lunes, 9 de diciembre de 2013

lunes, diciembre 09, 2013

Economic Beat

SATURDAY, DECEMBER 7, 2013

The Real Jobless Rate

By GENE EPSTEIN

The November jobs report looked promising, but the broadest measure of unemployment is still too high, even by the most liberal measures.

 

The labor market purportedly turned in a Hanukkah miracle in November. The jobs report released Friday by the Bureau of Labor Statistics showed that nonfarm payroll employment rose by an above-consensus 203,000 in November, while the unemployment rate fell from 7.3% to 7%, a five-year low.

If it weren't for the fact that the Federal Reserve is in holiday shutdown through December for fear of roiling the markets, the employment news might have prompted Fed Chairman Ben Bernanke to announce the beginnings of tapering its quantitative easing program. As recently as six months ago, when the jobless rate was at 7.6%, Bernanke actually promised that the bond purchases would be completely ended by the time the rate hit 7%. Here we are, but the Fed has not even begun the tapering process.

On a six-month basis, gains in nonfarm payrolls are only inching up, but at least the direction is right. The six-month average gain is running 180,000 through November, up from 175,000 through October. That signals a slowdown from the spring of this year, when six-month gains routinely ran over 200,000.

But monthly gains of 180,000 have proved more than enough to bring noticeable decreases in the jobless rate. Less reassuring, however, is that the Bureau of Labor Statistics' broadest measure of unemployment, known as U-6, still looks unusually high.

THE BLS KEEPS SIX DIFFERENT measures of unemployment, of which the official unemployment rate, U-3, is only one. While the official measure covers just those who have looked for work over the previous four weeks, U-6 builds on that category and adds two others: the "marginally attached," jobless folks who have not looked over the previous four weeks, but have looked at some point over the past year; and the "involuntary part-time," part-timers who are seeking full-time work. In November, with U-3 at 7%, U-6 ran 13.2%.

Now, I would not join the chorus of critics who argue that 13.2% is somehow the more "accurate" figure. Let's cast ourselves back to the year 2000, when U-3 was at 4%. No one doubted that, at that rate of joblessness, the full-employment economy had been achieved and that, in fact, many jobs were going begging (for which the obvious solution would have been to offer a higher wage). But naysayers could have pointed out that, through the year 2000, U-6 was at 7%, or 75% higher.

Some say that wherever U-3 is, U-6 typically should be no more than three percentage points higher. I take the far more liberal view that the U-6 figure should be about three-quarters higher. Yet even by that standard, today's U-6 number still looks too high.

From 1994 (the first year the BLS began keeping these data), through 2012, U-6 has averaged 76% higher than U-3, or virtually the same ratio that prevailed in 2000. On that basis, U-6 is about a full percentage point higher than it should be. When U-3 was 7.3% in October, U-6 should have been 12.8% (7.3 times 1.76); instead, it was 13.8%. At an official unemployment rate of 7% in November, U-6 should have been 12.3%. Instead, it was 13.2%.

Put another way, at a U-6 of 13.2%, U-3 should be 7.5% because 1.76 times 7.5 equals 13.2. That's why, as a measure of unemployment broadly defined, the official unemployment rate is currently misleading. 

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