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Truthfully, this is not particularly a new idea. For a long time, I, and others, have been pointing out that the data about the economy and jobs does not reflect how bad it really is--and this was true way before the financial crisis. But, drumroll, a little academic cover joins the chorus.

David Leonardt has a little write-up:

A new academic paper suggests that the unemployment rate appears to have become less accurate over the last two decades, in part because of this rise in nonresponse. In particular, there seems to have been an increase in the number of people who once would have qualified as officially unemployed and today are considered out of the labor force, neither working nor looking for work.

The trend obviously matters for its own sake: It suggests that the official unemployment rate – 6.2 percent in July – understates the extent of economic pain in the country today. That makes intuitive sense. Wage growth is weak, and Americans are pretty dissatisfied with the economy, according to other surveys. The new paper is a reminder that the unemployment rate deserves less attention than it often receives.

Yet the research also relates to a larger phenomenon. The declining response rate to surveys of almost all kinds is among the biggest problems in the social sciences. It’s complicating our ability to understand how people live and what they believe. “It’s a huge issue,” says Alan Krueger, a Princeton economist and one of the new paper’s three authors. (Mr. Krueger, who recently spent two years as the chairman of President Obama’s Council of Economic Advisers, founded the Princeton University Survey Research Center in the 1990s.)

Why are people less willing to respond? The rise of caller ID and the decline of landlines play a role. But they’re not the only reasons. Americans’ trust in institutions – including government, the media, churches, banks, labor unions and schools – has fallen in recent decades. People seem more dubious of a survey’s purpose and more worried about intrusions into their privacy than in the past.[emphasis added]

The paper can be read here. It is a deep dive into a concept known as "rotation group bias"...this is a very fun topic to bring up say on a first date or with your dentist just before the drill gets turned on.

But the point really is: the surveys are not giving accurate data.

And because the data is not accurate it is not measuring how bad it really is out there--something most of us can feel by talking to our family and friends.

For many years, I've written about the very bad idea of tying wage hikes to the Consumer Price Index because the CPI does not capture the full cost of food, housing, gas, minimal clothing and the other stuff you need to live.

This study just shows that it's a lot worse for people than statistics the government is spitting out.

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Comment Preferences

  •  Wow... (6+ / 0-)

    So what you are saying is, monkeying with statistics for political reasons yields a disbelief in said statistics.  I mean - who could have foreseen that?

    “Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.” - John Steinbeck (Disputed)

    by RichM on Tue Aug 26, 2014 at 12:03:58 PM PDT

    •  not sure that it's "monkeying" (7+ / 0-)

      I think they aren't alleging intentional monkeying but rather that the data is flawed because of the change in behavior of responding people. I am perfectly willing to see monkeying where it exists. That said, it will at least be willful ignorance if, given the proof, the statistics continue to get used unchallenged,

      Follow me on Twitter @jonathantasini

      Visit Working Life.

      by Tasini on Tue Aug 26, 2014 at 12:13:26 PM PDT

      [ Parent ]

      •  Using U3, or whatever, instead of U6 (8+ / 0-)

        which in its own case is not as accurate as what they had before Clinton revamped the way we do labor statistics in the nineties, is in fact "monkeying with statistics." But it's been done by the gov't not by the social scientists, who just reproduce gov't stats, most of the time. At least that's what they seem to be doing, they sure do use official gov't labor statistics.

        Here is an article on how badly Bill Clinton and his changes at the BLS monkeyed with the statistics.

        A mighty woman with a torch, whose flame/Is the imprisoned lightning, and her name/Mother of Exiles.

        by SouthernLiberalinMD on Tue Aug 26, 2014 at 12:44:08 PM PDT

        [ Parent ]

        •  Another Day, Another Clinton Neoliberalism Found. (4+ / 0-)

          It's only been 20 years; think how little of the Nixon WH tapes we had only 20 years after Watergate. Hell we didn't even have the tapes of LBJ telling Dirksen that Nixon's 1968 private Vietnam negotiations were treason.

          We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

          by Gooserock on Tue Aug 26, 2014 at 01:07:13 PM PDT

          [ Parent ]

        •  The BLS has a glossary of terms like 'Not in Labor (3+ / 0-)

          Force.' The article at the link is a little careless about how it uses those terms which can mislead people.

          If the individuals categorized at 'Not in Labor Force - Want a Job' were reclassified as 'Unemployed' here's what we'd see:

          Unemployment rate at 9.8% (down 3.6% from the recession high of 13.4%)

          The U3 numbers show the rate down 3.7% for the same period.

          Down 3.7% instead of down 3.6%. Not a big difference.

          •  Well, it looks like a pretty good argument to me (4+ / 0-)

            I admit I don't really understand your problem with it.

            It seems to me that pretending that long-term unemployed fall into some kind of special "discouraged worker" category that shouldn't be reckoned into actual unemployment numbers for some reason, is an example of one of the nastiest kinds of sophistry, and it's pretty obvious why Clinton et al did it.

            A mighty woman with a torch, whose flame/Is the imprisoned lightning, and her name/Mother of Exiles.

            by SouthernLiberalinMD on Tue Aug 26, 2014 at 02:23:42 PM PDT

            [ Parent ]

            •  I'm coming out as a labor stats nerd now (4+ / 0-)

              but the long-term unemployed are already counted as 'Unemployed' today.

              The survey was designed to categorize individuals electronically, using database principles, without 'judgment calls.' Based on answers to the survey questions, there's only one possible category for each person. That way, no one can be counted twice.

              If an individual:

              • is out of work
              • and the duration is more than 27 weeks
              • but they continue looking for work
              • they are counted as 'long-term unemployed,' and in the labor force.

              If an individual:

              • is out of work
              • for at least 4 weeks
              • and hasn't looked for work for the last 4 weeks
              • because they believe they lack the skills, education, experience, or other characteristic (aka discouraged)
              • or because they were unable due to health, lack of transportation, or other conflicting responsibilities
              • they're categorized as 'Not in 'Labor Force - Want a Job' i.e. the classification that was created in 1994.

              Before 1994, individuals who said they were looking for work were counted in the Labor Force, Individuals who said they weren't looking were counted as 'Not in 'Labor Force.' The new category 'Not in 'Labor Force - Want a Job' was created for people entering the Labor Force, mainly students and young people.

              It was already long-standing practice before 1994 to classify the entire population age 16 and older no matter what their circumstances.

              How would you classify a 16 year-old high school student who says he wants a job? Starting in 1994, he could be counted as Unemployed if he was looking for a job. If he wasn't looking for the reasons listed above, he would go in the new category. It could also accommodate others of any age who might decide to join the Labor Force later in life.

              This year, about 4 million young people reaching the age of 16 have to be categorized: in or out of the labor force.
              Most of them will be classified as out of the labor force and
               further classified as 'Not in 'Labor Force - Want a Job.'
              Eventually, most of them migrate to the category of Employed in the Labor Force.

              My problem, as much as I have one, is in observing how these stats became a topic of interest in recent years, not for people to learn and understand, but to spread doubt, confusion, fear, and anger. It should be no surprise. The great economist, JM Keynes, observed the same thing during the New Deal. It's possible to acknowledge the inequality we have today, and they had then, without jumping on a shitty bandwagon of misinformation. Nothing against you whom I like and I wish I knew a better way of saying what I say.

              •  OK, then I must look elsewhere (1+ / 0-)
                Recommended by:
                Mark Lippman

                for the explanation for the fact that the unemployment numbers absolutely don't match up to the experience of anybody I know. Under 7%? I don't believe it. For one thing, if you've been unemployed for more than 16 weeks, most employers won't even look at you. Have bad debt? Won't look at you. Over a certain age? Won't look at you. From what I hear it's not much better for the young either.

                And a lot of the time the "person" who won't look at you isn't even a person--it's a piece of software, and a badly written one, at that. . I don't believe that 6.2% number. The 14.7 number, or even the 22% number, feels closer to the reality. But maybe that's just because of this:

                I guess it's more than just unemployment...

                A mighty woman with a torch, whose flame/Is the imprisoned lightning, and her name/Mother of Exiles.

                by SouthernLiberalinMD on Wed Aug 27, 2014 at 03:59:23 PM PDT

                [ Parent ]

                •  The number of people who are Unemployed can (1+ / 0-)
                  Recommended by:
                  SouthernLiberalinMD

                  remain unchanged but the Unemployment rate will go down if the size of the Labor Force increases.

                  Unemployment rate = #Unemployed ÷ #in Labor Force

                  Everybody who expects to retire in the next 20 years has a stake in more jobs with better pay. Payroll taxes fund Social Security and Medicare. More jobs, more pay, more payroll taxes. How do we get there? By cutting corporate taxes to zero? I have to go back and re-read but I think someone here suggested that just yesterday. What a shocker! How many times can the American people get scammed?

        •  The media could easily use U6 ... (3+ / 0-)

          ...instead of U3 in its headlines. But the idea that U6 is a better count of the unemployed is a distortion. U6 is U3, a count of the unemployed and the underemployed. You can say lots about the plight of the underemployed (as well as the lower quality of jobs people have gotten during the economic "recovery). But you cannot say they are unemployed if they are working part time.

          Lance Roberts isn't saying anything here much different than what John Williams at Shadow Statistics says.

          The real problem with the BLS stats comes from those unemployed people who say they haven't looked for a job in more than 12 months. They are not counted as part of the labor force and that lowers the unemployment rate (U3 AND U6). Some people argue that if you haven't looked for a job in a year, you're not serious. But during the Great Recession and its aftermath, lots of people just plain gave up because there were no jobs. We need a better measurement for them than "dropped off the face of the earth."

          Don't tell me what you believe, show me what you do and I will tell you what you believe.

          by Meteor Blades on Tue Aug 26, 2014 at 05:38:49 PM PDT

          [ Parent ]

  •  So polling (0+ / 0-)

    in campaign sees high refusal rates, and yet is pretty accurate using smaller sample sizes.  So why would the BLS survey data be bad while political polling is pretty good.

    Politicians - "You can't be a pimp and a prostitute too"

    by fladem on Tue Aug 26, 2014 at 12:16:16 PM PDT

  •  U6 (1+ / 0-)
    Recommended by:
    Odysseus

    -You want to change the system, run for office.

    by Deep Texan on Tue Aug 26, 2014 at 12:35:29 PM PDT

  •  I have little faith in "the dismal science"... (7+ / 0-)

    ...and, here's a basic reality: It's widely accepted that the Bureau of Labor Statistics' numbers are more accurate (especially the "seasonally-adjusted," or "SA," numbers)  during times of middling periods/normalcy than they are during periods of recession or tremendous growth, etc. While, technically, many claim we're in a recovery, the truth according to many (certainly, the bottom three quintiles of the population) in this country is that it's anything but. So, coming full circle, the reality--whether the folks who acknowledge this greater truth about SA numbers during periods of recession/recovery, will admit it or not--is that it's understood, by even BLS acolytes, that these numbers are certainly more inaccurate than "normal" now, during this period of the "new normal" (which, in and of itself, is a pathetic joke). Furthermore, the pathetically low-to-population ratio aside--one need look no further than the ratio of PART-TIME to FULL-TIME workers, as well as stagnant levels of pay, to understand how even those that are "working" are doing so for much less (in REAL dollars) than they were before the Great Recession.

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Tue Aug 26, 2014 at 12:36:53 PM PDT

    •  s/b "low employment-to-population ratio" n/t (1+ / 0-)
      Recommended by:
      corvo

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Tue Aug 26, 2014 at 12:38:34 PM PDT

      [ Parent ]

    •  People have different opinions about the (2+ / 0-)
      Recommended by:
      bobswern, Deep Texan

      labor situation today. There are even opinions about whether the opinions matter.

      This summer I worked on production of a video that converts BLS data from 1981 to today into a visual representation. It also continues forward to 2022 using BLS projections.

      Data isn't partisan. It tells its own story. If it says there's urgent need for remedies and corrections, we expect public policy in accord with that.

      But we live in a world now where we get the opposite of what we expect.

  •  we've been slowing coming out of a big hole (3+ / 0-)

    http://www.calculatedriskblog.com/...

    2014 is on pace to be the best year for employment gains since 1999.

    -You want to change the system, run for office.

    by Deep Texan on Tue Aug 26, 2014 at 12:37:19 PM PDT

  •  The study is on the Current Population Survey and (1+ / 0-)
    Recommended by:
    Deep Texan

    it says nothing about the other data sources the BLS uses to compiles its statistics.

  •  The Current Employment Stats Survey uses data (2+ / 0-)
    Recommended by:
    Meteor Blades, Deep Texan

    collected monthly, most of it electronic.

    The active CES sample includes approximately one-third of all nonfarm payroll employees in the 50 States and the District of Columbia.
    http://www.bls.gov/...

    I've said it before and I'll say it again.

    We have science and we have science deniers. I happen to go with science.

  •  Fed Funds rate at virtual 0% (1+ / 0-)
    Recommended by:
    PanoramaCityChick

    is all I need to know the economy is still on life support. Yet the stock market is rocketing to the moon -- how bubblicious. U3 rate is a BS number for low information people -- politics as usual.


    No longer Hoping for Change. Now Praying for a Miracle.

    by CitizenOfEarth on Tue Aug 26, 2014 at 02:50:41 PM PDT

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