Naked Capitalism’s Diptherio Discusses Flaws in Unemployment Reporting

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NC regular Diptherio sent us a podcast, part of a series called “Economics for the Rest of Us,” which discusses the considerable shortcomings in how unemployment data is collected and reported. He warns that most of the points are likely well known by members of the commentariat. Nevertheless, this segment is a good review and also breaks the issues down in a way that makes it more accessible to laypeople.

If you have any tips for Diptherio, given that he wants to reach people who are relatively new to economics concepts, please pass them on. And circulate his chat!

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34 comments

  1. pretzelattack

    so does carrying a cardboard sign “will work for food” count as a job, too? only if you make 20 bucks, i guess.

    1. Brooklin Bridge

      Probably counts for two; the sign painter (or GA as they are called now-a-days), and the for food worker. That they are one and the same person is a detail like so many others.

    1. Jerry

      Drowning the commentary with music is a terrible idea! I contended with this on a PBS show this week, too. What are they thinking?!

      1. diptherio

        Yeah, you’re the second person to mention that. I’ll make sure to keep the music waaaay down in the mix, or just ditch it entirely.

        1. Torsten

          Excellent work, Diphtherio! I too suggest damping the music, but bring it up for 10 secs here and there to mark “section breaks” and prevent monotony.

          1. diptherio

            Good idea. I’m so glad I’ve got people to help me think these things through.

  2. apber

    The disinformation (or Propaganda) relating to employment numbers pales in comparison to what goes on with CPI. Keeping in mind that the official CPI is used for all sorts of adjustments to income, pensions, social security, etc etc, and that inflation is the greatest destroyer of disposable income, more attention should be paid to this metric. There are two sites that NC readers should know: l) Shadowstats, wherein John Williams analyzes true inflation using 1970s methods (prior to the Federal debt explosion) and procedures before the policy wonks used arcane justifications to disguise and suppress the real numbers.
    2) The Chapwood Index wherein a basket of goods and services across 50 US Metro areas are examined.

    Shadowstats finds 4-7% inflation (compounded) over the past 5 years; Chapwood shows 7-10% (compounded) for the same period.

    Inflation is perhaps the greatest theft from populations. The difference between the official numbers of 1.0-1.5% and the true numbers is enormous and propbably the “greatest” lie.

    1. Yves Smith Post author

      No, Shadowstats is not credible on inflation. Williams does do a very good job of compiling how official measurements have changed over time. He’s good on that. But his own estimates of inflation are terrible and have discredited him. He just slaps an additional 4% on CPI. Similarly, a simple index of goods and services doesn’t tell you much if it isn’t weighted to reflect what people actually consume.

      1. TheCatSaid

        This brief discussion (apber & Yves) shows how important it is to have a discussion of CPI. It’s such a common term and it’s based on such garbage. Is there anybody out there doing something halfway credible? Do any other countries figure it out differently?

        I’d also vote for GDP as another future topic. (Common term, based on much garbage, and alternative ways to compare.)

  3. Robert Hahl

    I can’t think, or even listen carefully with music on. I would add a second person to liven it up instead.

  4. MikeNY

    Dip,

    I love your speaking voice. Good info, clearly explained. Two suggestions:

    1. You need some graphs, charts, something visual to illustrate your points. There’s got to be loads of stuff available from BLS, the Dep of Labor, the I-banks, etc. That would really help keep attention. Also, why not put in some live footage of your pulchritudinous visage? Personal connection, doncha know.

    2. Love the music, but at times it’s too loud for your soft speaking voice.

  5. Brooklin Bridge

    Suggestions were requested, (so, take wago salt), but this is a great podcast and gets a lot of information across. I can hear Hillary now, “Don’t let that man loose on the radio!!!!”
    —————————————————————————-

    Music should be for pauses (like paragraphs) or emphasis. It gets in the way otherwise (imnsho). Your voice is a symphony in itself.

    Is it possible to go through and edit out sing-song areas (such as multiples side by side)?

    Side kick DP is great.

    Recap by enumeration from time to time such as,

    1) No qualification: 1 hr per week @ 20 per hr used to qualify you as employed (same as 40 hr job)
    2) if you stop looking for work, not counted at all
    3) prisoners not counted at all (unemployment rate would skyrocket)
    4) telephone methods of counting flimsy (homeless not counted)

    My wife will be the first pass along for me.

    Thanks!!

    1. diptherio

      Thanks BB. The next episode will be better for all the comments. So glad I have this community (of sorts) to bounce things off of.

      One other important unmentioned (by the MSM) aspect of unemployment is the vast variation by region/locality. As an article that was in the links a week ago or so (there’s a link in the show notes on Youtube) pointed out, some areas of the country have an official unemployment rate of 50%. Reporting the average for the entire country and making believe like that applies everywhere just as misleading as reporting the average wage…i.e. very.

      1. TheCatSaid

        This was a great point. I wished you’d added–if my understanding is correct–that if the official unemployment rate is 50% in some regions, the more realistic unemployment rate (U6) is probably 90% or more.

        Great job, I learned some important things from this. DP is great, agree with the comments about less music, softer, & use to punctuate. The music choices worked well (style, vibe). Your mankini metaphor is excellent–hard to forget it!

        More, more!

  6. diptherio

    Thanks for all the feedback. This is a learning process for me. I studied econ, not sound engineering…I’m thinking maybe the music is a bad idea….but the “special guest” is a good one.

    Next up is going to be NAIRU. What a joke that is. Do you think most people know that the Fed actually tries to maintain a certain level of unemployment? Somehow, I don’t. If anyone else from the peanut gallery would like to help me talk about it, just let me know here and we can totes make this a group endeavor. It’s actually work to make these things, even with minimal production values, and having some others to add to the convo would be great…I think. At any rate, I’m willing to try.

    And, of course, Thank You Yves!

      1. diptherio

        Doncha just love how it’s defined, in practice, as whatever the unemployment rate seems to settle around. If I’m not mistaken, in the 70’s NAIRU was considered to be 6 or 7 %. Then unemployment fell and inflation didn’t accelerate so they changed NAIRU to 5%.

        What I want to know is if there has ever been a documented case where it can be shown that low unemployment levels actually led to accelerating-inflation. The inflationary periods in US history that I’m familiar with seem to have all been caused by supply shocks (i.e. oil embargo) or financial shenanigans (the housing market of the early aughties). Ditto for other countries, so far as I know.

        As far as I can tell, the whole idea of NAIRU is strictly an artifact of economic modeling, not something that’s actually ever been observed in the wild. And doesn’t it seem odd that making sure we don’t drop below NAIRU is something the Fed feels like it needs to intervene to ensure…rather than letting the market sort it out. Even if NAIRU was a real thing, you would assume that low unemployment –> increased wages –> increased prices –> reduced consumption –> lay-offs and higher unemployment. Which is to say, if there were such a thing as a natural rate of unemployment, wouldn’t markets naturally produce it, obviating any need for the Fed to, say, jack up interest rates to keep the economy from “heating up” (I guess because people have so much money burning holes in their pockets?). It almost like, when it suits the capitalists, they stop believing in this whole “invisible hand” thing….strange…

        1. TheCatSaid

          If you’re going to do NAIRU, be sure to show why it’s important for the everyday person to understand this. I don’t think I heard anyone talk about this in political speeches so I’m not sure it’s the concept I’d focus on at this early stage.

          That said, it’s juicy in a way, but you’ll need to explain why it’s practical and useful for people to know how NAIRU as a concept is being used/abused by TPTB or their economic policy advisors.

        2. Left in Wisconsin

          I think the regional issue directly relates to NAIRU. As noted, when national UE is around 5%, then UE in some areas is more like 10%, which is obviously not NAIRU in those regions. Conversely, in other areas the UE rate is sometimes on the order of 2%, sometimes lower. As one specific example, I know the UE rate in the Twin Cities before the crash was under or around 2% for several years (it may be there again now, not sure) and I don’t believe there is any evidence of higher local or regional inflation even at that low level.

          What the last 30 years have shown is that it takes very low levels of national UE to raise real wages (only recent period in which this was the case was late 1990s). But even in these cases, rising real wages did not lead to rising inflation.

          The whole notion of wage-push inflation is BS. The idea was crafted in the 1970s because union cost-of-living clauses were generating huge (nominal) raises in the oil-driven inflationary years. The argument was that COLA clauses, even if they didn’t start the inflationary cycle, would reinforce it. And so Volker and Reagan set out to crush the unions, and succeeded.

  7. Everyone is a critic

    Need to fade out the music, way too distracting. Music credits too long. Rather than have exchanges with “DP” the student, have an interview. I don’t like listening to a distorted recording of your voice. All unnecessary verbage should be cut. Humor is fine. Monotone delivery is sleep-inducing.

    1. diptherio

      No apologies from you. That’s my bad. Mostly the music is just self-indulgent — it gives me something to listen to while editing….probably not the best idea though. Noted.

  8. petal

    Diptherio, so neat to have a voice to put with your posts! Digging it, but like the others have commented, the background music is good by itself but not put together with you speaking. One or the other but not both at the same time hehe. Very cool, though, please keep going with this. Cheers!

  9. Norb

    Diptherio- Nice work. I too have to comment on the music. Too distracting. Its like you are trying to fill every available space- remember less is more. Music at the beginning , breaks, and end are good. Let your information stand on its own. Your presentation is solid- so don’t worry.

    One suggestion. Feel free to reach out for voluntary production assistance if needed. I work in the graphic design industry and might be able to help with graphic production or video segments. I’m thinking along the lines of a community barn raising. A community information raising. Just a thought.

    Keep up the good work.

  10. fresno dan

    Thanks for the primer. I think any refutation of the Bullsh*t that we have low unemployment helps to crack the facade….
    Really, I am getting so cynical in my old age, but it is hard for me not to look at those that espouse 5% as being the unemployment rate and not see a disinformation campaign. And of course, as we only have one party (the neoliberal party) there is every incentive in the world to pretend we have full employment….

    I would suggest a short condensed version for the people with short attention spans that emphasizes the most egregious aspects (like the 1 hour per week your employed, the regamarole to stay defined as “unemployed” how all the people who can’t afford to look for a job are just wiped off the face of the earth, etc) so that people have easy to remember talking points to refute all those who think we are at “full employment”

  11. meeps

    Your pal DP sounds a little like Jeffrey of DarkMatter2525 fame. Always good to have a sidekick or devil’s advocate. (;

    Keep on keepin’ on…

  12. dk

    Hi diptherio,

    I liked your first one more. Important topic, good overview, well explained; an easy thumbs up. Music was quiet enough that it didn’t intrude (and don’t use such intricate music, how about something more ambient).

    The second one was more rambling, less informational than the first. I found the too-loud music more interesting than the speech; diggin the tunes, but they get in the way. The second voice is a good device for creating a more conversational/q&a context, but it was underused. Maybe a more q&a structured format could tighten things up.

    But I also think that too much / too trivial side talk (comic relief?) weakens the weight of the information, as does indignation and cynicism (unless those are the core message). Those devices are used by disinformers to blur information, don’t weaken your own material with it, or at least not too much of it. Having said that, the second voice may have real potential to improve accessibility and engagement for the material.

    The poor methods of data acquisition merely reflect much larger problems throughout our culture, including technology costs, compliance issues and privacy concerns. And the collectors and proponents of these (basically ridiculous) stats are trying to lie to themselves as much as to anyone else, and lying to oneself produces very different behaviors from lying to others while keeping correct information in one’s own mind; people who lie to themselves don’t think that they are lying at all, and will defend their positions much more aggressively. And these things may be beyond the scope of your immediate topic or this project, but distorting (basically, trivializing) them doesn’t do your topic justice.

    And… big fan, sir. I find your commentary generally well considered and always worth the read. My criticisms are meant to encourage you in your project, which I applaud.

  13. AnEducatedFool

    I do not mind the music. I’m used to listening to music while working. I see the point of cutting it out.

    Your delivery is fine.

    Would you mind if I shared this on a few Bernie Facebook groups? Many of them are new to everything in politics and economics. I think your approach can be very helpful. Especially if you and a few of the other well informed posters here can collaborate and make these issues more accessible.

    1. AnEducatedFool

      The F-bombs were appropriately placed. Too many academic types refuse to use language that accurately describes the situation to the vast majority of the population (not everyone in the 99% is in dire straits. I sometimes wonder if people in the upper echelons realize that many of us hate them as much as we hate the plutocrats). We really do not need more cocktail party intellectuals telling people why the economy is rigged for the top 1%. We need intellectuals to use a language that expresses the outrage that people like me feel when I read of yet another scam that steals my child’s future. Mine is already in the shitter but I accept that and paddle in the sewage with the goal of my child not needing to paddle as far as me.

      So again, thank you. I appreciate the way you presented the information.

  14. ewmayer

    Yves writes:

    Shadowstats is not credible on inflation. Williams does do a very good job of compiling how official measurements have changed over time. He’s good on that. But his own estimates of inflation are terrible and have discredited him. He just slaps an additional 4% on CPI. Similarly, a simple index of goods and services doesn’t tell you much if it isn’t weighted to reflect what people actually consume.

    My own favorite metric here is the ‘cost of raising a child to age 18′ one, which of course excludes rampant college cost inflation but does include the similar skyrocketing in medical expenses. The last time that hit the MSM (IIRC March 2015?) I sent link and comment to Yves who posted both in the next day’s Links. Upshot was that comparing the latest cost to the 50-years-ago figure yields an average annual inflation rate of around 4%, as opposed to Williams’ “4% on top of official CPI.”

    Do other readers have metrics they think are better?

    1. craazyboy

      Just from memory, I read a site that compiled stats since 1985. (this was few years ago) They put medical inflation at 8% per year, averaged from 1985 to somewhat recent times.(it was pre- O Care) It was the second highest component of things consumers may buy. College education was the highest! can’t remember the percentage.

      I don’t fault Williams, because he is vastly “outnumbered” by BLS people. But it doesn’t take long to punch holes in their work. For starters, healthcare costs are weighted at around 6%. Then “imputed rents” are a whopping 40%. My real rent just went up 5%. Then they do “hedonistic pricing”, so better is cheaper at the BLS, if not at stores. Moreover, the BLS doesn’t do crapification.

      There are probably more nits to pick, but I grow weary wading thru BS all the time.

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