David Henderson Provides Some Perspective on Job Losses
Duh, I can’t believe I didn’t think of this. Talk about confirmation bias (since I have been so gloomy):
On CNBC this morning, the talking heads pitched the new job loss figures in the most negative way. They focused on the fact that the 533,000 jobs lost (according to payroll data) were the highest in years, but they compared this absolute number with data going back to the 1970s and earlier. What’s missing? The fact that the economy has close to a record number of people in the labor force. In 1974, for example, when there were high monthly job losses during the 1973-75 recession, the labor force was 92 million. Today it is 155 million, or 68 percent bigger. I don’t have the monthly data handy, but I’m willing to bet that the 533K job loss is not close to the monthly percentage job losses in at least three of the months during the 1981-82 recession.
Although Henderson makes a great point, I agree with the people who argue that the official unemployment figures are more bogus now than they were back in the 1970s or ’80s. So yes, the absolute job losses aren’t as significant as the percentage figures, but those numbers aren’t apples to apples because of changes in how they compute unemployment. (And surprise surprise, the change in method leads to lower numbers!)
