Wednesday, June 18, 2014

Credit where Doomer credit is due (but get your numbers right)

 - by New Deal democrat

There's a rec-listed diary up at the Great Orange Satan now arguing that Congress's cutoff of long term unemployment benefits at the end of last year has led to a significant increase in the number of people who have given up looking for a job.  I happen to think he is correct, and he is citing the correct data series - Not in Labor Force, Want a Job Now.

This is because I made the exact same argument last week:
The number of discouraged workers rose by nearly 2,000,000 in the wake of the Great Recession. In 2012 and 2013, it declined by about 1/3 of that number.  Disturbingly, it has risen since the beginning of this year by over half a million.  This looks like a real trend.  I suspect it is fallout from the termination of long term unemployment benefits.  Supposedly this was going to spur those lazy moochers < /snark > to finally go out and find employment.  Instead, it looks like it has caused a fair number of  the long-term unemployed to simply give up hope.
This is a real issue, involving real hardship for people for whom there simply aren't enough jobs available.

At the same time, you need to keep your math correct.  Since the low of November 2013, those people who want a job now but have stopped looking for work have indeed increased by 659,000.  But you can't simply add that number to get to an unemployment rate. That's because the numerator in the unemployment rate is the number of unemployed .  Those who stopped looking for work entirely aren't included.  And during that same time, the number of unemployed has declined from 10.841 million to 9.799 million, or -1.042 million.

That makes the net change a decline of -383,000 in those who want a job, including both those who have looked, and those who haven't.  That's why the number I cited as "the REAL real unemployment rate" has declined since half a year ago, by about -0.3%.