If I tell you, "The Triple-A average prices of self-serve regular unleaded gas in Honolulu is $4.28 a gallon," but even if you live in Honolulu and use self-serve regular unleaded gas it doesn't mean you're paying $4.28 a gallon, because an average is an average, and maybe you get your gas at Costco or McKinley Car Wash.
It is the nature of economic information that any number, however superficially specific and decimal-pointed, is wrong for someone. The reason Mark Twain, who said he never lied except to keep in practice, could get a laugh by asserting that the three kinds of lies were lies, damned lies and statistics, is that statistics have a pervasive wrongness about them even when they are applied conscientiously by someone who is making no attempt whatever to pull sheep-based textiles over your eyes.
If I say unemployment is falling, it doesn't feel right to someone who has been out of work for many months, or knows someone like that. I always hear from someone who says, "Yeah, it's down because people are giving up. Why don't you ever mention that?" I mention that all the time but I still get one form or another of that email every month when the new jobless figures come out. If, on the other hand, I do make a big deal of what statisticians call "discouraged workers," who are no longer counted as unemployed because they're no longer looking for work, then I get an email from someone who lost his job and found a new one in less than a month who wonders why I pander to those lazy bastards who won't get off their okoles and look for work.
I would almost go so far as to say, no matter what I say about unemployment, if you don't immediately flash on someone you know who doesn't fit what the report says, you probably don't have a wide circle of acquaintances.
The lively responses I get to any mention of unemployment may also, however, be interpreted as a sign of intense public interest in the subject, which means you might be interested in reading more detail than I can customarily jam into my reports on the air. So here goes.
In February, when so many discouraged workers became so encouraged that they returned to the work force, unemployment did not rise above its 8.3% level nationwide because the returning workers were offset by 223,000 new jobs. Even this number is wrong, in the way that statistics are wrong: there was a net increase of 223,000 jobs, which means 223,000 jobs plus enough jobs to offset every one of the other jobs that vanished in the same month.
Economists have been waiting for this: enough improvement for the discouraged workers to begin returning. At some point there will probably be a month in which unemployment actually "rises" because a larger number of these people start looking again than the number of jobs created in the same month. For example, this might happen in June or July, when "discouraged workers" who went back to school ("I can't find a job anyway, so I might as well finish my degree and qualify for a better job when companies are hiring again!") get out of school and look for work again.
That 8.3% jobless rate... to whom does it not apply? Who's the Costco guy and who's the McKinley Car Wash guy? Well, among workers aged 20 or older, a year ago, when the jobless rate was 9%, it was actually 7.9% for women. Economists say men were more affected by factory layoffs while women are overrepresented in the lower-paying service sector. The teen jobless rate, always higher even in good times, was 23.9%. And now? The adult jobless rate has fallen to 7.7% for both men and women while the teen jobless rate is almost the same, 23.8%.
Unemployment is higher among blacks and Hispanics than among whites and Asians, to a degree that corresponds almost exactly with education. Knowledge matters. Unemployment is 4.2% for people with four-year college degrees or better; 7.3% for people with two-year degrees; 8.3% for people with high school degrees but no college; and 12.9% for high school dropouts. The key question to ask any kid who is thinking about dropping out is: "How much do you like money?"
Why are you unemployed? The answers, in February:
- 7,209,000 - lost job, or temporary job ended.
- 3,361,000 - re-entered job market.
- 1,392 ,000- new entrant to job market.
- 1,031,000 - left job on one's own.
How long have you been unemployed? The answers, in February:
- 2,541,000 - less than five weeks.
- 2,807,000 - five to 14 weeks.
- 1.971,000 - 15 to 26 weeks.
- 5,426,000 - 27 weeks or more.
About 800,000 fewer Americans are in the bottom two tiers (15 weeks out of work or more) than were a year ago. But, as you can see, that still leaves millions out of work a long time.
The unemployment rate is 17.9% in the construction business, down from 22% a year ago. Nationwide unemployment in leisure and hospitality is 11.6%, down from 13.8% a year ago.
Average hourly earnings, $22.88 a year ago, came out to $23.31 in February, based on the separate survey the Bureau of Labor Statistics sends out to employers.
Many people forget that the unemployment statistics do come from surveys, which, like all surveys, have a margin of error. The employer survey is way bigger and 40% of the surveys go to businesses with fewer than 20 employees. The household survey is smaller and has a larger margin of error but helps to count discouraged workers and the like.
Here's something almost no one ever notices: the surveys cover the pay period that includes the 12th of the month. So if weather or something affected employment that week, it might affect the numbers. But not, usually, much, because you're counted as employed if you worked even one hour during the pay period.
BTW, Mark Twain did not claim to have invented the "lies, damned lies and statistics" line, and wrote that it was often attributed to Benjamin Disraeli, but the earliest published reference to it, in a slightly less amusing manner, was in a London publication in 1891, 17 years before Twain mentioned it in print, and even then it was described as a line that was making the rounds.