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To: smolejv@gmx.net who wrote (39559)	10/13/2003 1:35:00 PM
From: AC Flyer	Read Replies (2) \| Respond to of 74559

DJ: You are reiterating the doomster-oriented assumption that the BLS employment statistics are undercounting the unemployed. I suggest the opposite is true - during recoveries from recessions the BLS systematically undercounts the number of employed, thus making the BLS-generated unemployment rate unnecessarily pessimistic. I have attached a CSFB report that lays out the reasons for this persistent bias. Here is the much-simplified Cliff's Notes version. The BLS uses two different surveys for measuring employment - the Establishment Survey and the Household Survey. The Establishment Survey is based on actual payrolls at existing businesses. The data from this survey are more quickly processed and form the basis of the BLS's preliminary employment reports. However, the Establishment Survey totally ignores the farm sector, the self-employed and more importantly, new businesses. The Household Survey includes these sectors. Recessions seed a process of creative destruction in the labor market and so, while many jobs permanently disappear through structural changes in the economy, many new businesses and many new jobs are created. When the Household Survey data is reconciled with the Establishment Survey, these new jobs are counted (estimated) and the employment data are revised upwards. At a minimum, take a look at Chart 2 on page 2 of the attachment, which shows a significant divergence between the Establishment Survey and the Household Survey since early 2002. Part of the divergence results from a non-back-dated change in methodology for the Household Survey, but even so, there is a significant discrepancy between the employment pictures painted by the two surveys.

To: smolejv@gmx.net who wrote (39559)	10/13/2003 7:21:50 PM
From: GraceZ	Respond to of 74559

The percentage reflects those who are in the labor force who don't have jobs, are available to work and are looking for work. If you counted say, the prison population or the millions of retirees or children the percentage of unemployed would be higher, but these are people who either don't want to work or are not available to work. Why would you count every stay at home parent raising their children as unemployed? When I was younger I would periodically quit my job and travel for months at a time, why would I be counted? Or someone who loses their job and goes back to school full time? These are people who, for whatever reason, have taken themselves out of the work force. What the unemployment rate measures is those people who are in the work force who don't have jobs and want them. It measures the percentage of people trying to find work. If it has a flaw, it is that it doesn't count those who have recently given up looking for work, but then counts them when they start looking again (which is why the rate ticks up at the beginning of an economic recovery). People give up for many different reasons, not always because jobs aren't available but sometimes they just give up because they get depressed or discouraged when a job they want doesn't seem to be easily within reach. There are probably a number of unemployed former IT workers who aren't ready to accept the fact that the high salary and benefits they received just three years ago are no longer a reality for them in today's labor market, that their former salaries were unnaturally fueled by the Y2K investment boom in IT and a shortage of workers. I have a sister with a graduate degree in chemistry. She worked for three years in her field, got discouraged with the lack of opportunity in her small company and quit. She then stayed home to raise her kids. Now, during that period, if you'd ask her if she wanted to work, she'd say, yes, that she wanted to work in her field. Yet, she never once during that ten years looked for work because she was convinced from her small three year experience of working that she couldn't find a job in her field that would be enjoyable, that would pay her a decent wage. The world is full of people like my sister. They KNOW that a decent job isn't out there so they don't bother to look. Now how dumb would it be to count her in the ranks of the unemployed? BTW I would most certainly be counted as employed. I'm self- employed which means I'm completely ineligible for unemployment insurance benefits (I don't pay the premiums either). If my business failed and I started to look for a job, I would be counted as unemployed but I would still not be eligible for unemployment insurance benefits until I'd been employed long enough to have paid into the fund. If I retired and decided to stop working I would then be considered as having left the workforce. Most people throughout their lifetimes exist in one state or another of employed, unemployed or not in the work force.