Lies, Damned Lies, and Statistics
Published by Bob Foster
Mark Twain popularized the old saying “There are three kinds of lies: lies, damned lies, and statistics.” When Twain wrote these words in his autobiographical book, he must have had the government in mind, because the government is, by far, the master of statistical manipulation.
Everyone knows that the “official” unemployment rate is now at 10.2% of the work force, or about 15.7 million workers. But, what we are not being told is how many people are actually unemployed but not being counted as unemployed because of some strange government arbitrary reason. Let’s look at the government’s own survey numbers:
- Government reported unemployed persons—15.7 Million.
- Persons marginally attached to the labor force and who wanted to work, were available to work, and had looked for work during the prior 12 months—but had not looked for work in the 4 weeks preceding the government survey, and therefore not counted—2.4 Million.
- Persons marginally attached to the labor force, but had not looked for work during the 4 weeks preceding the government survey for personal reasons (family responsibilities, school, etc.) and therefore not counted—1.6 Million.
- Discouraged workers who are no longer looking for work, and therefore not counted, because they believe there are no jobs available for them—808,000.
- In addition, there are those termed “involuntary part-time workers,” which means that these people have been laid off and are unemployed, but take a menial temporary part-time job just to feed their families, and therefore are not counted—9.3 Million.
Since these are government numbers, they are suspect, but they are all we have, so let’s look at some totals. If we only add up all the unemployed numbers above, we find 20.5 Million people unemployed—not 15.7 Million. Then when we add in the “involuntary part timers,” we get 29.8 Million people basically “unemployed.” This is nearly double the “official” number published by the government. There are likely many more that have dropped so far below the government’s radar they no longer get surveyed.
Government press releases and media pundits tell us the recession is over and recovery is in progress—so, where are the jobs? Small business has always pulled our fat out of the fire in past recessions, but they cannot do it this time, because of restrictive lending practices by banks, repressive government regulations, and the threat of government imposed higher operating costs, e.g., healthcare and higher taxes.
If you’re a small-business owner, you just might want to jot a note to your Congressional delegation and tell them that.
Yup—lies, damned lies, and statistics!
Comments
4 Responses to “Lies, Damned Lies, and Statistics”
My Book
Any business crisis can be managed before it becomes fatal . . . Be Your Own Turnaround Manager tells you how. Click here for more information.
No kidding! I’ve been haphazardly tossing around that figure as a “guestimate” now for the past couple years – so thank you for taking time to research the figures!
One group we can’t ignore and need to address is well is the undocumented workers here in the U.S. – it might be interesting to see how greatly they have been affected by this recent downturn as well.
Jeff´s last blog ..Adobe TV – Using Keylight in After Effects CS4
Jeff – I only wish good data was readily available. For instance, what about all the workers laid off, but are being paid a severance? They are unemployed, their severance is about to run out, and their COBRA will follow soon after. But, as I understand it, they are not even counted in any category. I believe the actual number is even higher than I could pull together in my post.
Undocumented workers should make an interesting study. Regardless of anyone’s views on whether or not they should have been here in the first place, the fact remains that they are now the glue that holds a great portion of our economy together. From what I read, it appears that many of them are headed home, taking a lot of experience and capability with them. They came here to work, and when there is none, they have no choice but to go back. It’s a shame we can’t solve this problem once and for all.
Bob Foster´s last blog ..Lies, Damned Lies, and Statistics
Bob – Reading the post, I could not help but to think of Nassim Nicholas Taleb’s “Black Swan” which deals largely with the fallacy of statistics and experts. He writes of an “Confirmation error (or Platonic confirmation): You look for instances that confirm your beliefs, your construction (or model)-and find them.” In our looking we often fudge numbers and hide reality. The last administration did this in hiding the cost of the two wars by not including them in the budget. Mark Twain captures this kind of statistics wonderfully. Great quote! Honesty is just the best policy. It allows us to actually address the problem and work for solutions as opposed to appearing as if there is no problem or that the problem is to a lesser degree. This is why problems are not solved or not done so more effectively. The truth eventually is revealed and usually we are in a deeper hole. Thanks for the post. As usual, it’s thoughtful.
Judith Ellis´s last blog ..Being Zbigniew Brzezinski III
Judith – Thank you for your comment. I absolutely agree with Taleb’s “Confirmation error” theory–it happens with all statisticians. I think that’s why Twain lumped them in with lies, and damned lies.
But, what of the consequences? What if the high level meeting the President just called on the jobs issue was working with a 30% unemployment number instead of 10%–would that have had a different effect on the substance of the meeting? I wonder.
Moreover, I am concerned about government reports that are presented as absolute fact. There is a big difference between “Confirmation error” and “spin.”
Thanks again for your comment Judith–I always look forward to them.