Why Don’t The Unemployment Numbers Make Sense?

I’ve been uncomfortable with the government’s unemployment numbers for some time. Conor Clarke’s post at the Atlantic makes me more so.

Mr. Clarke pulls some interesting data out of a CBS/NYT poll. Here’s what he found:

Are you currently employed, or are you temporarily out of work, or are you not in the market for work at all?                 

Currently employed: 52%
Temporarily out of work: 17%
Not in the market for work: 15%
Retired: 16%

His conclusion is that something isn’t right. I agree, but is the poll flawed or are the government’s numbers wrong?
Here’s another conundrum. Why is Arizona’s unemployment rate below the national rate. The state’s economy relies on the real estate industry for over 30% of its GDP. One would suppose that the state’s unemployment rate would be near the national average. It gets stranger though. Here is a chart that has the unemployment rates for all 50 states. Notice anything funny about Arizona versus a few of the others?
State    Jobless Rate    Change since start of recession    Difference from national rate   
Alabama 8.4 +4.7 +0.3
Alaska 8 +1.7 -0.1
Arizona 7.4 +3.2 -0.7
Arkansas 6.6 +1.1 -1.5
California 10.5 +4.6 +2.4
Colorado 7.2 +3.2 -0.9
Connecticut 7.4 +2.6 -0.7
Delaware 7.4 +3.9 -0.7
District of Columbia 9.9 +4.2 +1.8
Florida 9.4 +4.9 +1.3
Georgia 9.3 +4.8 +1.2
Hawaii 6.5 +3.4 -1.6
Idaho 6.8 +4.1 -1.3
Illinois 8.6 +3.3 +0.5
Indiana 9.4 +4.9 +1.3
Iowa 4.9 +1.1 -3.2
Kansas 5.9 +1.7 -2.2
Kentucky 9.2 +3.9 +1.1
Louisiana 5.7 +1.7 -2.4
Maine 8 +3.1 -0.1
Maryland 6.7 +3.1 -1.4
Massachusetts 7.8 +3.5 -0.3
Michigan 12 +4.6 +3.9
Minnesota 8.1 +3.4 0
Mississippi 9.1 +2.8 +1
Missouri 8.3 +3 +0.2
Montana 6 +2.8 -2.1
Nebraska 4.2 +1.4 -3.9
Nevada 10.1 +4.9 +2
New Hampshire 5.3 +1.9 -2.8
New Jersey 8.2 +4 +0.1
New Mexico 5.4 +2.2 -2.7
New York 7.8 +3.2 -0.3
North Carolina 10.7 +6 +2.6
North Dakota 4.3 +1.1 -3.8
Ohio 9.4 +3.6 +1.3
Oklahoma 5.5 +1.4 -2.6
Oregon 10.8 +5.4 +2.7
Pennsylvania 7.5 +3.1 -0.6
Rhode 10.5 +5.3 +2.4
South Carolina 11 +4.8 +2.9
South Dakota 4.6 +1.7 -3.5
Tennessee 9.1 +4.1 +1
Texas 6.5 +2.3 -1.6
Utah 5.1 +2.2 -3
Vermont 7 +3.1 -1.1
Virginia 6.6 +3.4 -1.5
Washington 8.4 +3.8 +0.3
West Virginia 6 +1.4 -2.1
Wisconsin 7.7 +2.9 -0.4
Wyoming 3.9 +0.8 -4.2
Source: Bureau of Labor Statistics
Florida, California and Nevada — all of which have had their real estate industry battered as badly as Arizona’s — have unemployment rates significantly above the national average. With the possible exception of Nevada, I don’t think that these states derived as much of their GDP from real estate activities as did Arizona. So why the disparity?
Here are a couple of thoughts:
  • The construction segment of the real estate industry in Arizona utilized numerous subcontractors. Many of these subs’ employees were working off the books. Hence when laid off they were not qualified for safety net benefits and thus go uncounted.
  • Many of the employees of the subs migrated either to other states or in the case of illegal immigrants returned to Latin America.
  • The white collar segment of the industry (realtors, mortgage brokers, etc.) were independent contractors and technically were not laid off. They simply saw their income streams approach zero. Once again, they wouldn’t be eligible for unemployment benefits and so aren’t counted.
  • There is a very large segment of the population in Arizona (probably nationwide as well) that work off the books. This group has either found other non-taxable type jobs or they aren’t counted in the unemployment numbers.
And frankly all of that is nothing more than idle speculation. Either I am completely misinterpreting the data or there is something horribly wrong with the official data. Any ideas are more than welcome.
more: here (WSJ State By State Data)
Share

Related Posts

You can leave a response, or trackback from your own site.

Leave a Reply