About Unemployment Figures and Liars

I had always heard that it was Mark Twain who originated the phrase “Figures don’t lie, but liars do figure.” It sounds so Twainesque that it makes total sense to attribute that clever saying to him. Garson O’Toole writes a scholarly blog Quote Investigator in which he traces the origins of this and other commonplace phrases. He seriously questions whether or not that it was Samuel Clemens, aka Mark Twain who first used the phrase. In his analysis he goes to almost excruciating detail to present other uses of that phrase and similar quotes that happened years before the first recorded reference to Mark Twain. It seems that like today Twain and others learned and repeated something that had been in common knowledge for years. This concept is important to understand for two reasons. First, every day we hear news stories about things that we accept without question because it sounds totally logical coming from the person saying it… without corroboration. Secondly, that phrase remains as true today as it was 100 years ago… and it may be getting worse.

Conspiracy theorists may challenge the very source of data even if it comes from the government. Faith in various branches of the government is at an all time low and sound bite political rants add to the mistrust and skepticism. Monthly unemployment numbers are seen to be a milestone for measuring progress on government programs and activities as well as taking the pulse of how well the private sector is performing. When the aggregate numbers show that the unemployment rate is down, the spin on that number can be either bad or good depending on your point of view. The numbers released this week showed a drop in the unemployment rate to 7.7%. Proponents of continuing government programs point to this as progress, even though the actual Department of Labor numbers show very little change since September of 2012.

Feeding the frenzy over accuracy of the overall data is the fact that certain elements of the workforce are not included in the reports. The numbers do not include the short-term discouraged and marginally-attached workers or those forced to work part-time because they cannot find full-time employment. People are only classified as unemployed if they meet ALL of the defined points for unemployment: They had no employment, they were available for work, and they made specific efforts to find work. We know that there is currently a measurable surge in the contingent workforce and this may be a factor in employment for some time to come. Experts are predicting that in the future as much as 50% of employment will be temps.

Is a convenient supposition made by analysts actually a lie? That may be taking things to an extreme, but looking at aggregate numbers can mask problems with unemployment. A drop to 7.7% may seem significant until it is measured against veterans (2001 to present) who are experiencing 11.6% unemployment. Data driven companies that make decisions based on how well they are doing relative to their competition would be wise to examine BLS data to learn that this is a significant pool of talent that is ready to join the civilian labor force. It is not just about a favorable image gained through public good will in advertising that veterans are encouraged to apply. Real results in veteran employment programs are profitable with a positive ROI… cooking the books or giving it lip service is not.

It is also important for private sector businesses, and perhaps all of us, to watch closely for the “seasonal adjustments” to BLS data. Every month they recalculate the previous month’s numbers based on regular patterns which vary from month to month depending on a number of factors. This involves a total recalculation of everything, including the previous month’s numbers, and then this adjusted number is announced without republishing the previous month’s numbers. Perhaps using the term “milestone” in describing the importance of the unemployment data implies a little more precision than is actually present, but it is the best we have.

This week, one of my unemployed friends was celebrating the short term drop in the unemployment rate as great news… she is still unemployed. It seems that for some it is less about what the economy is doing and more about what they are doing to change their job search practices to compensate for economic downturn.

 
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