“There’s a lot of money riding on the accuracy and credibility of U.S. economic data. A lot of that faith is misplaced, but it’s not because the government is actively fudging the numbers or lying to us. Unlike a lot of people in Washington, the statisticians who crunch the numbers are a professional bunch who want to get things right.
The two alternative measures of unemployment have risen and fallen in tandem.
We know that because we can verify much of what they produce from other independent sources. By and large, the government data are consistent with numbers produced by the private sector.
Of course statistics, by their very nature, can never be perfect or pure, no matter how well-meaning their creators.
Frequently we make it even tougher on ourselves by misinterpreting what the data could tell us with a bit of certainty. Too often we pay attention to the wrong numbers and ignore a more useful alternative. Those problems in understanding the data are compounded when we try to use them to make political points.
In recent years, the unemployment rate has become one of the most politicized economic numbers. Which means it’s also become one of the most misunderstood numbers. I have a partial solution for that, as you’ll see.
In theory, the jobless rate should be noncontroversial. It’s simply the percentage of people who want a job who can’t find one. However, it’s more complicated in practice. What does it mean to look for work? How hard do you have to try? How often do you have to try? What does it mean to have a job? Does it have to be a full-time job to count? What if it’s irregular work? …”
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