The UK unemployment rate is at least three times the official rate


#1

Originally published at: http://boingboing.net/2017/07/25/lies-damned-lies-and-employmen.html


#2

I don’t doubt that this is true. So what’s the plan for moving toward a UK where there is a labor shortage??


#3

Brexit and limiting immigration.

And once upon a time it may have worked, too.


#4

Does the UK measure unemployment differently than the US?

In the US, the Bureau of Labor Statistics has 6 different measurements of the unemployed. This is the list (from Wikipedia):

U1: Percentage of labor force unemployed 15 weeks or longer.
U2: Percentage of labor force who lost jobs or completed temporary work.
U3: Official unemployment rate per the ILO definition occurs when people are without jobs and they have actively looked for work within the past four weeks.
U4: U3 + "discouraged workers", or those who have stopped looking for work because current economic conditions make them believe that no work is available for them.
U5: U4 + other "marginally attached workers", or "loosely attached workers", or those who "would like" and are able to work, but have not looked for work recently.
U6: U5 + Part-time workers who want to work full-time, but cannot due to economic reasons (underemployment).

It’s surprising that the UK doesn’t similarly break down the numbers.


#5

The US unemployment rate is 5 times the official number http://www.shadowstats.com/alternate_data/unemployment-charts


#6

Breaking news! “Single number does not capture all the intricacies of the economic health of a nation…”


#7

Frankly I’m sick of people suddenly noticing that the U3 measurement doesn’t cover “everyone who isn’t working.” There are a WIDE range of measurements that describe the state of the labor pool, and a single one can’t handle the whole thing. U6 will ALWAYS be higher than U3, and that’s … how you measure these things. There’s also the ratio of employment to population, which is the broadest measure of employment. However, this too is subject to nuance – you’d expect that ratio to change as the demographics trend older. If the employment/population ratio were 1:1 you’d be horrified because it would mean nobody was studying or retired.

This isn’t a conspiracy. This isn’t “the government is trying to hide stats from you.” These numbers are useful less as a single point of reference than as a trend line – if it’s 4.7 now and 6.7 last year, then we’re moving in the right direction.


#8

But the lie and the conspiracy generate so much more web traffic than the analysis of government statistics… especially 'round here!


#9

My question was if the UK uses the same labor measures (U1-U6)? Do you know?


#10

I don’t know if they number them U1-U6, nor if they have the same definitions, but I am confident that in the UK, economists have multiple ways of measuring employment and the state of the job market. And I’m confident that “the unemployment rate is higher than the official rate” is a dumb headline. The headline implies that there is some vast government conspiracy to claim the economy’s doing fine so they can hold down wages for the struggling masses.

It’s a disservice to people who are trying to understand and provide accurate information and it sows distrust in what should be nonpartisan government services. This is of a piece with the Republican party undermining the CBO, which is a nonpartisan board dedicated to providing accurate information so that politicians can at least make decisions based on real facts.


#11

The headline implies to a common person who does not study economics that the “unemployment rate” that they report in the news every month doesn’t capture what they might think it does.

Google “UK unemployment rate” right now, what do you get? A nuanced breakdown of how employment interacts with the economy with five different measures? No, you get a simple chart comparing the UK to Germany and USA with one number, the lower the better.

“Unemployment rate doesn’t mean what you might think it means” would be a less sensational headline, but for the average person, they key fact is that when they try to reconcile their perception of how the economy is doing and how high unemployment is with government statistics telling them the economy is doing well and unemployment is low, they are totally right to reject apparent position of the government on the matter.

You can’t throw academic jargon at the public and get mad at them for not understanding it.


#12

True. Why then does every popular source report the same one? That’s an honest question, and I’d really like a primer on “This is what each measurement is good for, here’s what is healthy/unhealthy for each one.” At this point all that gets reported in the popular press is of the form “full employment is somewhere in the vicinity of 4-6% unemployment, and we’re near/not near that mark.”

That may very well be the metric that central banks, or government budgets, should care about. Or maybe not, I don’t know. It is definitely not the metric that most actual people care about in regards to how the state of the economy affects their everyday lives and those of the people in their community.


#13

Of course Brexit will help prevent a labour shortage in the UK.
Soon our economy will be so fucked up, there won’t be jobs for anyone. Well, as long as the tories don’t screw the NHS to the point where we’re all dead anyway.


#14

Agreed. The modern world is way to interconnected for that kind of approach to work.


#15

Oh excellent. Now we can all be amateur Donald Trumps and state what the “real” unemployment rate is.


#16

Different countries use different methods, which is why the rate in most European “welfare states” have such high unemployment – they use a metric that captures more people. So France, say, tends to look worse off than the United States, and the WSJ and even the NYT don’t bother to tell about the distinction (or their reporters don’t know. They’re getting better at using fairly-compared numbers since they’ve discovered them on the web).

The official rate is the one economists have found to be most useful for comparisons over time, much like the Inflation numbers that exclude food and energy. The latter tends to enrage people who think food and energy costs are some of the most important costs, and they are, but they create a series that isn’t stable month-to-month and don’t point to any useful trends when diagnosing the macro economy.

The “full employment” idea is arcana from economic theory that won’t go away, and reporters’ memories tend to last even longer. We’ll be hearing about “full employment” being 5% for the next several decades, even as most economists have realized that the concept is pretty elastic, and that when we’re in a situation where a lot of people have dropped out of the work force, then 5% is not full employment. But ideas die hard and 5% was always a conveniently round number to stick with, being easy to remember for economy beat reporters who are often terrible with numbers.


#17

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