Lots Ways to Measure Unemployment — Pick One

McDonald'sDan Diamond wrote a cheeky little article over at Vox, Donald Trump Says the “Real” Unemployment Rate Is 42%. He’s Really, Really Wrong. It’s about how Trump has been going around saying that the real unemployment rate is 18%, but then more recently 21%. Who knows what this is about? But his claim that the unemployment rate is 42% at least makes some sense. It is based upon the idea that only 58% of the people over the age of 16 have jobs. According this, school kids and retired people should all be working. What do you expect? It’s Donald Trump.

But it does raise an issue that is interesting. There are many ways to measure the unemployment rate. There are two that we standardly use here in the United States. The first is the one everyone knows: U-3. It does not include discouraged or involuntary part-time workers. It is currently 5.3%. The other measure is really more meaningful: U-6. It includes as unemployed, everyone who wants to work full-time but who isn’t. It is currently 10.4%. It doesn’t really matter which measure you use. The main thing is that you have to be consistent. And people aren’t — at all. It’s really sad to watch because it shows a total lack of intellectual integrity.

What Trump is doing is not at all unusual. I’ve been hearing conservatives — especially people on Fox News — saying that we should really use U-6. Like I said: that’s fine. But these same people didn’t want to use U-6 when George W Bush was in office. They just want to use it so they say, “Unemployment is over 10%! Obama is destroying the economy!” But you just can’t do that. This is just a way of saying that the unemployment rate was 7.8% (U-3) when Bush left office and is 10.4% after six and a half years of Obama. But the actual comparison looks like this:

President U-3 U-6
Bush 7.8% 14.2%
Obama 5.3% 10.4%

None of this is to say that Bush was terrible for the economy and Obama was great. The truth is that the unemployment rate was bound to go down. But you can’t say that the economy has done horribly under Obama. The most you can do is make the argument that the economy hasn’t improved as much as it could have under Obama. And that’s an argument I do make, although the blame is not primarily Obama’s but rather our entire political system.

But what this does show is that you can’t just pull out a different way of measuring unemployment and claim that things are worse than anyone knows. Everyone understands that the unemployment rate is not a perfect reflection of the state of the job market. But including discouraging workers into the calculation doesn’t make the economy any worse. The economy is just the same as it is. And whether you want to use U-3 or U-6 or something else, we see that the economy is improving.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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