I have a bunch of stuff I want to blog about, but we have been busy finalizing our May/June issue for the printers. We’ve sent it off and subscribers should receive their paper copies within about ten days. E-subscribers, you’ll get yours tomorrow–too tired to sort out the list and finalize the color version tonight. Not a subscriber? You can subscribe today, here! Please consider subscribing at the sustainer level–we always need the help!
As you can figure out from the cover, the theme of this issue is economic indicators–in four of our regular departments we see how some key ones measure up. I have just posted one of those–D&S co-editor Alejandro Reuss’s “Making Sense” piece on unemployment, Unemployment Is Down, So What’s the Problem? He walks you through the relationship between the unemployment rate, the employment-population ratio, and the labor participation rate. In the longer online version, there’s even some algebra (confined to a sidebar, though).
Here’s the p. 2 editorial note with more info about the issue:
Measuring Economic Indicators
In economics, numbers matter. Sometimes the numbers help explain the world, and sometimes they help obscure it. Researchers sometimes make mistakes, and they sometimes, consciously or unconsciously, put their thumb on the scale to get the results they want.
The rise and take-down of Harvard economists Carmen Reinhart and Kenneth Rogoff highlights the importance of the numbers. Reinhart and Rogoff became darlings of the austerity crowd when they published research, in 2010, purporting to show that countries with debt-to-GDP ratios of over 90% could expect very low economic growth. Pro-austerity politicians used the findings to justify painful cuts in public spending. Researchers in the UMass-Amherst Department of Economics, however, just found that Reinhart and Rogoff’s results had been driven by the questionable exclusion of some countries, dubious weighting of the data, and an embarrassing spreadsheet error. All these created an apparent cliff-like fall-off in growth rates above the 90% “threshold”—a result that vanished when the errors and manipulations were eliminated.
Sometimes, though, it is the official data series themselves that paint a misleading picture. For decades, Dollars & Sense has been informing readers about the shortcomings of the official unemployment rate. The “headline” unemployment rate (or “U-3” as designated by the Bureau of Labor Statistics) does not account for individuals who want work but have stopped looking or people who want to work full-time but can only find part-time jobs. The unemployment rate would be much higher if they were counted. Since 1995, BLS has published a set of “alternative measures of labor underutilization,” including the “U-6” measure, which does include these groups. However, it is still the headline rate (corresponding to the federal government’s “one official definition of unemployment”) that grabs the headlines.
This issue of D&S takes a look at four key economic measures (or “indicators”)—the ones that get most of the attention from commentators, politicians, and the general public—in our Comment, Making Sense, Up Against the Wall Street Journal, and Economy in Numbers departments. The four indicators are the official unemployment rate, the Consumer Price Index (which measures the price level, and is used to calculate the rate of inflation), Gross Domestic Product (the most widely used measure of total production), and the official poverty line. Our authors explain the shortcomings of these measures, and suggest alternatives that paint a more correct picture.
The features in this issue turn from the numbers to the facts on the ground. Economist Marjolein van der Veen looks at the different possible “ways out” of the Greek economic crisis. Labor activist Brian Walsh asks how workers can win—how they can transform top-down unions into member-driven, activist organizations, and how they can take the fight to the employers—in today’s hostile environment. Finally, freelance journalists Sarah Blaskey and Jesse Chapman report from Honduras on the struggles over land and labor in the country’s palm-growing region. This issue also includes Arthur MacEwan, aka “Dr. Dollar,” answering a question about “fractional reserve” banking; D&S collective member and freelance journalist Dan Schneider on profiteering from school data; and more!
I’ll post some of my backlog of stuff tomorrow or Friday.