Latest episode of Bikini Statistics

courtesy of Mark Perry:

According to Paul Krugman in today's (Apr. 14) NY Times: The official unemployment rate may be relatively low — but the percentage of prime-working-age Americans without jobs, which isn’t the same thing, is historically high.

1. Krugman says "the percentage of prime-working-age Americans without jobs is historically high," which is clearly not accurate. It would be more accurate to say that it is close to being historically low (see middle brown line above for "All Workers"). Krugman may have used Norris' data, but then mistakenly discussed the jobless rate for all workers aged 25-54 being high, when he should have been discussing men only aged 25-54.

2. When the data are displayed over a range from 0% to 70% (bottom graph) instead of a more narrow range from 2-16%, it's much clearer that the jobless rate for men aged 25-54 has been relatively stable at about 12% for the last 25 years. Further, the jobless rate for all workers aged 25-54 has been relatively stable at about 20% for the last 25 years, and jobless rate for women has been stable at about 28% for the last 20 years, and is close to an historical low.

3. Biggest Problem: Norris is calculating his "NY Times jobless rate" as: 1 - Male Employment (ages 25-54)/TOTAL POPULATION ALL AGES MEN AND WOMEN, and NOT MALE POPULATION AGES 25-54, which can obviously be decreasing (and the jobless rate increasing) for demographic reasons like rising life expectancy that are completely unrelated to labor market conditions, or the state of the economy. For example, the Male Employment (ages 25-54)/Total population peaked at 96.4% in 1953 (jobless rate of 3.6%) and is now 86.2% (jobless rate of 13.8%), mainly because life expectancy has increased by almost ten years since 1953 (68.8 years to about 78.2 years). The increase in life expectancy means that there are now millions more Americans in retirement than ever before, which decreases the employment/population ratios and increases the jobless rates for demographic reasons, NOT job market weakness.

In other words, the "jobless rate" used by Norris in the NY Times includes retired Americans, who are NOT looking for employment. Likewise, Krugman's "percentage of prime-working-age Americans without jobs" includes millions and millions of retired Americans who do NOT want a job! The top NY Times chart above could be more accurately labeled " Fewer Men Are Working Because More Men Are Retired and People Are Living Longer."

Previous BS installment here.

Statistics are like a bikini. What they present is suggestive, but what they conceal is vital--Aaron Levenstein