Tags: Brennan | unemployment | job | data

National Review's Brennan: 'One Number Can't Capture' Job Market

By    |   Wednesday, 11 February 2015 12:48 PM

Many commentators have railed against the government's employment data, with Gallup CEO Jim Clifton writing last week that the official unemployment rate is a "big lie."

Patrick Brennan, opinion editor for the National Review Online, offers a more nuanced view. "Clifton is wrong, or at least way overstating his case," he writes. But there isn't a single statistic that can accurately sum up the labor market, Brennan explains.

"We haven't found a 'real unemployment rate' yet — one that can be used consistently to compare the unemployment picture month to month, year to year, and in larger historical context. Such a number, perhaps obviously, doesn't exist."

That explains why economists use a variety of statistics to analyze the jobs situation. "They are aware, as we all are, that just one number can't capture what's going on, and that the best numbers to tell the story vary all the time," he writes.

As for some of the most recent data, the economy added 257,000 jobs in January, punctuating the biggest three-month gain in 17 years. The unemployment rate was 5.7 percent. But the labor participation rate totaled only 62.9 percent, barely above the 36-year low of 62.7 percent.

Zachary Karabell, head of global strategy at Envestnet, a wealth management firm, makes a similar point.

"The jobs reports, unfortunately, have been a [symbol] of what is off with our current political and economic debates," he writes in an article for Politico. "The reports contain a wealth of data on the types of jobs, wages . . . and reams of other data. But little of that data informs our discussions."

Instead, we just look at payroll numbers and the unemployment rate to determine the ramifications for the economy, Karabell says.

"The result is a shadow-puppet discussion of our issues, along with partisan talking points and gross pundit-fueled generalizations. Lots of noise, little substance, Kabuki theater, you name it."

In times of a financial crisis or a recession, such as in 2008 to 2009 and 1990 to 1991, jobs reports are "a vital guide," Karabell writes.

"They measure big, blunt changes in payrolls and hiring, . . . directionally they tell us which way the lumbering economic machine is moving," he explains.

"But in more stable times, these reports are less useful."

Meanwhile problems remain in the job market, despite the largely positive news for January. "America currently has 5 million vacancies waiting to be filled," writes Mike Cassidy of The Fiscal Times. "So where are these 5 million jobs hiding?"

What we have is a "disconnect — persistent unemployment and underemployment despite lots of vacancies," he says.

It's largely a matter of the field in which you're searching for a job. "Goods-producing construction and manufacturing sectors are the worst places to be looking for work," Cassidy states.

"By contrast, high-skill, white-collar sectors are doing quite well. In finance, there's enough job openings for every job candidate." The difference is reflected in wages too, Cassidy explains. "Once again, the winners are high-skill sectors, such as information and finance."

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Many commentators have railed against the government's employment data, with Gallup CEO Jim Clifton writing last week that the official unemployment rate is a "big lie."
Brennan, unemployment, job, data
Wednesday, 11 February 2015 12:48 PM
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