In his recent article on how government rigs its statistics, John Crudele writes:

Thanks to a tiny tweak in definitions made by the Clinton White House back in 1994, Obama’s life is a whole lot easier. [...]

Back in ’94, the definition of a discouraged worker was changed. Until then, Labor would call people’s houses and ask the adults if they were employed or not. If someone said they weren’t even looking for a job because they were too discouraged, that pre-1994 person was considered unemployed and included in the figures.

The Clinton administration decided that unemployed people couldn’t be discouraged — and not job-hunting — for more than 12 months. If a person hadn’t searched for a year he was simply not included in the U-6 or other measures of joblessness.

Yes, the definition of “Discouraged” was tweaked. No, the Clinton administration had absolutely nothing to do with it.

From a few documents BLS was kind enough to send me:

Given these reasons, an effort to redesign the CPS was begun in 1986. From 1988 through 1991, a series of research projects were conducted to guide the development of the revised CPS. Included in this research were two large-scale tests of alternative versions of the questionnaire collected using centralized computer-assisted telephone interviewing with samples of households selected through random digit dialing. The result of these tests was a completely revised questionnaire designed to be collected with an entirely automated survey instrument.

So this particular redesign actually began under Reagan. Moving on:

June 1990. The first of a series of experiments to test alternative labor force questionnaires was started at the Hagerstown Telephone Center. These tests used random digit dialing and were conducted in 1990 and 1991.

January 1994. A new questionnaire designed solely for use in computer-assisted interviewing was introduced in the official CPS. Computerization allowed the use of a very complex questionnaire without increasing respondent burden, increased consistency by reducing interviewer error, permitted editing at time of interviewing, and allowed the use of dependent interviewing where information reported in one month (industry/occupation, retired/disabled statuses, and duration of unemployment) was confirmed or updated in subsequent months.

And the reason for the change also had nothing to do with Clinton:

The former measurement of discouraged workers was criticized by the Levitan Commission as too arbitrary and subjective. It was deemed arbitrary because assumptions about a person’s availability for work were made from responses to a question on why the respondent was not currently looking for work. It was considered too subjective because the measurement was based on a person’s stated desire for a job regardless of whether the individual had ever looked for work. A new, more precise measurement of discouraged workers was introduced that specifically asked if a person had searched for a job during the prior 12 months and was available for work. The new questions also enable estimation of the number of people outside the labor force who, although they cannot be precisely defined as discouraged, satisfy many of the same criteria as discouraged workers and thus show some marginal attachment to the labor force.

The Levitan Commission was established in 1978 and released its findings in 1979, to put in perspective how misguided it really is to assign this definitional change to Clinton.

And, finally:

In 1994, major changes to the Current Population Survey (CPS) were introduced, which included a complete redesign of the questionnaire and the use of computer-assisted
interviewing for the entire survey. In addition, there were revisions to some of the labor force concepts and definitions, including the implementation of some changes recommended
in 1979 by the National Commission on Employment and Unemployment Statistics (NCEUS, also known as the Levitan Commission). Some of the major changes to the survey were:

b) The addition of two, more objective, criteria to the definition of discouraged workers. Prior to 1994, to be classified as a discouraged worker, a person must have wanted a job and been reported as not currently looking because of a belief that no jobs were available or that there were none for which he or she would qualify. Beginning in 1994, persons classified as discouraged must also have looked for a job within the past year (or since their last job, if they worked during the year), and must have been available for work during the reference week (a direct question on availability was added in 1994; prior to 1994, availability had been inferred from responses to other questions). These changes were made because the NCEUS and others felt that the previous definition of discouraged workers was too subjective, relying mainly on an individual’s stated desire for a job and not on prior testing of the labor market.

Beyond taking a gratuitous and demonstrably inappropriate swipe at Clinton, Crudele implies that the number of people unemployed or underemployed today would be significantly higher without “Clinton’s” change:

How high would the U-6 underemployment rate be if these discouraged workers were added back in? ShadowStats.com, which tracks government figures, thinks the broadest jobless rate would be 22.9 percent if President Bill’s folks hadn’t redefined what it means to be unemployed. [Ed. note: As you'll see immediately below, the redefinition is not nearly as radical as Crudele makes it out to be.]

Yes, the number of discouraged workers was reduced after Labor (having nothing to do with Clinton) changed its definition of the word. However, let’s consider the change Crudele is harping about, to wit the added requirement that an interviewee had “Looked for work some time in last 12 months (or since last job if employed within past year).” Is it Crudele’s argument that an unemployed person who has not looked for work for over 12 months is even remotely (“marginally”) attached to the labor force? Think about that. I mean, really, is that an argument anyone wants to make?

Here’s a side-by-side comparison of the changes Labor made in 1994 (thanks again to the good folks at BLS sending it along). Note that Discouraged Workers were considered “not in the labor force” both pre- and post-1994.

[Importantly, note the improvement in data collection - from 1/4 of the sample, tabulated quarterly to the entire sample, tabulated monthly. That bastard Clinton was trying to get more accurate and reliable information! Damn him!]

See what Crudele’s all worked up about? Me neither. But these are slow summer weeks and there are column inches to fill. That doesn’t, however, mean that the facts should take a vacation.

Finally, I’d have to disagree with Mr. Crudele’s claim that the U-6 numbers are “buried deep” in the monthly jobs report. Unless, of course, by “buried deep” he means one click away on the main Employment Situation Report page (Click on Table A-15). “Buried deep,” to me, is more the average price of “Steak, round, USDA Choice, boneless, per lb. (453.6 gm)” in May 2006 (it was $3.89). U-6? Not buried.

Follow me on the Twitter: @TBPInvictus

Sources:
The CPS After the Redesign: Refocusing the Economic Lens, Anne E. Polivka, Bureau of Labor Statistics and Stephen M. Miller, Bureau of Labor Statistics, December, 1994, Revised March, 1995
Current Population Survey Technical Paper (CPS TP66), October 2006
Employment and Earnings, February 2006

Special thanks to the folks at BLS for being so very responsive in tracking down all the relevant documents.

Category: Employment, Financial Press, Media, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

11 Responses to ““Discouraged” By The Media (Again)”

  1. Bridget says:

    “Is it Crudele’s argument that an unemployed person who has not looked for work for over 12 months is even remotely (“marginally”) attached to the labor force”

    Or is it his argument that an unemployed person who has not looked for work for over 12 months is…….unemployed.

  2. thetruthseeker says:

    Bridget,
    Thank you for the common sense argument. Facts are stubborn things.

  3. carleric says:

    You can count, not count, redefine, calculate or whatever. Here is how it works for us simpletons: If you are working you are employed . If you are living on the public dole or living off our parents or whatever, you are unemployed and exist as a parasite on the working populace. Arguing about specifics and who is responsible is simply silly.

    Invictus: You apparently care less than I about having an accurate historical record proffered by our media. I prefer the truth.

  4. RW says:

    So the commonsense rule would categorize a person in a vegetative state for the past decade as “unemployed” and the simplistic rule would count them as a “parasite” too.

    Sounds like double counting to this simpleton but I can see it would spice up the stats albeit at the slight cost of rendering them useless for research and policy purposes.

  5. mrnegative says:

    RW, the person in the vegetative state would be considered out of the workforce in either case because they could not indicate they wanted a job to an interviewer. Nice try trying to tarnish the opponents of the new way of classifying by associating them with the “parasite” related post, though.

    Personally, I think the problem is with the focus of broader policy/political discourse on U-3 as opposed to “new” methodology shaving off some people from U-6. I am always more interested in U-6 and frankly revisionist nudges in either direction on it won’t affect how I interpret it because the numbers are just a starting point for interpretation anyway. I don’t need the “lost” numbers in the new methodology to be deeply concerned right now, and simply being aware of the historical changes allows me to be aware that some trends may be getting missed. Its all just a very imperfect starting point anyway. It always has been and it will always be, just the same with all other types of economic data.

  6. dasht says:

    If you want an honest measure of unemployment, you need to find some way to ask people what skills they have and if they would look for work if they believed there were jobs available for those skills. And then you have to compare those to the jobs available to that person for those skills.

    Something like that, anyway.

  7. SecondLook says:

    There is an “unemployment/underemployed” offset that is very rarely mentioned, if at all, the fairly large number of Americans who work off the books. in non reported economic activities.

    Those who have criminal earnings, from stealing to prostitution to illegal gambling to drug dealing – given the prison population we can extrapolate that the latter is likely 1-2% of the total workforce – to those who engage in more serious crimes (not making a moral judgement here, just using what our society defines as criminal).

    Add a probably much larger number of people who work for unreported cash, either part time or full time, and the real unemployment rate: people who have no earned income at all, is likely to overstated in the official numbers by as much as 5-10%.

    The informal economy as the few economists who study call it, is one of the most neglected aspects of any discussions about the general health of the total economy. It’s hard to gather precise data, so most economists either ignore or downplay it, the social issues underlying much of it is difficult for politicians to talk about, and most of the public either participates in it now and then or knows someone who is and really doesn’t want to get into that conversation.

  8. poppysmic says:

    at least we know your a a died in the wool proggy Dem… did BLS leak their fake job data to you as well?

    4 more years!!!

  9. Biffah Bacon says:

    I find it fascinating that the presumably self-identified conservatives (e.g. poppysmic) not only don’t want to know the narrative truth, they follow a Stalinist path of ideology defining truth in spite of empirical fact. Emerson, Nietzsche, and the Clash all said it differently but along the same theme: we become what we hate and fear. Conservatives at least used to make the pretense that they were the coldly dispassionate party driven by facts and numbers.

  10. philipat says:

    Simple answer: U6

    Invictus: It was a minor tweak to U-6 that Crudele was whining about.

  11. ToNYC says:

    Capitalism works best to the degree one has skin in the game; the rest are skinning the gamers and deserve the risk-free ride which is discounted. Away from that folks end up in politics and turf battles for self-preservation of sites on the host. Jobs are what you make them, rather looking for legacy ones that no longer sustainably exist.