BLS or B of S?
0 comment Thursday, May 29, 2014 |
I don't trust what the Bureau of Labor & Statistics reports. Not one whit. Have you seen the unemployment numbers for June? They're downright abysmal.
Thanks to this article in Forbes, I can shelve yet another dense post about the differences between U3 and U6. My preparatory chicken-scratch stickys, pictured below, I can now peel off my desk shelf.

(An aside: I couldn't find any flickr pictures to post. So, flickr, what's up with all this my-cat-is-so-special, you've-got-to-pay-me-for-his-photo stuff? Flickr, you are dead to me.)
But back to unemployment . . . .
Bottomline: The more folks who stop looking for employment, the smaller the denominator in the government's unemployment equation (i.e., the fewer number of folks being measured).
Put another way, if Harvard accepts 2,000 students every year from 10,000 applicants (instead of 2,000 out of 30,000), its acceptance rate would be a lot higher and its "Dear John, Get out of town" declination (unemployment) rate would be a hell of a lot lower. (It's a simple fraction: 2k/30k or 2k/10k . . . )
The same goes with unemployment.
So when 842,000 people get out of town (e.g., out of the labor force) in one month, and this causes unemployment to inch down only infinitesimally, it's really no time for cheering.
Hence, the unemployment rate appears to be improving, but it's all a mirage.
The unemployment rates in Michigan provide an excellent illustration of how bad unemployment numbers can sound "good."
For a thorough and accurate unemployment primer, watch Khan Academy's video below, not this:

P.S.: Your kids will crush on him, too. Khan has videos on addition, subtraction, division and multiplication, algebra, physics, even the Geithner P-PIPS! Videos for all ages and stages, excellent and free!

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