EconoMatters

US: Massaging Unemployment Numbers

Many European countries would like to grow jobs at the same rate as the U.S. A look behind the official U.S. statistics.

Credit: Luna Vandoorne Shutterstock.com

Takeaways


  • The latest official unemployment figure for the US stood at 3.7%. That figure puts the country on the brink of full employment. Or does it?
  • If one sticks with a previously used unemployment measure, a politically very inconvenient fact emerges: The US unemployment rate is 7.5%.
  • For Trump, the numbers are what matters. Other facts are deliberately disregarded.
  • To the Republicans, it’s about using numbers for political advantage, not improving people’s lives for real.
  • In politics, ideas need to have personalities attached. Like it or not, Trump powerfully personifies his ideas. No wonder he is looking confident.

The latest official unemployment figure for the United States, released in September, stood at 3.7%. That is a figure unheard of since 1969 and puts the country on the brink of full employment.

Or does it? The official unemployment measure is known as U3. It’s political purpose has been to ratchet the unemployment number downward at a time of prolonged unemployment.

There is also “U6,” which was previously used. It includes those who were looking for work until recently, but have given up, and those that work part-time and want to work full-time. It is thus much closer in real life to what’s meant by underemployment.

If one sticks with that definition, a politically very inconvenient fact emerges: The U.S. unemployment rate doubles, rising to 7.5%.

One can certainly understand while Donald Trump is trying to make the most political hay out of the lower, official unemployment numbers. They surely help him for the Congressional elections to be held on November 6th, half-way through Trump’s term.

Numbers matter, not facts

For him, the numbers are what matters. Other facts – such as many people having stopped even registering as jobless, having lost confidence in their ability to find work, are deliberately disregarded. It is telling that the rate of employment relative to the U.S. population (60.4%) is still below pre-crisis levels in 2007 (62.9%).

To the Republicans, it’s about using numbers for political advantage, not improving people’s lives for real.

How else would they make light of the fact that, despite annual GDP growth of 4.2%, there is widespread malaise in U.S. society? It was this malaise that Donald Trump tapped into in his 2016 election campaign.

Despite the impressive headline GDP growth numbers, U.S. wages are growing slowly, much less than the economy. Trump’s promise that they were going to climb by an annual average of $4,000 per worker is the flight of fancy.

Unemployment is down (and wages depressed) because, in the case of irregular immigrants, the growing “shadow population” avoids registering, owing to the Trump Administration’s policy of separating families.

Meanwhile, the so-called gig economy – comprised of freelancers, informal workers, the self-employed and the like – is also growing rapidly. Their on-again, off-again work status is hard to capture with the old set of unemployment statistics.

Some good news

Unemployment among the young (19-24 year-olds) is below pre-crisis levels, but is still three times higher than general joblessness (and much higher among racial and ethnic minorities).

A significant number of young people are burdened by the debt of having to pay for their university education, the cost of which has rocketed. And millennials (aged 18-34) who have found work are earning 43% less than the preceding generation did in 1995, at an average age of 35.

Helpless Democrats

Meanwhile, some voters, especially working-class white males, continue to blame Obama for their woes in the job market.

The Democrats, for their part, seem quite paralyzed. They still lack a new political manifesto. New personalities continue to emerge, and they are debating each other at length.

From this heap of candidates, a new vision must emerge in the run-up to the 2020 presidential election. It is quite doubtful whether this will happen. The Democratic Party is still caught in a continuing fight over its political identity.

In politics, ideas need to have personalities attached. For the time being, that is the job that, whatever his plentiful faults, Donald Trump gets done. Like it or not, he powerfully personifies his ideas. No wonder he is looking confident.

Editor’s Note: Adapted from Andres Ortega’s Global Spectator column, which he writes for the Elcano Royal Institute.

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About Andrés Ortega

Andrés Ortega is senior research fellow at the Elcano Royal Institute, a major Spanish foreign affairs think tank.

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