San Diego Housing Bubble News and Analysis

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socratt: I might be mistaken, but I was under the impression that the Labor Department stops counting someone as "unemployed" if they're out of work over a year.

Also, I would be curious to see the impact of those chronically "underemployed" as well. I know of quite a few people that are working temporary assignments, or doing consulting work, and are nowhere near fully employed.

What's unemployed?

Am I unemployed if I work part-time but I want to work full-time?

Am I unemployed if I sit home all day because I'm trying to find a professional job that pays six digits, but there are readily available jobs at Home Depot paying $10/hour?

Is my wife unemployed if she stays home with children? What if she's only able to work 6 hours a day while children are at school, but the only jobs with those hours would give her lower salary than she's willing to take? What if we don't have any children, but I make enough money for both of us?

Am I unemployed if I'm under 65 but I have enough money saved that I don't have to work 8-5 for the rest of my life?

What's the significance of the absolute number of unemployed people, whichever definition we choose?

http://www.marketwatch.com/news/story/On...

One in Ten Americans Now Uses Food Stamps as Unemployment Continues to Rise

Last update: 11:57 a.m. EST Dec. 5, 2008
WASHINGTON, Dec 05, 2008 /PRNewswire-USNewswire via COMTEX/ -- Government statistics released today reveal that unemployment rates have reached the highest level in 15 years; while a record 31.6 million Americans are now receiving food stamp benefits, the highest number since the 1960's.

That is incredible that one in ten Americans are getting food stamps! I had no idea the number was that high.

Where's MY handout! I need to figure out a way to get my family on the gravy train!

I was just basing my facts off of a census of all Americans between the age of 18-64. I think it is fair to say that anyone over 18 and under 65 without a disability and able to work would be considered employable, wouldn't you? Things are looking uglier to me by the day! 31.6 million on food stamps is absolutely scary. I am puzzled how a country on the verge of economic collapse is going to have the ability to continue to support this excess of Americans who are in need.

What is even scarier is I have a few foundations that are run strictly off donations (clothing, food and so forth). Most of it is done through friends and colleagues. No one is donating and my wife and I are in shock how few people seem to be interested in helping others. Even if we were broke we would go out of our way to help those in need. Americans seem to be turning the other cheek.

This country blows my mind!!!

I think it is fair to say that anyone over 18 and under 65 without a disability and able to work would be considered employable

Even if there were jobs available for every one of them, you wouldn't have 100% employment in 18-65 non-disabled category. Some people retire early, some people take extended breaks between jobs. 2 out of 5 married women with preschool children are out of labor force.

You really need to break down your millions of unemployed and figure out why they are unemployed and what they are doing instead of working.

Socrattt- Consider it an indicator, like all govt generated stats. And it's always much lower than reality as both parties want to hide the truth from most people. I think it's more useful to look at what our markets are doing. Equities are down $30T from the highs this year and most homes are down ~25%. This cannot be good for our future as the US is very much a "FIRE" employed economy now.
If roughly 35% of all morgages are upside down in CA and unemployment is rising, "Walk Aways" will take on a whole new growth pattern.

Esmith, even if we took the US governments number of 17.8 million we are still over 11% if we used that calculation of 160 million people between the ages of 18-64. I am just trying to find the basis of the governments calculations. The other numbers are a moot point.

esmith brings up some good points. Both of my parents fall into the "under 65 and employable" catagory, yet neither works anymore. They left today to go run a marathon, so they arnt in the unemployable catagory yet they inflate your stats as they dont have jobs. They saved and invested and worked hard and now are enjoying a long retiremnet for it. They should not be counted as "unemployed".

It seems you are looking to get a handel on the true employment issues our economy is facing. Use the "underemployment" catagory, I think it rose to the middle teens today. It includes all the people who want a job, have a part time job but want a full time one, and stopped activly looking out of discouragment. It is the highest it has ever been since they started tracking it in 1994.

Are you serious? Most people on food stamp are on it temporarily, and only because they do need it. I suppose they should stop eating. Besides, you wouldn't want the food allotment required by food stamps anyways. You do realize the welfare queen driving a Cadi was made up by Reagan...

Am I losing my marbles or is DWCAP and Esmith only taking numbers away from the equation? Esmith you seem to be arguing in favor of what I am saying. If you want to tell me that we should drop the employable age to 14 then that would essentially add numbers to the bottom line therefore decreasing the unemployment rates I am stating. When we remove a stay at home mom or an early retiree from the employable group we have an unemployment percentage that would be even higher.

My point is simply that US numbers are completely out of whack creating a false sense of security in this country. I truly believe that unemployment is already over 11% nationally, but that this government is doing everything in their power to have us think otherwise. It is simple math. Not many think outside the box, they just watch the news.

Here are some basic facts about how the unemployment rate is calculated.
The labor force consists of all people working (including self-employed), plus unemployed.
"Unemployed" means out of work AND actively seeking work.
Each month canvasers spread out and knock on 50,000 American doors and ask a bunch of questions. They chose a cross-section of cities and neighborhoods, and return a few times if no one answers.
Among the many questions are buried the following:
How many in this houshold?
Who is working? (defined as working as little as one day per week, last I checked)
Who is not working but wants to?
Is that person actively seeking work...i.e. making applications, asking friends about leads, checking want ads & following through, etc., etc. If so, bingo, they are classified as unemployed.
The current work force is about 153 million, of which about ten and one-quarter million are unemployed. 6.7%
Given these definitions, many people are not working by choice--stay-at-home Moms (& Dads), full time students, institutionalized, retired, etc.
A couple more definitions:
Underemployed generally means those working way under their potential, such as part-timers who would rather work full time. Also includes those working way below what their education and experience would suggest, such as Political Science majors flipping hamburgers (though I would
suggest they have maxed out).
Discouraged Workers is a category of people who have supposedly given up looking for work, but would take it if offered. Given the series of questions posed above, one can imagine a lot of people in this category, but that is a subjective call.
Journalists and hand-wringers like to point to an army of underemployed and discouraged workers as the government's way to understate our problems. The government does put out estimates of these categories, but rightly sticks to objective questions when doing these surveys so the statistics have meaning over time. They tweak their survey methods to try to keep them relevant and meaningful. They are constantly challenged by suspicious critics so have to prove their validity constantly. Overall, a pretty good system.

EconProf, thanks for all the info, much appreciated. Now lets talk numbers real quick. November's report just came with 533,000 jobs lost and pushed the unemployment rate up two tenths of a percentage point. By your facts above that should have pushed the rate over one half of a percentage point. This leads me to believe that there is a fundamental flaw in this system.

I had no clue that door knocking was the how the unemployment was determined. Maybe the bus got stuck in Rancho Santa Fe this past year. All in all I just don't buy it! There are millions more that are unemployed that the government fails to acknowledge. I think the numbers are clearly left lower to control any sort of panic that may have happened in the Great Depression.

http://www.chrismartenson.com/blog/fuzzy...

But it would have been worse had it not been for the mysterious positive addition of 30,000 jobs by the so-called birth-death model. From here on out we'll just refer to it as the birth-birth model because no matter how bad the underlying economic data this model somehow always adds jobs in every month except typically January and July when the model backs out a few of its more irrationally exuberant additions.

However, keeping regular track of the amount of fudging in the Birth-Death model is one of my favorite activities because I think it provides insight into just how unreliable government statistical models really are. For a nation that drives economic policy "by the numbers" it's important that the numbers are good. The Birth-Death model provides a valuable caution flag for anyone with a tendency to "believe the numbers" that are being offered up for consumption.

I think Karl nails it on the head here:

http://market-ticker.denninger.net/archi...

Socratt, good question. If 550,000 (net) jobs were lost last month, why did unemployment rate only rise by two-tenths of a percent? Answer: some of the unemployed stopped looking for work. The household survey compiles the # of unemployed. The # of jobs is more of a payroll total coming from employers.
By the way, your chance of being interviewed in any given month are about 1 in 3000.
Arraya, your reference to that blog is a good one, as it brings up one valid complaint to the way the BLS compiles their statistics. The Birth/Death allowance supposedly allows for the imputed jobs created or destroyed monthly by the birth of new businesses or the death of same. Their model is greatly flawed because it overstates job creation. It recently, for example, claimed that construction jobs are still growing in the U.S. A Barron's columnist, Gene Epstein, has frequently mocked the BLS for these conclusions.
Still, the erroneous numbers are not large in the scheme of things, and are due more to bureaucratic sloth than dark conspiracy.

EconProf I just can't imagine that 320,000 +/- people (the percentage of people that would amount to the .3% of people in question) just stopped looking for work. It just doesn't make sense. Even in a strong economy I can't imagine that high of a percentage of the unemployed would just drop off the map. I think the government will see some major fundamental problems with the way they track unemployment if and when we get out of this mess.

Imagine it. Actually the news today was that some 440,000 people moved from unemployed status to "discouraged worker" status, meaning they were no longer looking for work but would take it if offered. (Look again at the carefully crafted questions asked in the Household Survey).
The BLS tracks #s of "Discouraged Workers", "Underemployed", and also "Long Term Unemployed" (more than x weeks unemployed), what we used to call hard core unemployed.
Remember that the # of "Unemployed" is actually a stock--a sum measured at one point in time. It is the result of two flows--the # of people moving into unemployment status each month less the # of people leaving unemployment status (got hired or else stopped looking, i.e. discouraged worker), plus the # of people remaining in that stock from the previous month.
It is not inconceivable that 440,000 people left the pool of 10,250,000 unemployed pool and gave up looking for a job last month.
Now, what would our unemployment rate be if we hadn't seen those 440,000 drop out? It would have gone up to 7% from 6.5%, not the reported 6.7%. Add to this revisions DOWNWARD in the previous two months' payroll figures and you have a really catastrophic jobs picture right now. The official figures actually understate the deterioration unless properly interpreted.

So essentially what I am saying above is correct. There are plenty of unemployed in this country that just aren't accounted for because their monthly checks have stopped and they aren't technically part of the unemployment calculation.

I think the government is smart to keep these numbers down, so that we don't panic, but knowing this system is far from fool proof puts these numbers into perspective.

esmith brings up some good points. Both of my parents fall into the "under 65 and employable" catagory, yet neither works anymore. They left today to go run a marathon, so they arnt in the unemployable catagory yet they inflate your stats as they dont have jobs. They saved and invested and worked hard and now are enjoying a long retiremnet for it. They should not be counted as "unemployed".

They won't be counted. The unemployment calculation works like this:

% Unemployed = % of population currently receiving unemployment benefits

Since unemployment benefits run out after a few months (varies by state), the number doesn't reflect those who never found a job before their benefits ran out.

http://www.bls.gov/news.release/empsit.t...

NOTE: Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule. For more information, see "BLS introduces new range of alternative unemployment measures," in the October 1995 issue of the Monthly Labor Review. Updated population controls are introduced annually with the release of January data

Concho, you have voiced a common misconception. Unemployed simply means not working and actively seeking work.
That could be someone entering the work force for the first time, coming out of retirement to seek work, laid off, fired, etc. They may or may not be getting unemployent benefits, and in fact only about 40% of the unemployed currently receive benefits.

Someone told me they changed the way we look at unemployment during the Clinton years. Can anyone confirm this?

Just in case you were all curious how they break down the unemployment numbers here is the link:

http://www.bls.gov/cps/cps_htgm.htm

I find the 8th paragraph under "WHERE DO THE STATISTICS COME FROM?" quite amusing:

"Each month, 1,500 highly trained and experienced (THIS HAD ME LOL) Census Bureau employees interview persons in the 60,000 sample households for information on the labor force activities (jobholding and jobseeking) or non-labor force status of the members of these households during the week that includes the 12th of the month (the reference week). This information, relating to all household members 16 years of age and over, is entered by the interviewers into laptop computers (most likely circa 1991 IBMs); at the end of each day's interviewing, the data collected are transmitted to the Census Bureau's central computer in Washington, D.C. In addition, a portion of the sample is interviewed by phone through two central data collection facilities. (Prior to 1994, the interviews were conducted using a paper questionnaire which had to be mailed in by the interviewers each month.)"

I guess the highly trained and experienced are about as good as our Department of Homeland Security scanning for devices at the local airports. If you have heartbeat you are a considered highly trained and experienced!! This country is so technologically advanced that I would assume that they could find a more efficient way of determining unemployment, but why would you when this current strategy allows for the US to present an extreme version of a false reality.

Sounds to me that if we just convince everyone to stop looking for work, we'll be at 0%. Problem solved.

socratt, it seems you are making a tempest in a teapot. Its not important that the govt lies (it does that constantly.) Its only important that they lie consistently, which is what people like econprof are getting at.

The unemployment number is a good relative fear gauge. One could argue that the birth/death and other hedonic adjustments are the govt attempting to lie, but if so that is only at the margin. Whats important isn't the lie itself, but the consistency of its telling. Were you concerned when unemployment was at its lowest point ever pre dot com crash? 3% of the work force was still unemployed? If not why so concerned now at 7+ percent? Its the relative change that worries you I'm betting.

Either way, we're fucked. Have a nice day!

Josh

Barnaby, I appreciate the eloquent post. I am not trying to prove anyone right or wrong, I am just making a point and discussing where I think the numbers are currently at. Of course the government consistently hides information hence the definition of propaganda which happens in every country.

This country is in a bad position, but those who work hard and smart will thrive in this climate. I enjoy having to be creative when markets are going the other way. Unfortunately the majority of this country is standing in a virtual line waiting for a government handout.

Eventually the greed and ignorance will be minimized and those who couldn't afford the big house, big car, big ego will be feel the greatest pain!

I think the numbers are incredible. I can also point out another flaw in the system. I am a single mother of two. I have been declared disabled by doctors. However the government still counts me as employable because I am not eligible for disability (the doctors cannot come up with a firm diagnoses). Because of my disability I am unable to work or unable to work very much. I also do not qualify for unemployment benefits, because I can't work very much, I did not make enough at my last 3 jobs to qualify.
My disability forces me to collect food stamps to feed my children. And because of the welfare reform act and the rules of employment I am unable to collect TANF to pay my bills, and buy my children clothes. In case any of you are wondering the welfare reform acts rules of participation are that if you collect TANF you must participate in work related activities or volunteer 30 hrs. a week, the amount of TANF you receive is based on your family size for my two children and myself the TANF benefits payout would be $364.00 a month (food stamps for the same household size is $464.00 a month). And I would be required to participate in work, finding work and/or volunteer hours for 30 hrs. a week to receive that. Which wouldn't be enough to pay any bills anyway. There are quite a lot of people in this country going through the same thing I am. They are probably not helping your equations any...