the problem, due respect and all...,
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the hollow cold war...,
the hollow economy:
I was away from my desk yesterday and had to buy my news on paper. I ended up with the Sunday NYT, in which Stephen Roach notes the hollow aspects of present productivity statistics and Austin Goolsbee complains about hollow unemployment figures.
Roach suggests that: a) for the service sector, which employs 80% of the US workforce, government uses worker compensation to approximate output in many cases, b) that the US workweek according to the Labor Department is woefully inadequate ("patently absurd") because white collar workers spend a lot of unbilled hours working from home, so that c) whitecollar productivity is overestimated and d) increased productivity figures for the corporate sector stemming from increased profits from cost-cutting layoffs or cheap outsourcing overseas is a negative economic gain.
Goolsbee points out that: a) Reagan reclassified military personell from "not in the labor force" to "employed", b) Congress under Bush Sr. loosened standards to qualify for disability payments and people moved "in record numbers" in the Social Security disability system, which moves you from the labor force to "not in the labor force", c) that from "1999 to 2003, applications for disability payments rose more than 50 percent and the number of people enrolled has grown by one million. Therefore, if you correctly accounted for all of these people, the peak unemployment rate in this recession would have probably pushed 8 percent." Hence historical comparisons of unemployment rates are rendered meaningless.
Goolsbee does not take into account a prison population that's growing faster than the general population or the fact that long-term unemployment results in being classified out of the labor force. From disability alone Goolsbee gets a 2% unemployment rate increase; last April Wampum made the case that if you include everybody that is unwillfully underemployed or erroneously "not in the labor force" that you end up with an unemployment rate roughly double what it was, of 12%. Newman, likewise, continues his series on how our economic indicators are increasingly the result of cooking the books.
update 12/11: DeLong takes an angle, discussing the employment-to-population ratio, suggests the historical ratio would tack on 2.4% to the present official rate, and like everybody else doesn't really know why. Unlike everybody else he doesn't, on the other hand, pretend to know why.