The Right-Wing Media's "Real Unemployment Rate" Deflection
Research ››› ››› TERRY KREPEL, THOMAS BISHOP & ALBERT KLEINE
Despite hopeful signs of economic progress, the right-wing media have attempted to downplay positive economic news by using alternative measures to argue that the "real unemployment rate" is much higher than has been reported. In fact, these alternative measures are not appropriate substitutes for the official unemployment rate.
Right-Wing Media Hype Alternative Measure As The "Real Unemployment Rate"
Trump On Fox: 7.8 Percent Rate Is "Phony," The "Real Number" Is "15 Percent, 16 Percent." On Fox & Friends, Donald Trump declared that the 7.8 percent unemployment rate reported for September is "not the real number" and a "phony number," adding, "The real number is 15 percent, 16 percent. People even say 21 percent." [Fox News, Fox & Friends, 10/15/12]
Peter Ferrara: U-6 Number "Better Reflects The Reality." Appearing on Fox & Friends, conservative analyst Peter Ferrara claimed that that the U-6 employment rate, "better reflects the reality" of unemployment. Co-host Alisyn Camerota echoed Ferrara, suggesting that the U-6 number, which was 14.7 percent in September, is "the real authentic number ... the real number that captures the pain that Americans are feeling by not being fully employed." [Fox News, Fox & Friends, 10/14/12]
Fox Graphic Calls U-6 Rate "The 'Real' Unemployment Rate." During Ferrara's segment, an on-screen graphic appeared that declared "The 'Real' Unemployment Rate" to be 14.7 percent, the U-6 number for September:
[Fox News, Fox & Friends, 10/14/12]
Fox Business' Shapiro Declares "Real Unemployment Rate" To Be 14.7 Percent. Appearing on Fox News, Fox Business reporter Adam Shapiro said: "If you were to factor in the people who want to work part-time, the people who've dropped out of the work force -- that's the labor participation rate -- to what the real unemployment rate would be, it would be 14.7 percent." [Fox News, Fox & Friends First, 10/8/12]
Fox Business Reporter: "Take A Hard Look" At U-6 Rate. Under the headline "Time to Focus on the Real Unemployment Rate," an article by Fox Business reporter Dunstan Prial stated: Forget the official 8.2% unemployment rate. Take a hard look instead at what's known as the U6 rate, which tracks not only those out of work but those who've essentially given up looking for work. That rate stands at about 14.5%, or nearly double the official unemployment rate." [FoxBusiness.com, 4/6/12]
Right-Wing Media Have Also Used Labor Force, Discouraged Worker Stats To Downplay Unemployment Drop
Ferrara: Americans "Fleeing The Work Force Under Obama." In his Fox & Friends appearance, Ferrara also claimed that one reason unemployment rates have declined is because "they've counted 8.2 million Americans as fleeing the work force under Obama." [Fox News, Fox & Friends, 10/14/12]
Fox's Doocy: "Real Unemployment Rate" Covers "Tens Of Millions" Who Are "Unemployed, Stopped Looking, Or Have Taken Part-Time Jobs." Fox & Friends co-host Steve Doocy said that "when you look at the real unemployment number, you know, all those who are unemployed, stopped looking, or have taken part-time jobs, you're talking about tens of millions of people, and for them, the unemployment or underemployment problem is 100 percent." [Fox News, Fox & Friends,10/8/12]
In Fact, Economists Have Identified "Benign Reasons" For Labor Force Drop
Washington Post: Labor Force Improvement Suggests The Fall In Unemployment Rate Reflects A Real Improvement." The Washington Post's Ezra Klein noted in his October 5 article that the improvement in the labor force participation rate "reflects a real improvement, rather than people stopping their work search":
[The Washington Post, 10/5/12]
Kansas City Federal Reserve: Long Term Trends Account For About Half Of The Decline In Labor Force Participation From 2007 To 2011. In a 2012 study by the Federal Reserve Bank of Kansas City and published in the journal Economic Review, researchers found that long term trends such as changing demographics accounted for "about half of the decline" in the labor force participation rate (LFPR) with economic factors accounting for the other half:
The recent strengthening of the association between the LFPR and the unemployment rate, as measured by the correlations over time or across U.S. states, suggests that labor market participation has become more sensitive to the cyclical weakness in the labor market. Thus, the labor market slump may be an important factor for understanding the recent decline in participation.
[T]he LFPR declined from 66.0 percent in 2007 to 64.1 percent in 2011 ... 1.1 percentage points of this decline (58 percent) [are attributable] to the cyclical downturn. Long-term trend factors, such as demographics, account for the remaining 0.8 percentage point of the decline (42 percent). [Economic Review, 2012]
Huffington Post: "We Shouldn't Assume That Everybody Is Just Dropping Out Of The Labor Force ... Because They Are Simply Discouraged." Following a labor force participation drop in September, Huffington Post chief financial writer Mark Gongloff noted that while the number of Americans "not in the labor force has risen by 2.7 million in the past year to 88.9 million," fewer than "7 million people who are out of the labor force say they still want a job." From the Huffington Post:
And what are the majority of these 2.2 million people who don't want a job doing instead? Retiring, it seems. About 1.6 million people who have dropped out of the labor force in the past year are 65 and over, according to the BLS.
That leaves another 600,000 dropping out for other reasons besides retirement or an inability to find a job. Some could be teens going back to school -- the number of teenagers not in the labor force has grown by 245,000 in the past year. People could be going to college to get better skills. Unfortunately, we don't know for sure, because the BLS doesn't have a detailed breakdown of what people do when they leave the labor force.
But we shouldn't just assume that everybody dropping out of the labor force, or even most of the people dropping out, are doing so because they're simply discouraged. We just don't know that for sure. [The Huffington Post, 9/07/12]
U-6 Is Not The "Real" Unemployment Rate
The Washington Post: "U-6 Is Not An Unemployment Measure." In an updated article also published on October 5, The Washington Post's Ezra Klein pointed out that "U6 is not an unemployment measure because it includes part-time workers who want full time employment":
U6 is not an unemployment measure. It includes part-time workers who want full-time work. So it doesn't count the increase in part-time work. But every measure of actual unemployment -- U1, U2, U3, U4, and U5 -- went down. You can see them all here. Again, there's no mystery. [The Washington Post, 10/5/12]
BLS Spokesman: U-6 Is Not An "Unemployment Rate." In February, FactCheck.org quoted a BLS spokesman who explained that "the agency does not refer to U-6" as an unemployment rate, instead using the official number which "has been calculated the same way for decades":
Romney calls the U-6 number the "real unemployment rate," but BLS spokesman Gary Steinberg said the agency does not refer to U-6 as any kind of "unemployment rate," real or otherwise, because it includes people who are employed, albeit part-time. The U-3 figure is the "official unemployment rate," Steinberg said, and has been calculated the same way for decades. [FactCheck.org, 2/10/12]
The Heritage Foundation: "The Chief Utility Of The U-6 Rate ... Is Often Just Its Shock Value." In 2010, Rea S. Hederman, Jr., a research fellow at theconservative Heritage Foundation, quoted a BLS economist pointing out that the "marginally attached" category which is included in the U-6 rate is "so broad, it includes every person who has ever thought about one day having a job." Hederman noted that referring to U-6 as the unemployment rate is only useful for "its shock value":
The problem, however, is that this number is startlingly high only in relation to the levels of unemployment that the official unemployment rate -- the much more restrictive U-3 figure -- has accustomed us to seeing. The chief utility of the U-6 rate for anyone but labor economists, then, is often just its shock value.
For economists, these last two definitions of unemployment can help provide some insight into labor-market movements. In particular, the spread between U-5 and U-6 can show how quickly businesses are returning to normalcy after a recession, because it offers a way to gauge changes in the number of hours worked as well as in the number of workers hired. An increase in U-6, meanwhile, can provide evidence that employers are shifting more workers to part-time schedules in response to declining economic conditions. But beyond these limited assessments, the significance of the U-5 and U-6 numbers is far from clear -- and surely not as great as many commentators recklessly suggest. [Heritage Foundation, 7/5/2010]
U-6 is Categorically Higher Than The Official Unemployment Rate, But The Two Figures Trend Together
Federal Reserve Bank of St. Louis Data: U-6 Rate Has Declined Along With U-3 Rate. Data from the St. Louis Federal Reserve shows that historically, the U-3 and U-6 figures have trended together. Furthermore, while both measures of unemployment rose during the recession, they have been on a downward trend since 2009:
[Federal Reserve Economic Data, compiled 10/14/12]
While The Gap Between U-6 and U-3 Widened During The Recession, It Has Remained Relatively Flat Since Obama Took Office. When viewing the gap between the rates from the day Obama took office (January 20, 2012) to the most recently available date (September 1, 2012), the difference between U-6 and U-3 has only risen by 0.1 percentage points. From the St. Louis Fed:
[Federal Reserve Economic Data, compiled 10/14/12]