STILL GETTING PUNCHED BY THE PANDEMIC

Several days ago, the Bureau of Labor Statistics released what is undoubtedly one of its most anticipated reports-- the monthly Jobs Report. Each report refers to what jumped off in the previous month; thus, the report released on February 5th, 2021 conveys info about the state of January's labor market. There's more than enough data to put you in a daze. Data on job creation. On wages. On the number of people on payroll. On job losers and job gainers. On the number of people employed by all levels of government. Data that's disaggregated by race, ethnicity, and gender.

It's a treasure trove. A data sleuth's delight.

There's one number, though, that especially stands out. A number that's probably cited more than any other. In public discourse. In Facebook posts. On Twitter. Instagram. Newspapers. Blogs.

It's a number familiar to the humble and the haughty. To policy elites and to neophytes. It's hard not to encounter it. It's straight-up ubiquitous.

But it's also a faulty figure. Especially as a lens through which to capture and glimpse the extent to which the pandemic is still pummeling people.

A FAULTY FIGURE

And that faulty figure? 6.3%. That's the most recent estimate of the nation's unemployment rate, and it's down from the previous month's figure of 6.7%. You'd think that that decline in the unemployment rate between December 2020 and January 2021 would be good news. And, in some sense, it is. After all, it seems awfully dumb to be dismissive of what appears to be people successfully transitioning from unemployment to employment. Scholars have long known that unemployment, especially prolonged unemploment, is bad for your health. Unemployed folk report lower levels of happiness, higher levels of stress, elevated episodes of sickness, increased levels of hunger and, not suprisingly, heightened struggles to make ends meet.

Additionally, that drop from 6.7 to 6.3 percent means that, between December and January, the ranks of the unemployed thinned out by 606,000. That's the size of a good sized city. Like Atlanta. Like DC. Like Baltimore. When you go from 10,736,000 unemployed folk in December to 10,130,000 in January that's not exactly something to sneeze at. That drop of .4 in the unemployment rate is pretty significant and, therefore, it is somewhat understanding why people would cheer at the sight or thought of 600,000 people climbing out a ditch. Or being pulled out. There's still 10,130,000 packed in the pit. But a bunch got out.

Or did they?

Here's the problem and it brings us face to face with why the official unemployment figure is a flawed measure of labor market distress: The vast majority of those 606,000 folk did NOT move from unemployment to employment; the vast majority, in other words, did not grab a gig. A close look at the report reveals that while the number of people classified as unemployed dropped by 606,000, the number of people counted as employed only increased by 201,000. Simple math suggest that there's a "missing" 400,000 persons. 600,000 drop in numbers of unemployed. 200,000 increased in the numbers of the employed. Where did those 400,000 persons "go"? Did they just vanish in thin air? Do unemployed people possess the power to go "poof," to disappear right before the very eyes of government statisticians.

Want to know where they went? They dropped out of the labor force. They stopped looking for jobs. They took the exit ramp. So, when you look at the BLS's report, you'll see that between December 2020 and January 2021, the civilian labor force dropped from 160,567,000 to 160,161,000. There's your "missing" 400,000. People who drop out of the labor force, for whatever reason, are not included in the nation's unemployment count and rate. They exist in that statistical netherworld that government statisticians dub as "out of the labor force."

That decline in the unemployment rate between December 2020 and January 2021 has a lot more to do with the unemployed dropping out of the labor force than it does with them securing a gig. To the extent that there's any rejoicing, it clearly ought to be restrained.

We're still being punched by the pandemic.

Catch you on the flip side,

Doc Greene