The Unemployment Report Wasn’t Rigged, but It’s Not Accurate, Either

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David Duprey / AP

Mariyamo Bakar, left, and Hawa Mugolo fill out job applications at a career fair in Buffalo, N.Y., on April 12, 2012

On Oct. 5, the Bureau of Labor Statistics announced that the official unemployment rate had dropped from 8.1% to 7.8% — a surprisingly sharp decline given the slow pace of growth in the U.S. economy. The reaction from many on the right was incredulity, with some even suggesting that political appointees in the Obama Administration had tampered with the Labor Department’s report to give the President a political boost in the final weeks of the election. Although these conspiracy theorists were dismissed by pundits on both the left and the right, that’s where agreement on the report ended. Conservatives have long argued that the official unemployment rate understates the sluggishness of the economy and that much of the decline in the rate is a result of people giving up their job searches and dropping out of the labor force entirely. Supporters of the President say the decline in the number of workers in the labor force is caused by the aging of the workforce — as our nation gets older, there will naturally be a larger portion of the population that is retired.

(MORE: Is the Obama Administration Juicing the Unemployment Stats?)

All this back and forth underscores the fact that the unemployment rate is not the cut-and-dried, authoritative statistic that the media often portray it to be. The so-called discouraged worker is one factor that muddies the data, for example. The Labor Department determines the unemployment rate by surveying 60,000 households and asking respondents a series of questions to determine their employment status. If a citizen is out of work but hasn’t looked for a job in the past four weeks, he isn’t considered employed or unemployed; he simply isn’t counted as part of the labor force.

The reason for this is simple: a retired person, say, or a parent who voluntarily stays home to raise his children shouldn’t be considered unemployed. The problem is that, using this methodology, someone who becomes so discouraged by the state of the job market that he gives up looking for work won’t be counted as unemployed either, even though logic says he should be. Ideally, you want to have a measure that eliminates people who are obviously not in the labor force, like stay-at-home parents, but includes people who want work but can’t get it, like discouraged workers.

It turns out that tracking the discouraged-worker population is only one of the difficulties in measuring the unemployment rate. To mitigate these kinds of problems and give the public a better understanding of the total employment picture, the Labor Department issues six different measures of employment, with the official rate being just one of the six. The most inclusive measure, called U6, classifies discouraged workers (as well as those who are working part time but would like to work full time) as unemployed. In a sluggish economic recovery the U6 rate may be a better barometer for the state of the economy. And by this measure, the economy is improving at a slower pace than the official rate indicates.

But even with these alternative metrics, there are blind spots in the data. One of the biggest is the Social Security Disability Insurance (SSDI) program. SSDI is for workers who have paid into the system but are unable to work because of a long-term medical condition. Obviously, workers who are severely disabled and unable to work should not be considered part of the labor force — their inability to work is not a function of the economy, after all. But huge increases in the SSDI rolls over the past several decades have given ammunition to those who argue that all measures of unemployment compiled by the Labor Department are understated.

(MORE: How Bad Is America’s Pension-Funding Problem?)

Since 2007, the number of people receiving benefits from the program has increased by 23%, to 11 million. While this is a large increase, it is really just an extension of a trend that has been going on for decades. According to a recent Congressional Budget Office report, disability rolls increased six times between 1970 and 2011, far outstripping population growth during the same period. What’s notable, however, is that the percentage of the population receiving benefits tends to rise during recessions — suggesting that the program, which was created to help Americans who are unable to work under any economic condition, is being used by many Americans to help them get through periods of temporary unemployment. As a 2010 Center for American Progress report on the SSDI program said:

When Congress created SSDI in 1956, disability and employability were viewed as mutually exclusive states. As a result, the 1956 law defines disability as the “inability to engage in a substantial gainful activity in the U.S. economy” — in other words, the inability to work. The SSDI program still uses this definition, providing income support and medical benefits exclusively to workers who are out of the labor force and cannot be expected to work in the future, as determined by the Social Security Administration (SSA).

It is clear that the program operates differently from what these stated goals suggest and that the Bureau of Labor Statistics should be counting many of these recipients as unemployed or discouraged workers. The fact that it isn’t seems to result in a systematic undercounting of the true state of unemployment in the country. And, by the way, this isn’t just a right-wing critique of a Democratic Administration’s estimate of the employment situation. In fact, Austan Goolsbee, President Obama’s former chair of the Council of Economic Advisers, wrote an op-ed in the New York Times criticizing the practice, alleging that it understated the gravity of the recession during President George W. Bush’s first term:

The point is not whether every person on disability deserves payments. The point is that in previous recessions these people would have been called unemployed. They would have filed for unemployment insurance. They would have shown up in the statistics. They would have helped create a more accurate picture of national unemployment, a crucial barometer we use to measure the performance of the economy, the likelihood of inflation and the state of the job market.

The left and the right will disagree on the question of how generous SSDI should be. But setting that debate aside, it should be universally recognized that it is no longer simply a program for the terminally unemployable. And if we want to have a clearer picture of the state of the economy, there should be measures that take into account the fact that a growing percentage of the population is receiving benefits from this program, even though these workers would like to — and possibly will be — employed again in the future.

MORE: What Are the Jobs Figures Really Telling Us?

47 comments
btt1943
btt1943

It goes without saying. This is how the public can get misled easily without scrutinizing the details.     (vzc1943)

gilahelio
gilahelio

if we considered what an individual contributes in a lifetime to society, or what an unemployed or retiered person may yet accomplish beyond the profit and loss statment, or what education does in the broader sense for our lives, we wouldn't tolerate the present enviornment, which considers nothing much beyond the mentioned four weeks....or at most the quarterly profit and loss statement. don't expect it to get better, there are a lot of chickens on the way home to roost.

gilahelio
gilahelio

btw, more and more people are choosing the "single shot" retirement plan. they don't show up on the rolls, either.

gilahelio
gilahelio

law, schmaw. employers use disability as an excuse to dump workers. not outfront, naturally, but they do. my job dissipeared while recovering from multiple surgeries. btw, my job performance was outstanding, regardless of the pain endured to do it.

Lisa Miles
Lisa Miles

Yes bcuz there is part- time,seasonal,fulltime w/ benifits,work for cash,having own business,ect.ppl find many ways to earn money.having a long time full time job/ career with full benifits is very had to find.

Diane
Diane

Personally, I don't feel anyone wants to be deemed disabled.  In the current and future days ahead of us all, a person cannot afford to even survive on disability. The payment is not enough to live on and medicade or medicare, it does not pay for everything either.

With that said, for the sake of your own health, if your not bound to a wheel chair you need to be in the work force.  For one it's better for your health to be around other people, so you don't become depressed, suicidal and or feel sorry for yourself.  Everyone has his or her own illness and or disease issues, going on and some people have more than others.  So if you think your the only one, think again because you are not! You will get the support you need and feel better about yourself when you are physically doing something for yourself and socially engaged. Even if you just take on  part-time work or even take on a volunteer job, it's better than being at home because that's why all jobs are required by law to accomidate people with "Disabilites".

Our country will get a false/postive jobs report through December.  This is all due to the massive number of Americans that are being hired on as "Temporary Seasonal Workers".  You won't know the true number each month, because these people have no guarantee job and no guarantee number of hours they will be working either.

These jobs are determined by the speculations on how the business did last year againsts how the business is running now and how the business wants to be running during the holiday months, all in the terms of profit and sales.  In the end of the season, count your blessing if you still have a job.

fmarc
fmarc

23% increase in disability, more than 20 states extending Police and Firefighters 20 years retirement pensions to non dangerous administrative professions... Our children will pay a high price for this elector's vote shopping. 

fmarc
fmarc

I understand this argument, but it cannot explain a 23% surge. I am afraid that this phenomenon can be put in parallel with what happened in 23 states, where the pension benefits, usually reserved to dangerous or exposed professions, (Firefighters, Police, CSI...)  who are eligible for full pensions after 20 years, was widely extended to peripheral non dangerous administrative occupations.

I am afraid that this is a trend, that probably buy a lot of votes, but at what cost for our children! It might even be more expensive than the Ohio votes ( 25 billion GM bailout), made at our and Ford's, Toyota, Nissan...expense.  (http://usatoday30.usatoday.com..." In Florida, for example, a senior crime lab analyst making $80,000 a year can now retire at 55 and receive an annual pension of $60,000 after 25 years of service.This trend is terrible news for taxpayers because these pensions are hugely expensive. In California, the number of workers in these special plans has shot up to 77,394, from 59,685 in 2000. Taxpayers are spending about $1.5 billion per year on enhanced early retirement benefits."

SGT_RAYRAY
SGT_RAYRAY

I don’t know why nobody has brought this up; when you run a

100 meter race you run exactly 100 meters, not 101 or 110.  Reason I say this is because for the longest

time, this jobless measuring stick was ok as long as it stayed over 8%, now

that it has dipped below 8% you here some of the critics say things like, “oh,

well that isn’t the real unemployment rate, etc..”.  Who cares, you cant just change the goal post

in the middle of the race, nor can you change the finish line from 100 meters

to 110 in the middle of the race.  This

is a very ignorant argument and should be treated as such.  The problem is that if the economy does

better, the GOP chances of taking over in the fall are worst.  Sad when supposed American cheer for a bad economy,

the GOP should be very ashamed, but I guess when you don’t have any original

ideas you are kinda stuck with rolling in the mud to hopefully get your way.

SGT RAYRAY

CoachPhil
CoachPhil

Why not show a graph of the data instead of some person filling out a job application?  Do you want to make me -- the reader -- feel a specific way with that photograph?  Or do you want me to be armed with the data?  This is a comment on the media's crappy presentatioin more so than the data being accurate or misleading, or not.  Show me the historical trend of the U6 ALONG SIDE the historical trend of the numbers being published.  Allow ME -- and other readers -- to form our own judgements FROM THE DATA, not pictures.

fmarc
fmarc

What this article says is properly revolting!

1- During Obama's presidency, the number of disability recipients increased by a quarter, from 8 millions to 11 millions, which mean that 3 MILLIONS people were put on this program. Did we have a sudden surge in accidents, disease, because this surge does not reflect the population growth.

2- This implies a massive cheating, involving the doctors affiliated to Medicare, the Medicare administration. The taxpayers will have to pay these pensions, and the cost of the benefits for decades, considering that these pseudo disabled person will live, like the rest of the population a lot longer life. If they cost, say, $15,000 a year for 10 years x 3 million = 

450 billion for the next year. If we keep this disability eligibility growth rate, we will be soon more broke than we are, if this is possible. 

dw1206
dw1206

I don't know why people think workers just get tired of looking and drop out of the work force! If you want to pay your bills, you never even think of not looking for a job. That is the most ridiculous thing I've ever heard of!

fixkid
fixkid

All true. But as long as the methodology is the same from month to month, then using these numbers to look for trends is helpful. Things are slowly improving.

sfelt
sfelt

The numbers may be inflated or manipulated but the fact remains that Obama wasn't able to get the jobless rate under 6% as he promised in 2008. And now he's making more promises he can't keep and the sheep are believing him for some reason. Wake up people, Obama can't do it, he can't even get party lines to drop on any issue. It's time for new leadership.

Joel Keen
Joel Keen

Can we please call them "disability rolls" rather than "Disability Roles?"

John David Deatherage
John David Deatherage

I find the idea that the government would release false or misleading information about unemployment figures unbelievable.   I mean, come on, when has the government ever mislead the American people?

msmischief
msmischief

One notes that one problem with the "discouraged worker" thing is that not all of them would leap into action if they only had a prospect of working, or even working as they did before -- some are claiming it to cover up their own unwillingness to work. 

Not all, by all means.  Probably very few since money is nice.  But some.

Dan Bruce
Dan Bruce

You can pick apart the numbers all you want, but the simple fact is that the economic indicators are trending upward in almost all sectors (jobs, housing, automotives, stock market, etc.), and that means recovery. After a free fall toward Depression that was not stopped until the stimulus began to take hold in late 2009, the trend has been steadily upward. That's the fact that Republicans can't seem to live with. 

rokinsteve
rokinsteve

The key to unemployment numbers is you don't count stay-at-home or retired

people.  They are not unemployed.  That's why the numbers look funny. 

Talendria
Talendria

Thank you for an informative, unbiased article.  So rare these days!

If SSDI was created in the '50s, most of our workforce was probably employed in physically demanding occupations which would've been difficult to perform with an injury.  Nowadays a much higher percentage of Americans work desk jobs which can be tailored to accommodate a wide range of disabilities.

As to the statistics, you always have to apply a reality test.  Are home values still depressed?  Are friends and neighbors still unemployed?  Are people still begging on the street corner?  In my Colorado community, all three of these things are still true, which belies any claim of economic recovery no matter how they fudge the numbers.

iAMDPDIDH
iAMDPDIDH

you cant trust any polls around election season.

mantisdragon91
mantisdragon91

 You are complaining about 450 billion in disability benefits. How do you feel about the 530 billion in tax cuts and 200 billion in additional military spending that is in Romney's plan? And all without a credible plan to pay for any of it.

miki801
miki801

That a great increase in disability does not mean that all on it are cheats.  When business is booming the disabled can find some type of restricted employment, However, when and employer has many applicants for a job, the young and healthy are selected.  When one can not do any job available do to a disability that is not cheating.

bcfred
bcfred

It's mostly young people who can subsist off of their parents and second household earners.  Plus many of the people who are counted as employed have taken part-time jobs or accepted lesser positions (for the reason you cite - gotta pay the bills), so even if they are no longer 'unemployed' they are certainly underemployed.

mike3316
mike3316

It may seem rediculous to you ... but it DOES happen. I personally know of a couple who had both been working in mid to upper level jobs.  They have no children and have been getting along quite well.  About 2 1/2 yrs ago HE lost his job.  He collected unemployment until it ran out - that was a year ago.  After 2 years of "pounding the pavement" and "working his network" he finally got so discouraged that he gave up looking  and is now a "house husband."  They're making do with only her income at this point.  His "plan" (such that it is) is to wait for the economy to get better before heading back out to look for work.  This guy ... by the current counting method is "technically" NOT unemployed.

onlymho
onlymho

not when there is a disproportionate increase in DI participants since 2007 compared to population change and (from another article) often right after unemployment benefits end the application for DI occurs

sherman234
sherman234

 not necessarily.  suppose everyone who is currently unemployed becomes discouraged and drops out of the labor force.  then the measured unemployment rate is zero and yet the state of the economy couldn't be worse.

sherman234
sherman234

not necessarily.  suppose everyone who is currently unemployed becomes discouraged and drops out of the work force.  then the measured unemployment rate is zero and yet the state of the economy couldn't be worse.

mtngoatjoe
mtngoatjoe

The fact is that republicans led us into a deeper hole than anyone thought possible in 2008. The fact that unemployment didn't drop as much as "promised" is not a reflection of the policy, but of the problem. Romney's only plan is to lower taxes. He has no other policies. But the reality is that taxes are already at historical lows, and lowering them further will only increase the debt (especially since Romney doesn't plan to reduce spending).

miki801
miki801

No one would believe that congress would hurt the whole American way of life by blocking every jobs proposal that was put forth to defeat Obama.  Job one for the Republicans was NO jobs.  Romney sent Mass. state call center jobs to India, but who'd want those? Here they pay better than McDonalds.  Romney came in 47th in the nation for jobs in Mass when he was gov.  Hmm 47th, sound like a number we've been hearing.

mantisdragon91
mantisdragon91

 And your idea of new leadership is going back to the same policies that tanked the economy in the first place?

dw1206
dw1206

His term isn't over yet.

miki801
miki801

Viable Opposition?  Sounds like an impartial group to me.  Hmm.

bcfred
bcfred

What no one is enjoying living with is average growth coming out of this recession of around 1.5%.  GDP growth out of the last recession was around 6%.  Historically the steeper the decline, the steeper the recovery - a V-shaped pattern.  It's been this way since the government began tracking such data more than 70 years ago.  Yet this one is more like an L rotated about 10 degrees onto its back.  The number of net jobs added has declined each of the last three months.  Yes, that is technically growth - but hardly recovery.  These observations do not make me a Republican - they make me a sentient being with common sense.

Dan Bruce
Dan Bruce

Just the opposite is true in my neighborhood. Who is right? We probably both are in our own neighborhood. However, nationally, we are in a sustained recovery, and Obama deserves credit for that. 

dw1206
dw1206

Also, many Boomers are beginning to retire. The Underemployment is truly a problem and will probably rise, as the greed of Businessowners continues to blind them to the fact that if the workers pay and benefits were increased, it would be a HUGE boost to Business and therefore to our Economy! We need to vote out ALL politicians who don't understand that as well!!

bcfred
bcfred

That's exactly what happened here - fewer jobs were created in September than in August, but more people dropped out of the labor force.  That is NOT a positive development.

Ali Alexander
Ali Alexander

If Obama were serious about decreasing unemployment among Americans, then how come he's giving 1.7 million illegal aliens work permits?  And how come he hasn't made use of eVerify mandatory to remove 7 or so million illegal aliens from jobs they're holding illegally?

Ali Alexander
Ali Alexander

The Obama Administration is funding a training program in Sri Lanka so that citizens of that country can learn English and US business practices, the better to take call center jobs from the US.  And Obama is assisting illegal aliens to take jobs from Americans WITHIN THE US.  His "policy change" aka DACA will give 1.7 million illegal alien "children" work permits, despite the fact that they made their own decision at age 18 to remain in this country illegally.  He's also not deporting the PARENTS who brought them here illegally.  Meanwhile, 7-8 million illegal aliens (including some of these "Dreamers") already have jobs that they've stolen from Americans--and I'm not talking agriculture, either.  Most illegal aliens work in jobs other than agriculture under stolen SS numbers alongside Americans.

bcfred
bcfred

What are you talking about?  The House has passed more than 30 job-related bills that Reid refuses to even allow a vote on in the Senate.  Who's the obstructionist there?  And which Obama jobs bill are you referring to?  If the House is somehow blocking it, why hasn't the Senate take it up? 

Oh, and when Obama had a majority Democratic House and filibuster-proof majority in the Senate, why didn't he focus on the jobs situation then?  Simple - expanding the entitlement state was more important to him.  Obama spoke with his actions; ignore his words.

Dan Bruce
Dan Bruce

You lack context, however. The rest of the world is doing worse. Even China is not seeing the kind of growth that it has been seeing. Obama and his efforts (despite lack of Republican cooperation) have kept our heads above water and laid the foundation for genuine long-term growth while the rest of the world is splashing around with major economic inertia.

RoccoJohnson
RoccoJohnson

You're being pretty generous with your assessment, obviously using indicators that are favorable to your political agenda. The overwhelming evidence has shown that the economy, if it has been growing, which is dubious, has been at a trickling rate. It's widely known now that the government doesn't count food and fuel prices in calculating the inflation rate, which greatly skews the numbers to the good. I'm not singling out Obama over this, presumably it's been the same regardless of who is president, but it's one example of how actual numbers can be favorably manipulated.

Dan, when Bush enacted the first half of the stimulus I remember you wrote negatively about its presumed folly, yet now you're claiming that if not for Obama's stimulus the country would be in a deep depression. I don't believe you're being honest or consistent in your attempt to persuade people that you know what you're talking about.

Talendria
Talendria

Could I ask which region of the country you live in? I don't want to invade your privacy, but I think the recovery is localized. We recently moved to northern Virginia, and this area has bounced back almost completely because everything here benefits in one way or another from government spending. Home prices are rising; new home construction is active. People seem happy and optimistic. I haven't seen a single beggar or homeless person. That's why I think it's a shame that our elected officials travel between metro DC and their upper-class lifestyle in their home district. They probably have no idea how bad things are in other parts of the country. I think we should avoid politicizing the discussion with terms like fault or credit, because that makes it difficult to remain objective.

bcfred
bcfred

Both stimulus packages were ultimately unsuccessful because short-term programs do nothing to change long-term behavior.  If someone sends you a check for $5,000 you may go buy a few things but you're not going to change your lifestyle.  The same is true at the business level; a one-time credit might create short-term spending on new equipment, for instance, but will not result in permanent capacity expansions or hiring.  The government would do well to stop calling it "stimulus" at all, and instead call it "support" - as in, government will TEMPORARILY spend more during downturns to support the economy in times of less private sector activity.  That's a definsible concept people can understand and get behind.  Claiming that government spending will stimulate anything is just setting a lot of people up for disappointment - like our current "recovery."  That's not even getting into the politicalization of how funds are spent.

Dan Bruce
Dan Bruce

I wrote negatively about the way the Bush stimulus was distributed. It went too heavily to Wall Street, not enough to Main Street. Time has shown that to be a legitimate criticism. Also, I didn't trust Bush, and for good reason. He sold the country out with both foreign and domestic policies.