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Middle Molly's America
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Hi Jeff! I just came across your blog today, and I'm glad to see someone I can agree with writing about employment numbers. I'm not an economist or a statistician; but I'm very interested in jobs numbers and calculations thereof. I started investigating jobs numbers back when the economy started to crash in late 2008. I needed to understand what these statistics meant. I have found and read so much that is just plain wrong, so I value your thoughts. I also agree that, considering the size of the population and the number of jobs, the BLS does a very decent job in its estimates and is fundamentally honest. I wrote early last year, "If the BLS is "cooking the books", why didn't they cook the unemployment rate down below 8.5% or even 8.0% before the November 2010 midterms?" And many, many people forget that, even though many people are laid off monthly, many people are also hired monthly, in good times and bad. Now, how do the numbers reported in business dynamic tie into the reports of JOLTS numbers of new hires vs. layoffs/quits? There were about 11,400,000 private hires in that same three month period (March through June 2011) and 11,059,000 private separations, for an increase of 341,000 hires over separations for that quarter. That underestimates both the private CES numbers and the business dynamic numbers.. though it is really close to the CES estimates for the same period of time. It also shows how much "churn" there is in hiring and separating during any month.
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People won't drop out of the job market unless they have a stash of cash behind them, they have a working spouse who brings in a decent income, they can rely on social security, disability, or some other kind of income support. If you have no job, no other source of income, no rich relatives who can support you, you are going to bust your butt to find a job. My sense is that the people who stay on the rolls vs. drop out are those who have other sources of income. I don't believe that the data is not available to confirm or disprove that, unfortunately. Now I did look at the methodology of at least one of the studies that seemed to indicate that longer term unemployment extensions seemed to increase the length of unemployment and the unemployment rate. The researcher was comparing people who were laid off and got benefits with people who quit and didn't get benefits. The people who quit and didn't have benefits got jobs sooner. This was a head shaker to me... Someone who quits a job vs. getting fired either has more financial resources behind him/her or has an in-demand skill set so that there is less risk to leaving his/her job. It would make sense that a person in this situation would find a job more quickly. In any event, it seems that the data isn't available to create decent controls for researching this issue.
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There were really good reasons why societies put the brakes on pure free-market capitalism and came up with "social safety nets" aside from pure voluntary charity. Are our memories so short? Do we have to learn these lessons again?
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The qualifications/disqualifications for UI vary somewhat from state to state. I'm in Illinois, and the only kind of firing that can keep you from getting UI is "gross misconduct". Performance is not an issue, unless you just don't show up, you sleep or drink on the job, something like that. I've heard that other states make it easier for the employer to dump someone and avoid paying UI.
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Oct 26, 2011