75-01-B3
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TranscriptThere's a kind of a continuous mad hatter's tea party going on in the area of unemployment statistics, thanks to some clever Washington bureaucrats. I'll be right back. Yesterday, we were talking about unemployment and how the Bureau of Labor Statistics goes about determining the number of jobless in America. I promise to explain how that number could increase by as much as 30 percent without one additional worker losing his job. Actually, that's what happened in California early last year when the federal government required it and 14 other states to change their method of computing unemployment data. California's own method for estimating unemployment had been based primarily in the number of individuals claiming unemployment insurance benefits. This tends to be heads of households out of work and not youngsters interested in after-school jobs. Older teenagers seeking their first jobs or housewives who might like part-time work but don't actually need it to feed a family. The Bureau of Labor Statistics, on the other hand, had been basing its estimates on a national survey of 50,000 households selected at random for telephone interviews. The California portion of the survey was some five thousand households. The Washington bureaucrats thought this sample was too small to produce reliable monthly estimates but the 12 monthly samples in a row would provide a reliable annual average. The federal survey's annual average had been consistently higher than the figures produced by California's own state survey, no doubt this is because it included the youngsters looking for paper routes, the housewives interested in part-time jobs and others not actually thrown out of work because of economic downturns. I was governor of California when the bureaucrats ordered our state government to switch to the federal method of estimating. We warned that people would not realize this was just a technical change, they'd see in the newspapers one day that unemployment had jumped from a little over five percent to more than seven percent and think the bottom was dropping out of the economy, when actually the federal bureaucrats had simply redefined unemployment. Our fears were realized, but the bureaucrats very happily told us the new figures would trigger a lot of emergency programs and California would get more federal funds. They were right. I can't help but wonder if that wasn't the real reason for the change. Many federal handouts are tied to the unemployment rate and unless it goes over a certain figure the programs can't be implemented. Bureaucracy has a strong instinct for survival, if there isn't enough unemployment to keep the bureaucrats in business, they get nervous. Juggling the figures may be the easiest way to allay their nervousness. We could live with the numbers game more easily if the Bureau of Labor Statistics would break down the total and tell us what percent represented real involuntary hardship unemployment, how many were new entrants in the job market and how many had voluntarily quit their jobs. Official U.S. policy has been that four percent unemployment was actually something called "full employment." This was a recognition of the fact that even in the best of times people switch jobs and we always have new job market entrants finishing their education. But if this is so, why didn't the bureau adjust this figure to reflect the new system of counting national policy. Being what it is, shouldn't actual unemployment be recorded as the amount in excess of four percent? Now, in this time of economic distress, if you want to be amazed, take your Sunday metropolitan newspaper, turn to the classified ads and count how many pages, full pages, of help wanted ads there are. For that matter Labor Department statistics show that only about 7 percent of the unemployed are jobless for 26 weeks or more. This tends to be true in good times or bad. This group may represent a social problem but it isn't a sudden economic downturn that causes it. More than half the unemployed find jobs in less than five weeks. Those lush emergency federal funds the labor department people talk about come from the taxpayer's pockets. before we go any further down that road we'd better demand an accurate count of the real unemployed plus a system of cataloging which occupational skills are in short supply and where so the people with them can find the jobs. This is Ronald Reagan. Thanks for listening. |
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