Numbers Can Be Deceiving

Well, the Orange One has delivered a “major” speech on the economy. As usual, very little he said is remotely accurate; here’s just one example from a Time Magazine article deconstructing those claims:

Trump’s claim that one-in-five American households “do not have a single member in the labor force” is also therefore not a reflection of employment problems so much as it’s a recognition that 20% of American households are headed by retirees. Your 85-year-old grandfather and his 82-year-old wife aren’t participating in the labor force—and that’s probably a good thing.

Because we Americans have a tenuous grasp of economics, politicians often feel free to play with the numbers. That’s nothing new (although Trump does take misinformation to a whole new level…)

Last May, the website of the Indiana Institute for Working Families had a discussion of unemployment numbers that explained what those numbers do–and do not–reveal about the health of a state’s economy. Since we are in the middle of a campaign season in which Trump and other candidates will continue to take liberties with those numbers, it is worth revisiting that explanation.

The post itself was triggered by a seemingly rosy employment report: more Hoosiers were working, and the workforce was nearing an all-time high. Good news, right?

Well, as the policy analyst explained, “all that glitters is not gold.” Among the reasons for caution is something called the Labor Force Participation Rate.

 it’s also important to look at the Labor Force Participation Ratio (LFPR)—the ratio of the civilian labor force to the total non-institutionalized civilian population 16 years and older—as a useful tool in determining the overall health of the labor market. A low LFPR means there is slack in the labor market, which puts downward pressure on wages, and holds back growth in household incomes.

In layman’s language, the LFPR means that a decline in the unemployment rate can be explained, at least to some extent, by the number of Hoosiers leaving the labor force. That’s because workers are only counted in the unemployment rate if they are actively seeking work. But the workforce dropout rate isn’t the whole story either.

That brings us to the third and final point, which helps to illustrate declining LFPR; while the state is reaching employment levels (total nonfarm employment) not seen since the summer of 2000, the population of adults in Indiana (16+) has grown by more than a half-million during that time period. In other words, Indiana has added jobs, but not nearly enough to keep up with population growth.

Worse yet, the jobs that the state is adding are low-paying jobs. A recent report from the Indy Star – Economic Gaps Growing Among Hoosiers – encapsulates the conundrum that is the state’s insistence on low road growth strategies: “As the state economy grows and state leaders say pro-business policies have created more than 57,000 new jobs last year alone, poverty is on the rise. That’s right. More jobs, yet more poverty.”

It’s always useful to consider what the statistics tell us–and how the real story differs from the snake-oil on offer.

26 thoughts on “Numbers Can Be Deceiving

  1. Yes, and it always come down to education.
    I think you have found the reason for our national angst, much less here in Indiana.
    Here is a quote from the recent article noted below:

    ‘Younger households took the hardest hit from the recession, the Times reports. They often have large college loans to pay off as states have reduced support of colleges. And they have seen their elders remain in the work force.

    On the flip side, Americans 65 and older are more likely to be in the middle class than ever.

    One factor that remains consistent, however, is education. The ability to learn on the job, to reinvent yourself, to make yourself valuable to employers often requires a college education or at least training beyond high school.

    The disturbing trend here is that many young people are less likely to have college educations than their elders. America is falling behind other industrialized countries in the proportion of adults with college educations.’

    http://jacksonville.com/opinion/editorials/2016-08-09/story/pressure-our-middle-class-reason-our-national-angst

  2. This may seem irrelevant, but you begin a succinct, intelligent discussion with a playground slur (Orange One?). Is this any better than “crooked Hillary”? One thing Hillary Clinton has managed is to refrain from name-calling and I hope she continues. Although it may give some short-term satisfaction, it detracts from the impact of what you’re saying, just as Trump’s name-calling completely destroys any chance for his credibility. A writer can be sarcastic, satirical, or whatever they wish without it. Of the many things that anger me about Trump, one is the way he has emboldened all of us to speak in ways that a few years ago we would not have spoken.

  3. There is one more very important factor that is always left out of the unemployment rate figures:

    Adults who have lost their jobs and have not found a new job before their unemployment insurance runs out. Thes people no longer even “exist” as far as the government is concerned when calculating the unemployment rate.

    I actually called the IIWF a year ago to ask about this and they confirmed my belief. Even though there may be millions of adults searching for employment, they are eliminated from the calculation once their unemployment ins runs out. At the time that I called the IIWF the true unemployment rate was approximately 14% if those people are included.

    These are the people who are depending on family to support them or are using their savings and 401K or have become homeless.

    This country needs to be honest about the REAL unemployment rate.

  4. Anthony; I must take issue with this statement. “On the flip side, Americans 65 and older are more likely to be in the middle class than ever.” Americans 65 and older are more likely to be retirees on Social Security and, if lucky, receiving small retirement income – IF their retirement plan wasn’t destroyed in the recession or by thievery. We are actually among those who have lost our “middle class” status thanks to the recession, escalating costs of everything and no COLA for the fourth year in the past six years. We must pay the same amount for all goods and services as those with higher incomes; those of us who do not pay income taxes DO PAY all other taxes imposed on piece of goods and all services. That list is endless.

    ‘Younger households took the hardest hit from the recession, the Times reports.” With this I must agree; looking at my son and daughter-in-law’s situation with one son in his senior year at BSU (there are many current expenses aside from the upcoming student loans) and homeschooling their two teenage sons (yes, there are financial obligations for home schooling). My son is a brick mason, seasonal work; my daughter-in-law is the custodian at a local Catholic church and school, her base monthly salary is $1,408 BEFORE all tax deductions and $520 for health care coverage. She is virtually working for food. They are among those considered middle class; but, are they.

    When weather prevents my son and his crew from working, are they counted among the jobless during those times, sometimes weeks? They aren’t working and they don’t get paid for those days. Are the elderly counted among those adults with no college education? Older generations were rarely expected to make it into college due to the need to work and less education was required for many jobs when we entered the work field. I am a high school dropout with a GED, part of my job when I became disabled in 1994 was Records Secretary for the Metropolitan Development Commission, the most powerful board in the state of Indiana. Two people were hired to replace me; what are the requirements for that job today? Are the disabled included in the jobless count?

    There is no way to obtain a true count of jobless. Pete posted a list recently questioning many situations being counted as “working”; what we receive from the qualified sources for statistics doesn’t include all working or non-working situations. It is an impossibility to accept their numbers as being totally accurate – they are a “best guestament” and only near accurate for a brief period of time.

    Yes; “Numbers Can Be Deceiving”!

  5. Dakota, name-calling is as old as speech. At one point the revered and pious (?) John Adams called Alexander Hamilton “that Creole bastard”. No excuse for us to do the same, I agree. Just say’n.

  6. Dakota,

    “This may seem irrelevant, but you begin a succinct, intelligent discussion with a playground slur (Orange One?). Is this any better than “crooked Hillary”?”

    If Sheila did otherwise, then it wouldn’t be an intelligent discussion. Anyone who TRUSTS anything that Trump says ought to have their head examined.

    “Dakota: Of the many things that anger me about Trump, one is the way he has emboldened all of us to speak in ways that a few years ago we would not have spoken.”

    You don’t trust him either. Sheila is just being more up front.

  7. JoAnn,

    “Anthony; I must take issue with this statement. “On the flip side, Americans 65 and older are more likely to be in the middle class than ever.”

    The link Anthony provided came from The Florida Times-Union. Talking about “bullshit.” As a matter of fact, yesterday I was distributing my A.I.R. for FAIRness t-shirts with the back of which was displayed:

    VOLUNTEER

    STOP THE INSANITY

    “SWARM”

    The Florida Times-Union

    [unable to transmit in graphic form]

    You have to understand the background of the transmitters of knowledge. When you don’t, you can end up looking like a fool. OR WORSE.

    Without understanding the context, what appears to be innocent words can be just the opposite. The Florida Times-Union, more than any one factor, is responsible for the Jacksonville BANKRUPTCY. See what I have been saying about The Florida Times-Union on the web since last November at http://www.EthicalForum.net.

    As I have mentioned before, Jacksonville is the SPEARHEAD of the so-called TEA PARTY MOVEMENT. If you believe a LANDSLIDE VICTORY is our only chance this fall, that’s the place to trigger it.

  8. My favorite appellation applied to the lying Mr. Trump (an accurate description is not name calling) is, “The Mango Mussolini.”

  9. I agree that name-calling is nothing new in politics and elsewhere. What bothers me about it here is that Sheila’s blogs are so logical, reasonable, and clear. I’ve used them with friends when I have a hard time explaining my position. I don’t care if you say “Trump is a liar.” He is. That isn’t name-calling. But venting spleen at his hair? Why waste your time and detract from what you’re saying? Let Trump and his supporters use playground epithets. The comparison between a dangerous bombast and a steady, clear-thinking, and responsible leader is becoming more and more obvious, even to some die-hard conservatives. If we mimic someone’s behavior, it shouldn’t be Trump’s.

    Okay…sermon over!

  10. Dakota,

    “Okay….sermon over!”

    I’ve agreed with you before. And I agree with about everything you say. But not in the context of a presidential race with the likes of a Donald Trump. Hillary Clinton hasn’t responded at all to him in my book. And she is not going to. She’s going to listen to her democratic political consultants who DON’T HAVE A CLUE as to how to handle Donald Trump.

    A group of democratic political consultants was hired a few years ago to run the presidential campaign in, if I’m not mistaken, Bolivia. By the time they were through the country was mired in something close to a revolution. Around that same time, two of the most important political consultants were involved in our presidential race, one was on the Republican Party side, the other on the Democratic Party side. THEY WERE HUSBAND AND WIFE.

    As I mentioned the other day, for the moment, Sheila Kennedy is my quarterback, not Hillary Clinton. I’m not into suicide, not just yet.

    The above doesn’t mean that I’m not going to vote for her. Right now the only person in charge of America is Barack Obama. Donald Trump isn’t, the same goes for Hillary Clinton.

  11. In my book, the most important election is the August 30th election in Jacksonville. It will determine the future of the Tea Party Movement. If they lose, it will trigger a LANDSLIDE. And at the moment, there is a very good chance that they are going to lose.

    In a WEBWAR, you can’t afford to lose the VITAL NODE which controls your nerve center.

  12. Dakota you are right! The correct term for the Orange One is “short-fingered vulgarian.” Btw, in his latest article, Fareed Zacharia calls him a B.S. artist and defines the term as worse than a liar.

  13. The essence of Sheila’s words today is that the level of ignorance amongst us in the areas of statistics and economics is, on the average, very high.

    A statistic reveals almost nothing. A complete suite of statistics, to those adequatately educated, can reveal a lot.

    We have evolved to a great new place. What we know collectively is vast, we have some who are adequately educated in each field, we have nobody adequately educated in all fields, we are individually on the average ignorant in almost all fields. Very uncomfortable, no?

    Yes it is. There are a few of us who will address that reality by getting educated in some field (full discloser, I’m not one of them. I invested my time more in doing stuff that I’m interested in and family) but the rest of us are (drum role please) dependent.

    Horrors!

    Unfortunately this means that to keep from getting misled our strongest suite is our ability to assign credibility.

    Some people are so inept at this most important of life skills is that they assign some to the Orange one. (Sorry Dakota that’s merely a color and the one that he seems to be. You know how many refer to the Obama’s as black? Same principle.)

    See the problem?

  14. I came across on an interesting statistic recently. The number of people on food stamps. In 1978 about 7.5% of the US population was on food stamps, in 2015 the % increased to 14.2%. The number of people on food stamps was around 15.5M in 1978, that increased to 45.8M in 2015. I suppose over time the qualifications have changed.

    Here in Indianapolis Carrier Company announced back in Feb 2016 it was moving it’s manufacturing facility to Mexico. 1,400 jobs will be gone. The effect on the 1,400 workers will be dire. There is the attending issue (ripple effect) of the businesses that depended on the workers to spend their income locally. Thanks to NAFTA. Supposedly from what I read the workers in Mexico will be paid $3 per hour. http://www.indystar.com/story/news/2016/03/23/hundreds-protest-carriers-move-mexico/82182598/

    It used to be said America’s economic heath rose and fell on consumer spending. Our industrial base for the production of consumer goods has been gutted by out sourcing. If you do not think so go to a big box store and try to find anything Made in the USA. Our industrial base probably could have been upgraded with automation and robotics. Our politicians (Democrats and Republicans) made it easy for companies to shut down US Factories and relocate them off shore, with trade deals.

  15. It seems that in my brief lifetime (74 of the shortest years in human history) the standard for education has pretty much gone from a high school diploma to a PhD.

    There’s also another factor. Education (and training in general) nowadays is less likely to last a lifetime. It used to be that industry was slow moving enough so that once you knew how to do something useful it would last a lifetime. Now people have to go through that cycle multiple times in a lifetime.

    If you look at code writers or programmers as examples what they know seems to have a half life of perhaps 5 years.

    This is not your father’s world, or your mothers. As an old fart, mine either.

    Change is the new stasis.

  16. Perhaps Louie the rebirth of Unions will be to represent workers in general, not trades, and their chief product will be life long learning. Better pay and benefits should be based on growth in capability and unions in connection with community colleges could be the drivers of that.

  17. Sheila (and the rest of us) are entitled to call Trump what he (demonstrably) is. My chief objection to him has nothing to do with his hair and genitals; it has to do with his demented state of mind and utter inability in knowing how to conduct himself in the world of politics and economics due to ignorance. His narcissism will not sell in Beijing and Moscow, and shouldn’t sell in Washington. He is totally unqualified for the job – totally – with or without hair!

  18. Interesting statistic. According to the Bureau of Labor statistics the average American spends just over 13% of their lives actually working. Doesn’t seem very important in that context, does it?

    I suppose that put another way that means that we get to spend the other 87% on stuff that’s really important to us personally. Of course sleeping and eating are some of it. Having and raising families. Education, getting and giving. Vacationing. Care giving and yes, care receiving.

    How lucky are we?

  19. Sheila is absolutely correct: numbers can be deceiving. I’m just not sure why she’s suddenly interested in LFPR in Indiana but apparently not nationwide. The President has been touting the improvement in unemployment numbers since he took office. The U3 (the official unemployment rate, as reported by the Bureau of Labor Statistics (BLS)) has dropped from 7.8 to 4.9 during that period. That’s impressive. However, he hasn’t had much to say about LFPR, another number captured by the BLS. When he took office, it was 65.7. Today it’s 62.8, the worst it’s been since the 1970’s.

    There are admittedly some mitigating factors, principally involving demographic trends. But those factors apply not just nationwide, but statewide, as well. Additionally, as in Indiana, the jobs added nationally are also of the lower-paying variety. If we’re going to call out Pence (by implication) for playing fast and loose with statistics, let’s do the same for the President. I get why “politicians often feel free to play with the numbers.” They’re partisans who want to get elected. Unfortunately, too many columnists seem to be less than objective, as well.

  20. Why would you expect LFPR to change? As I said the average American works 13% of their life. Before one works it is zero. After one works it is zero. When one’s working it’s >0. If one is not looking for work they have decided that zero works for them.

  21. I think US Americans need to recall that the K-12 courses are for minors’ by residence and by parental choices as free to stay or go, transfer a child to a private placement for many reasons — health included. How school personnel actually interact with patrons — and matrons — and constituents is far more age appropriate and professional than as censured or censored by beat reporters. The largest growth areas are in adults education and schooling, for second and third careers, or none in the public employee sense of strong-enough unions and guilds. We speak different dialects, with different accents, but have 50 years to do so, not 50 jurisdictions for Red and Blue courses for K-16 accountants.

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