Unemployment Continued

Jon pretty much nailed almost everything you need to know about employement/unemployment statistics.  I’ll try to add a just little more context.  First, there is a methodology which is part of the establishment survey called the “birth/death model”.  It is not what it sounds like, however.  You see, a big part of the jobs created or lost each month comes from the creation of new businesses or the closing of old ones.  The survey can only gauge such activity with a considerable lag, because new jobs and old lost jobs are not yet added to the unemployment insurance rolls.  To fix this, the Bureau of Labor Statistics (BLS) must estimate how many new business “births” are created and likewise “deaths”.   They base the calculation on actual birth/death statistics, but naturally these reflect what happened in the past and now what is happening now. so they tend to be way off the mark during turning points in the economy- overstating employment when the economy slows and understating new employment when the economy picks up. 

Unemployment

Hey! We got an e-mail:

Guys-

Can you straighten me out on unemployment statistics. I dimly remember a commentary from someone about different versions of the unemployment statistics. The commentator seemed to imply that whatever administration was in charge always picked the version of the statistics that made them look best. Am I remembering this correctly? If we use a consistent measurement for the last 20 years, how does our current unemployment trend look?