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Oy...
As I just IMed to a colleague, someday when I'm powerful and important, I'll write my chilling expose about how little journalists understand about the issues they write about. Until then, you'll have to read U.S. News and World Report's thoughts on the labor market:
Breathe easy, workers: The jobless recovery is indisputably over. Some 262,000 new jobs were created last month, with almost every sector of the economy contributing, including manufacturing. That's icing on the cake after January, when the U.S. labor market at long last recouped all of its losses from the 2001 recession. There are now about 300,000 more people working than in February 2001, the pre-recession peak.This is a bit like John Kerry taking solace in the fact that he's the second-highest all-time vote getter in an American presidential election. The American population grows at around 0.9 percent each year -- that means we've got something like 9 or 10 million more people than we had in February 2001 chasing the additional 300,000 jobs. The recovery, clearly, is no longer literally jobless. We've got the old jobs back, and then some. But there's no reason workers should be "breath[ing] easy" or believing that "A brightening labor market could make this the time to look for a new job." Note that real wages have been stagnating or slightly declining (mine have been slightly declining, and, frankly, I'm getting pissed about it), evidence of a slack labor market.
March 14, 2005 | Permalink
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» It's All About The Rate from Saheli*: Musings and Observations
Matthew Yglesias makes a point worth repeating: even if we're doing slightly better than February 2001 in absolute number of jobs, we're not doing better in terms of actual employment: [Read More]
Tracked on Mar 15, 2005 12:25:02 PM
Comments
What's really amazing is that such a clumsy misunderstanding of economics is not being committed by some guy sitting in a bar, or a bunch of people around the lunchtable at work, but by a guy who is the head economics writer of a major US weekly news magazine. Shouldn't someone who is writing economics cover stories at USN&WR have some inkling of economics? Not graduate level ordinary differential equation solving stuff, but simple freshman statistics and macro?
I can understand some third-tier talk radio bozo not understanding that re-attaining a previous # of jobs is meaningless in a labor pool that is growing by X% a year, but shouldn't an economics writer for the #3 weekly news magazine be able to grasp this simple fact? How low is the bar to be a writer for USN&WR? Does their science writer believe that heavy objects fall faster than light objects? Does their art writer regularly confuse Monet and Manet?
This is the sort of thing that drives Brad DeLong to distraction.
Posted by: FMguru | Mar 14, 2005 11:32:59 PM
It seems to me that graduate stuff is more based on point-set topology than ordinary differential equations. Though I'm just an undergrad who occassionally tries to read Debreu's Theory of Value before giving up, so don't take my word for it.
Posted by: Julian Elson | Mar 15, 2005 12:06:08 AM
"The American population grows at around 0.9 percent each year..."
And all of them joins the labor force immediately? Cool...
Posted by: Dennis | Mar 15, 2005 3:43:14 AM
No, Dennis, just the immigrants; otherwise it's the ones born 17 or more years ago (when the US was growing at much the same rate as now).
Does anyone know what the actual U.S. unemployment rate is as of March 2005?
Posted by: MFB | Mar 15, 2005 4:33:25 AM
I have an impression that Mr. Zuckerman (the publisher and editor-in-chief of the "US news") has been much more concerned about Arab wickedness 'n stuff than about US employment 'n stuff.
As a result, you can expect to find a lot of nonsense in his publication on both subjects. I suspect if he tried to concentrate on the US economy for a change, it'd be better for for everyone. But I have no hope for him at this point.
Posted by: abb1 | Mar 15, 2005 5:21:14 AM
"No, Dennis, just the immigrants; otherwise it's the ones born 17 or more years ago (when the US was growing at much the same rate as now)."
Not all the immigrants. And even though the growth rate is the same, the population was lower 17 years ago. It doesn't have to be such a big difference in the end, but I find it somewhat ironic that someone who writes "how little journalists understand about the issues they write about" the go on and makes the wrong comparison.
Posted by: Dennis | Mar 15, 2005 5:44:38 AM
Dennis -
You may be right that population growth isn't the right metric to measure the change in the labor force. But that doesn't mean it will overestimate it. It might well be underestimating it as well, particularly if the 66 year olds hang on a little longer and fewer of us die in industrial accidents etc. In the long term, there will be a high correlation between the two.
From jobwatch.org "For instance, 64.3% of the working-age population was employed at the recession's start in March 2001, whereas in February 2005 only 62.3% was employed—a deficit of 4.5 million jobs."
Posted by: benton | Mar 15, 2005 9:54:04 AM
So why isn't the unemployment rate skyrocketing?
Posted by: Undertoad | Mar 15, 2005 10:21:33 AM
"The American population grows at around 0.9 percent each year..."
And all of them joins the labor force immediately? Cool...
Matt was thinking of the Jamaican labor force. Get that baby a yob, mon!
Anecdotal observations from my own sphere of relations, while worthless statistically, are nonetheless worth noting I think. I've worked for two major corporations, my wife works for a major manufacturing company, and most of our friends happen to be white-collar professionals. Among them, stories like the following are very common. You'll note the pattern of a very successful, experienced employee being out of work for a year or so then coming back at often half of their former salary:
Kirk: systems manager for ten years for the largest office of the largest paging company in the world. Brilliant, skilled guy. Company went under, wireless telco was hit hard, Kirk was never able to find work again due to being "overqualified." Now does handyman work for about a third of what he used to make.
Mike: a national construction manager for a very large retail chain for eight years and in retail development for ten years before that. One of only six guys in the corporation who oversaw the building of stores all over the world. Company made cuts to please Wall Street, Mike has been unable to find work for a year and a half despite an amazing resume.
Matt: a computer programmer making $85k/year for five years working for a company that had contracts with major utilities, auto manufacturers, hospitals, you name it. Matt was jobless for a year after cutbacks and now makes half of his former salary.
Jeff: top regional sales rep for a wireless telecom organization. Company went chapter 11. After four or five different sales jobs over a few years that didn't match his former pay, Jeff finally found comparable employment working for AT&T's business broadband division and became the top sales rep there locally. After just under two years there AT&T sold off the division. Jeff has been out of work for four months to date.
Dave: my neighbor, who worked for a specialty manufacturing company with international customers. He was a skilled machine operator whose job went to China. Off for six weeks, at forty years old he now has a job hanging gutters.
I could go on and on with similar examples but you get the picture. The economy may have been recovering some lost jobs but for workers it seems that pay and benefits have been slashed. Underemployment and low wages seem to be the order of the day. So while U.S. News and World Report would let us all just eat cake, I don't believe the situation is quite that delightful.
Posted by: glitter | Mar 15, 2005 11:01:22 AM
I guess that all our jobs now belong to Egypt.
Posted by: la | Mar 15, 2005 11:29:16 AM
Undertoad,
So why isn't the unemployment rate skyrocketing?
Because of the way they count unemployment. If you lose your job you are unemployed until a certain period of time passes and then you don't count anymore.
I wish I could do that with my bills. Don't pay them for six months and then I don't owe them anymore.
Posted by: Tripp | Mar 15, 2005 11:29:32 AM
No, that's not true. They count unemployment by performing a survey; they call random people and ask them if they worked or were looking for a job last months. Those who weren't actively looking aren't considered unemployed.
Posted by: abb1 | Mar 15, 2005 11:35:29 AM
People do leave the "workforce," which I put in quotes because we're talking about the workforce as its defined in the methodology of the Bureau of Labor Statistics. And this does account for declining unemployment rates.
But a lesson from the boom of the late 1990s, though, was that people who were on the shelf, considered out of the workforce compeltely, jumped back in as a result of the boom. Which indicates that there is probably more unemployment and a larger workforce than is dreamt of in the survey methodology.
For a rundown on the survey method see http://bls.gov/cps/cps_faq.htm#Ques2
Posted by: benton | Mar 15, 2005 2:27:53 PM
Re: Because of the way they count unemployment. If you lose your job you are unemployed until a certain period of time passes and then you don't count anymore.
This is not true. You are counted as unemployment as long as you are still looking for work. Unemployment stats are NOT based on who is getting unemployment checks. They are based on a phone survey with two key questions: “Are you currently working at least one hour a week” and if not, “Are you looking for work”. Answer No to the first question and Yes to the second and you show up in the unemployment stats.
That said, a great many people who are underemployed (note that “working one hour a week” standard) are counted as employed.
Posted by: JonF | Mar 15, 2005 2:37:49 PM
This seems like grasping for a bad news straw.
I swear I'm not trolling, I just want to get a sense of it
I myself have been underemployed for a long time, but I blame myself, kinda. If there were good jobs I would be more motivated to take one instead of my current "treading water" self-employment.
Posted by: Undertoad | Mar 15, 2005 3:40:44 PM
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