Saturday, August 19th, 2017

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The “Real Unemployment Rate” vs. The Spin: Where’s the News Here?

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Let me begin with this disclaimer: we pollsters are not a gracious lot. Picture a faculty review committee discussing merit pay or tenure. We are a competitive, sanctimonious, altogether not a very nice bunch of people. With that said, I really am compelled to comment on the recent comments of Jim Clifton, longtime CEO of Gallup, and his recent statements on the "real unemployment rate". In short, Clifton penned an op-ed on the company website referring to the "big lie" of the official Bureau of Labor Statistics monthly unemployment rate. The 5.7% rate for January he says is woefully inadequate and does not take into account part-time workers, those earning $20 a week, those underemployed, and the hundreds of thousands of others who have simply given up looking for work. The real unemployment is much larger - at least double the official rate, and probably higher.

In all of this, Clifton is absolutely right. The published rate is not only woefully inadequate, it is misleading and dishonest. But the thrust of Clifton's remarks is to suggest that the current administration is perpetrating the lie and purposely using the recent reduction of the overall rate to suggest a recovery that is not really existent. In other words, the Obama administration has fabricated a hoax and continues to spin the "official" statistics for their own benefit.

But then Clifton has gone even further. In a follow up interview on CNBC, in responding to a question about the "big lie", he notes that he fears that telling the truth will endanger his life in some way. So he backed off the "big lie" headline by telling CNBC: "I think that the number that comes out of BLS [Bureau of Labor Statistics] and the Department of Labor is very, very accurate. I need to make that very, very clear so that I don't suddenly disappear. I need to make it home tonight."

Conservatives on talk radio and in the blogs are having a field day. The leader of the "iconic Gallup Poll" is speaking the truth. (It always amazes me how we pollsters are "iconic" and "pioneering" when the numbers are favorable and mere "tools" and "hacks" when folks disagree). But there are too many problems with all of this. First, the inaccuracy charge against the official labor statistics is very old news. Truth is that the same set of accounting has always been used. I recall campaigning for the Humphrey-Hawkins Full Employment Bill in the mid-1970s and citing the examples of part time, poor pay, and under-employment. Obviously, the BLS needs a new system, but for now we are comparing apples and apples and should not suggest that movement from a 10% unemployment rate to a 5.7% rate is not real (in some way). If some sort of chicanery were being used to fudge the rate doesn't anyone think that a low-level accountant or statistician would step up to be a whistleblower and make one of the great news stories of the decade?

But secondly, for Clifton to suggest that he could become a target of a hostile administration is simply ridiculous. If we pollsters aren't being assassinated for coming out with terrible job approval numbers, why would we be killed for citing facts that most people know already anyway.

Or maybe Jim Clifton was just kidding about all of this? Or at least just the part about his personal safety. I am happy that the GOP has finally discovered the concept of the "real unemployment rate", although it took outright contempt for anything involving Barack Obama to get to this point. And I am thankful that the argument has been made again that there is a real unemployment rate. But just remember: this is same official unemployment "rate" that went up under Nixon and Carter, down and up and then down under Reagan, up under Bush 41, down under Clinton, up under Bush 43, then down under Obama.

Is this really something new?