With the upcoming presidential campaign, the one that started around January of 2013 and already has three or four Democrats and 4,677 Republicans, the rhetoric is flying thick. It is particularly thick around topics that most Americans actually don't really care about, like abortion, contraception and gay marriage. It is also thick around concepts that are more ethereal than what a president can control, like global warming and "income inequality".
Far too infrequently, the topic will move to something actually important to most everyone, and which a president can actually do something about. In today's topic, I refer you to the unemployment rate.
Now, there is considerable dispute as to what that rate actually is and, far more critically, how we are actually doing in regard to our national desire for "full employment." For example, while the Obama administration orders the Labor Department to put out numbers in the range of "five and a half percent" or so as the "unemployment rate", it places on page 367-A of its monthly report, where no one can find it, the so-called "U-6" number. U-6 counts the unemployed and underemployed in a different way, and that number is running around 11% of the labor force.
There's also a number called the "Labor Force Participation Rate", which is a different way, a mirror image as it were, a reflection of the percentage of the workforce that is adequately employed. Back in the days, i.e., before the current administration, that rate ran steady at about 66%. Beginning the very month that Barack Obama was elected, that rate started to drop, sitting today at 62.8%. That means that the labor force, as a percentage of the civilian "non-institutional population" (i.e., not in retirement homes, the military or jail), has dropped substantially, immediately on the election of Barack Obama, and has stayed there.
But I digress, although not by much.
My theme for today goes back to that pesky unemployment rate that Barack Obama swears is now 5.4%. That's supposed to mean that we're close to full employment, but the math is a bit sketchy. I mean, the population is growing, but the labor force participation rate is dropping. That "5.4%" is a ratio, and ratios have two parts to them.
The 5.4% number going down, as the president and the press would have us believe, is because of his "leadership" and would be a good thing. But is it going down because more people are employed or because the labor force has gotten smaller? Well, clearly the labor force is lower than it was, given the labor force participation rate dropping. So if the number actually employed, however they count it, stays the same or just tweaks up a little, but fewer people are looking because they've given up seeking work, or are not collecting benefits and have otherwise dropped out of the denominator, that unemployment rate keeps dropping.
And where, then, am I?
That would be "I", as in "me, old Bob." How am I counted? I ask that because I do not have an actual job, in the sense that I do not get a paycheck from an employer, receive a W-2 at the end of the year, or otherwise receive benefits. I am a private consultant provided to my client through a third party for whom I am not an employee. I get a Form 1099 from that third party at year end. I have no guarantee or even expectation of billable work tomorrow and can't be "fired" because I have no employer to do so.
I do not collect unemployment, because I'm at least adequate at what I do, and am fortunate to have clients who keep me busy pretty much full time. But I also have zero future expectation, in the sense that if I were to break a few fingers this afternoon and couldn't type at a keyboard, I couldn't work and would not get paid. I pay my own health insurance (double last year's rate despite no doctor visits in 2014) and cannot take vacations.
I am not complaining; I chose this working life and that's it. I get paid when I work, and am fortunate to be always working.
But where am I in that 5.4% that Obama thinks the unemployment rate is? I assume I'm regarded as "employed", although I don't know how the Government knows that. If I have a week with no billing, I don't get paid and am every bit as unemployed as the poor guy laid off from Apple or 7-Eleven, but I don't file for unemployment -- and I don't know how the Government knows that either.
I'm one of many consultants my biggest client uses, many of whom are retired military consulting only part time. Where are they in the 5.4%? We are consultants because it is cheaper for the client to pay us but still be able to not pay us between assignments. It is far, far more expensive for them to hire us as employees, provide benefits and vacations and insurance and all that other stuff the Government now mandates, when all we want is the stability of a regular paycheck.
But where are we in the 5.4%?
I do not know. This is why it is so important to understand how hard it is to count the labor force, count the unemployed, count the under-employed and count the part-time employed. This is why it is so important to look hard all those real, not-changed-by Labor-at-the-behest-of-the-White-House numbers before opening the borders and letting tens of thousands of unskilled into the labor force.
And then they can tell us where those illegal immigrants show up in the BLS numbers, too.
Copyright 2015 by Robert Sutton
Like what you read here? There's a new post from Bob at www.uberthoughtsUSA.com at 10am Eastern time, every weekday, giving new meaning to "prolific essayist."
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