 Hi I'm James. And I'm Anthony. And this is Words and Numbers. How you doing this weekend? I'm doing alright James. Yeah you're doing alright and apparently if if I'm reading the tea leaves correctly so are American workers because this past week or so the Department of Labor has yet again told us that fewer Americans are unemployed or at least that's what we would be led to believe. That's right the the big news the April job numbers came out and according to the Department of Labor 4.4 percent of Americans are unemployed so this is this is of course good news a 4.4 percent unemployment rate is indicative of a relatively healthy economy. Sure and you know I think what we have to do is set aside political statements that were made during the primaries because those are at at distinct odds with um presidential pronouncements on the matter right so every president for as long as I can remember has said over and over again I think almost every month certainly every quarter unemployment is down yet again and and yet that seems somehow not to be right or not to be possible so let's start unpacking this. Right so so to unpack it we might go back to 2010 and notice something interesting there was a there was a period of time maybe maybe six months maybe nine months in which we had the same kind of news we're hearing now unemployment down unemployment down every jobs report that came out said that unemployment was was was improving and and yet people went out reporters went out and talked to to people in the street and said what do you think about the economy and consistently the guy in the street said no I don't think things are getting better and so for a long stretch of time we had this contradiction of the jobs numbers saying things are getting better and the man in the street saying that no I don't think things are getting better at all and if you dig into that data what you'll find are weird things like for a stretch of time unemployment drops drops drops but if you look at the jobs numbers the jobs numbers are holding steady or they're actually falling that's inconsistent right if unemployment is dropping you should see jobs going up now now and I'm no statistician I will cheerfully stipulate to this but even I know that that's impossible right the unemployment cannot go down simultaneous with jobs going down in uh in a population that is remaining constant or growing right and and so what happens here is it the whole the answer hinges on the definition of unemployment and this is where where many people get it wrong when when they think about unemployment we imagine that that Americans fall into one of two categories you're either employed or you're unemployed right you have a job or you don't have a job and in fact there's a third category and a lot of Americans fall into the third category it's what economists call non-employed and a non-employed person is a person who doesn't have a job but also is not actively looking for one so you can imagine you know natural people you put into that group the elderly who are retired they don't have jobs they're not looking for jobs full-time students they don't have jobs they're not looking for jobs right but interestingly another group that falls into this category are people who have been unemployed for so long they figured that it's just not worth looking anymore these are people who actually do want jobs but they've given up the search because they they figure it's fruitless we we have a name for this we call this discouraged workers and so what happens is if you look at the numbers what was going on back in 2010 is that there were people who were unemployed for so long they gave up looking for jobs and we stopped counting them that's why the unemployment rate was falling all right well this should actually give us enough to start working with right because once we've got the categories established we can start making comparisons over time apples to apples right and and we may stipulate that these categories are not perfect they're not great but they might be the best we can do given the nature of of this data yeah that that's absolutely right there is no good way to do this right they're just competing um inadequate ways one thing all right so we so we're dealing with a largely inadequate method of counting but it at least gives us something to work with and we can actually compare things over time so let's compare things over time and let's stick within you know the 2007 putting us right before the great recession to 2017 period so we've got data from then to literally what the bureau of labor gave us last week right what do we what do we see when we start looking at this data with no political acts to grind yeah and i i think that's the right way to do it compare let's talk about what was going on just prior to the great recession compared to what's going on now so just prior to the great recession uh if you look at 15 americans 15 to 64 years old so that's you know the the core working age groups almost 72 of them were in the labor force and what i mean by that is 72 percent of 15 to 64 year olds were either employed or unemployed they were either had a job or they didn't have a job but they were actively looking 72 percent of them now today that number is less than 70 percent now that difference of maybe two percent doesn't sound like much but when you're talking about 200 million people in the workforce it turns into about 4.8 million people that is excuse me 4.3 about 4.3 million 15 to 64 year olds who back in 2007 would have been in the labor force either looking actively for a job or or holding a job today those 4.3 million are gone we're not counting them anymore we count that they are the non-employed all right so things are pretty grim on that note what can you tell us about people who are in fact employed well the ones then to now yeah the ones who are employed you know we count them they're employed and we talk about the jobs numbers and they appear there and then we talk about the people who are unemployed and we can count those and they're here as well so if you take the employed and the unemployed you put them together 4 percent of that 4.4 is unemployed but what about these 4.3 million out here the people who prior to the great recession they were actually part of the workforce and now we're no longer counting them well if you put them back into the mix and you say look these are people who used to be in the labor force they aren't in the labor force now let's count them as unemployed all of a sudden you find that the actual unemployment rate isn't 4.4 percent it's about 6.5 all right so we've got about 6.5 percent unemployment right now and I guess we would open parentheses and say actual yeah actual with I guess with the with the big footnote that remember there's no good way to measure this right so so what we're so what we're doing here is saying look if the world today looked like it did back in 2007 there'd be another 4.3 million people on the unemployment rolls right so what if we got over that same period right over that same period of time what does that number look like year to year is it going up is it going down is it relatively flat yeah well that's a good question it is going down it's going down nicely from the great recession but I think that the take home message here is the great recession was not restricted to 2008 2009 it's something that we've been feeling the ramifications of all these years later what is it now eight years nine years since since the housing crash and still we're feeling things like we're discussing now people who have been knocked out of the labor force for so long that we just don't count them anymore right it has been you know a series of of distinct ripples since the events of 2007 eight nine that that do still kind of pollute the waters when we think about all financial things and it's a little more pronounced even than we've let on right because when you think about things like unemployment the length of time that people remain unemployed has changed over these past 10 11 years as well and not for the better yeah so going back to you know as far back as the data reliably goes the the 60s or so what you find is the median unemployed person is unemployed for about seven weeks right so you take some people are some of the unemployed or unemployed longer some of the unemployed or unemployed shorter but the mid the middle person the guy in the middle the median unemployed worker is unemployed for about seven weeks that's prior to great recession come the great recession that number jumped to 22 weeks the median unemployed person was unemployed for 22 weeks now that number has been falling but it has been falling slowly we're now at about 10 weeks so even today nine years later the median unemployed person has been unemployed for 10 weeks versus what would have been seven weeks prior to the great recession right and this is where all those discouraged workers are found right the in the category discouraged worker this is literally where they all are yeah and you can start to see this if you look at it from from the perspective of the discouraged worker if you have been looking for work and getting rejection rejection after rejection for 10 weeks or more in a row at some point you say why am I beating my head against the wall here I could at least be home you know watching tv or playing with the kids or cooking or whatever it is I do rather than going out and being constantly rejected in the minute you say that you're now counted as the non-employed we don't count you anymore here's one less unemployed person well you know what it really should be an unemployed person right because by any rational definition of the term that's exactly what these people are exactly so in the grand scheme of things really what we've got here is as is almost always the case a mixed bag with unemployment right over time yeah things are getting somewhat better but they're getting somewhat better very very slowly and as president after president has come along and claimed victory after victory here well that that's all more or less nonsense right this this is a long drawn-out process that is just going to run its course yeah I think that that's absolutely right things are without question getting better but we are not back yet to where we were prior to 2008 right so really what we've got now is the inexorable march back to where we were if we're lucky yeah and so you know people are going to pin their hopes on this president or that president and frankly I don't I don't think that the person who's sitting in the oval office matters all that much it's not a function of the person it's it's largely a function of what government is doing the harder government makes it for entrepreneurs to start and maintain businesses the harder the government makes it for for lesser educated lesser skilled people to get their foot in the door in the workforce the harder those things are the fewer jobs we're going to end up creating right yeah no I think that's a really nice way to end this week and really what you're saying is what we often say both here and in print when things are going well presidents tend to get too much of the credit when things are going poorly presidents tend to get too much of the blame right all right so that that's all we've got thanks for watching this episode of words and numbers be sure to come on back next week usually Wednesdays usually around about noon when we'll be back with another topic drawn from the headlines if you like this episode subscribe to the channel and check us out at fee.org and at fee online on social media till next weekant take it easy i'll see you later see you next week james