Saturday, May 03, 2008

Fewer Jobs = Lower Unemployment

Yes, we performed that seeming miracle last month, and our Beloved Great White Father in Washington even spoke cheerfully about it in a press conference yesterday. He is giving almost daily press conferences now, presumably to give himself something to do, or perhaps to give the press something to do.

So how do we reduce jobs by 20,000, add an unknown (but not small) number of people to the population, and reduce the percentage of the population which is unemployed? Well, there are several methods.

There is a time limit for unemployment benefits, and right now jobs are becoming really hard to find. If your time limit for benefits runs out and you have not found a job, you are no longer unemployed. What you are may feel a lot like unemployment, in that you are not working and you have no income, but you are not unemployed because the government no longer counts you in the percentage of unemployed. This is the big method; lots of people are banging up against the time limit on unemployment benefits without finding new jobs.

Periodically during your unemployment benefit period you get asked if you are looking for work. Some people are honest enough to admit, "Oh, hell no, I gave up weeks ago." They live in a small town and have already applied and been turned down for all of the town's twelve job openings. Their unemployment benefits are terminated and, you guessed it, they are no longer unemployed.

Some jobs are seasonal. Fishermen can work only during the fishing season, for instance, so they do other things during the off season. These days those "other things" jobs have dried up so the fisherman don't get any work during the off season but they are not unemployed, they are "seasonally adjusted." Seasonal adjustment provides neither activity or income, but it is not unemployment.

Some people look for work but can't find any but are not unemployed because, while they do not have a job, they do have a husband and five children. I think the term for these is "second careerists" or something like that, but they are not considered unemployed because the government doesn't think they are really serious about working. They were just looking for a hobby, you know; a hobby to replace the job that their husband got laid off from. The husband is unemployed (for a while anyway), but the wife is not.

So only 5% of the country is unemployed, while a larger portion has no job and no income. How much larger nobody knows. Which is, of course, the whole point.

And Inflation Drops
While the price of gasoline went from $3.10 to $3.85 (in San Diego), inflation dropped from 4.28% to 3.98% in this country. The cost of everything else must have dropped a lot, right?

Well, no, the price of gasoline isn't accounted for in the inflation index. No matter what portion of your budget it represents, when it rises from $1.20 where it was at the beginning of the current administration to $3.65 where it is now, fully tripling in price, it has no effect whatever on the inflation index.

The government doesn't include the cost of any form of energy when calculating the inflation index. So when you see the electric bill go up (mine has more than doubled since 2001) and the natural gas bill go up (mine has tripled in that same period), don't see that as part of inflation. It isn't.

People are paying more at the grocery store, too, a lot more. Most would say we're paying more than a 5% increase at the grocery store, and they would be right. Food is another thing that is omitted from the inflation index.

Food and energy are omitted because they are "too volatile" to be included. (Of course, they were included for many years, but...) The real reason they were removed, by Nixon if memory serves, is because their costs were rising too fast at the time and were making the overall number look bad.

Interestingly, the two commodities that we cannot avoid buying are excluded from the inflation index. That index includes things like toys, carpets, new furniture and everything else that is entirely optional in life.

Someone once pointed out that if we measured them today as we did in 1973 then both unemployment and inflation would be in double digits. I suspect that is actually quite true, but no politician is willing to let that sort of thing become public knowledge.

Because then the public would know they screwed up with their votes.

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