. You can too, by crunching your own data here: http://www.bls.gov/data/

We know that about 74.5 percent of our population is typically comprised of people ages 16-64, which is what most of us consider working age, according to the Census data here: http://factfinder.census.gov/servlet/GRTTable?_bm=y&-_box_head_nbr=R2301&-ds_name=ACS_2009_1YR_G00_&-format=US-30

We also know that our total population was 310.1 million in 2010, which gives us a working age population of 231 million. And we know that 108 million Americans were employed full-time in 2010, ages 16 and 64.

Once you run the jobless numbers for that data you learn that 54 percent of working-age Americans did not have a full-time job last year – or about 123 million. That’s bad.

oldIt’s even worse when you realize that only 14.1 million Americans were officially listed as being “unemployed” in the June payroll report.

The difference is not a willful deception. It’s really a sin of omission resulting from the fact that the technical definiton for “unemployed” is meant for economists looking at short-term changes in the labor force. It’s not meant for non-economists, who take the term “unemployed” literally and apply it to anyone who doesn’t have a job.

So, why do we keep leading our stories on job loss with the unemployment rate?

We do it because we’re screwing up. As journalists, we can and should do better.

Unfortunately, I don’t have a way to look at WWF data over time because the number of employed people, ages 16 to 64, only goes back to 2009 on the BLS website. The federal government needs to start listing that data, because it’s the kind of information our fellow Americans really need.

Why?

old 2 Because without it, many members of the American wage-earning class are left wondering why they’re doing so much worse than their peers, when they’re not. Ultimately, sinking with the Johnsons is just as important to our self image as keeping up with them. The problem of misinformation by omission isn’t limited to the unemployment rate.

The mainstream media also continues to run stories on job creation that simply don’t make sense because they lack proper benchmarks. For example, the U.S. economy created 18,000 jobs in June, according to the payroll report.

Readers have to wonder how the unemployment rate could increase in the same month to 9.2 percent. It happened because we had a net loss of jobs, not a net gain, although I have yet to read a business story that explained this phenomenon.

It’s a sin of omission because there’s no way for readers to place the 18,000 new jobs in proper perspective without the knowledge that we must create 120,000 to 140,000 jobs each month just to break even on job creation, due to population growth. That’s the number of jobs we have to create above and beyond the normal churn that results from new workers replacing older workers who die or retire.

To put it another way, zero monthly job creation equals at least 120,000 jobs a month. Anything less represents a net loss in a nation that grew by 9.6 percent to 312.5 million in May from 282.4 million in 2000.