Most of us are aware of the media's attempts to spin last week's disappointing December job numbers into good news. One of the statistics trumpeted in many stories was the report that unemployment dropped to 4.9% last month. To get a truer picture of unemployment, something called the "augmented unemployment rate" should be considered.
So what is the augmented rate? It adds in all the folks who are willing to work but who aren't called out in the most-quoted unemployment statistics. And that number actually increased in December: to 8.4% from 8.3% in November. Of all places, I saw this number quoted in the business section of today's Dallas Morning News...
The full column can be found [removed link, since I can't get it to work]
for those who are registered on the News' website.
Here's some excerpts:
Jobs story has much more to it
Danielle DiMartino
[...] It doesn't get much worse than the December labor report. Once again, the media took lemons and made lemonade. The report delivered little in the way of good news, but you'd have never known it to read the paper or watch the news.
Rather than focus on the meat of the report - payroll gains came in at 108,000, half the 215,000 gain economists were forecasting - most journalists dug around until they found the report's one bright spot: November's originally reported gain of 215,000 was revised upward to 305,000, a positive swing of 90,000.
But the revisions didn't end there. October's gains of 44,000 were revised downward to 25,000 - a negative swing of 19,000. So what you really had were net positive revisions of 71,000, not enough to make up for the 100,000-plus shortfall in analysts' December expectations.
[...] Well, as things turned out, the economy added 2.02 million jobs in 2005, for a monthly average of 168,000.
That's less than the 2.19 million jobs added in 2004, or 183,000 a month. Not only that, 2005's payroll gains were back-end loaded: The first six months produced an average gain of 190,000; the last six, a much less robust 147,000.
As for the other hoorah-ed headline, yes, the unemployment rate dropped to 4.9 percent. But no, this was not a good thing - not for the 30,000 people who threw in the towel on trying to find work. That detail was hidden in the labor force participation rate, which fell to 66 percent in December from November's 66.1 percent.
When you add back in all the folks who are willing to work, you get what the government calls its augmented unemployment rate. It actually moved up to 8.4 percent last month, from 8.3 percent in November.
She also notes the lack of income growth for those who are working. Of course that's a subject very familiar to anyone who reads Bonddad's excellent diaries here.
My comment to add to all of this: I was looking for a job through most of last year, starting shortly after the new year and finally beginning work in late October. My experiences in the job hunt -- and those of almost anyone I've talked to who has been job hunting -- suggest that the 8.4% number gives a much truer indication of what the job market is actually like right now. 4.9% suggests something very close to full employment, and anyone who believes that we've achieved that is seriously deluded...
It's a shame that "seriously deluded" seems to be an apt description of so many reporters who cover the economy. But I'll certainly give credit to Danielle DiMartino for bringing a refreshing dose of reality to the business page of at least one newspaper in the so-called "mainstream media".