Dissidentpress

December 26, 2007

Unethical US Job Numbers?

Filed under: Economics, Economics Statistics, perspectives, Research, unemployment — jensn @ 6:40 pm

Excerpt from • Unethical US Job Numbers?

http://enlightenedeconomics.wordpress.com/2007/12/06/%e2%80%a2-unethical-us-job-numbers/

“The business world waits with trepidation, the first Friday of each month, the release of the US unemployment/employment numbers. Stock, bond, currency and commodity markets often swing wildly with their release. The media focus on the numbers presented, and discuss their relevance to economic activity. But where is the analysis, the critique, of how these numbers are generated — or of their actual reliability? 

Do all economists really believe that the US government’s unemployment data (and other statistics too) are beyond reproach? Are the big banks’ economists too afraid to dig into the numbers for fear of offending or confusing employers and clients? Where is the role of honesty, of ethical responsibility, to the publics these institutions serve? 

Fortunately, discussion concerning the ethics and reliability of economic statistics does occasionally appear. 

For instance, last year Philipp Bagus asserted in an article, The Problem of Accuracy of Economic Data, August 17, 2006, (http://www.mises.org/story/2280)

“[That] we … face the question of why the problem of accuracy of economic data is rarely mentioned or passed over in silence in economics, while in the physical sciences this problem is widely acknowledged.” Further, “In contrast to physics, there is still no estimate of statistical error within economics. The various sources of error that come into play in the social sciences suggest that the error in economic observations is substantial… Economic statistics cannot be accepted at face value.” 

In my research on US unemployment data, I have discovered some disquieting information. First of all, they concern the elimination of ‘discouraged workers,’ who used to be in the figures.

Discouraged workers are those who have been looking for employment for more than a year and have given-up looking for a job. They used to be included in the main unemployment numbers, but are now, conveniently left out! John Williams, statistician and economist, believes that when ‘discouraged’ workers and other ‘distorting factors’ are accounted for, then the true unemployment rate, measured in much the same way as it had been historically, would be closer to 12%! (See Welling@Weedon, February 21, 2006, Shadowing Reality interview with John Williams). At the time of Mr. Williams citing this, the US February 2006 unemployment rate was 4.7%, which is the same as for November 2007…” Try this too: http://www.shadowstats.com/

 

I just remind that the described problems are most worse in Denmark. A least US has the simultaneously publication of the deciding input and output figures of the labor market every month. 

Jens

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