Lies, damned lies, and statistics

Mish points out the obvious:

To be sure, the drop in the unemployment rate [from 9.5 to 9.4 percent] was a surprise, but it was all due to the slide in the labour force — the employment-to-population ratio gives a more accurate picture of the slack in the labour market and the hidden secret in today’s report was that this metric slid to a 25-year low of 59.4% from 59.5% in June and 61.0% at the turn of the year.

Got that? Translated into non-econospeak, that means the decline in the unemployment rate isn’t because more people are working, but because more people have given up looking for work. So, they’re no longer counted as part of the labor force and therefore there are both fewer workers and less unemployment. I’ve long felt that employment-to-population ratio is a much better statistic to measure jobs because it removes one subjective variable from the equation. Calculated javascript:void(0)Risk has a nice chart up which demonstrates both the significance of women entering the work force – although not the full extent of it since it would have to go back to 19731950 for that – as well as the scale of rising not-employment.


Even these numbers appear to considerably overstate the case. The “civilian noninstitutional population” is reported by the BLS at 235.87 million, considerably less than the U.S. Census-reported population estimate of 306.29 million. I think it’s reasonable to consider soldiers employed; they’re arguably more productive than most government employees, so adding the 1,455k members of the military to the 140,041k civilian employed means that 46.2 percent of the population is employed, not 59.4 percent as reported in the July 2009 employment report.

Legalizing academic fraud

Salt sends an email informing us that North Carolina has raised the bar:

§ 14-454. Accessing computers.
(a) It is unlawful to willfully, directly or indirectly, access or cause to be accessed any computer, computer program, computer system, computer network, or any part
thereof, for the purpose of:

(1) Devising or executing any scheme or artifice to defraud, unless the object of the scheme or artifice is to obtain educational testing material, a false educational testing score, or a false academic or vocational grade, or
(2) Obtaining property or services other than educational testing material, a false educational testing score, or a false academic or vocational grade for a person, by means of false or fraudulent pretenses, representations or promises.

A violation of this subsection is a Class G felony if the fraudulent scheme or artifice results in damage of more than one thousand dollars ($1,000), or if the property or services obtained are worth more than one thousand dollars ($1,000). Any other violation of this subsection is a Class 1 misdemeanor.

Rumor has it that the White House is putting pressure on Hawaii to consider similar legislation regarding birth records….

Fred on health care

He explains why more government involvement isn’t going to make anything cheaper:

I believe that Econ textbooks say that price controls haven’t worked from Diocletian on. Wrong. They work splendidly. Ask Bausch & Lomb. If you could make over twenty-two bucks on a dime’s worth of salt water, wouldn’t you be in favor of governmental interference in the economy?

Let me explain medicine briefly. It’s an unholy scam. Here in Mexico my wife occasionally gets ear infections. At any pharmacy, we pick up Amoxicillin, 250mg three times a day for ten days. Six bucks.

Recently we were staying in Maryland with friends, and she got an ear ache. Amoxicillin is by prescription only in the US, which means that doctors have a monopoly on ear aches. It was Friday evening. It was either agony until Monday or go to one of those mall-based walk-in clinics, which wanted $150 for the appointment and prescribed $78 in medicines. It’s a scam, pure and simple. Above the level of county government, the US is as corrupt as Mexico could ever be, and it’s mostly legal.

The problem boils down to this: focused interest groups will always have more influence with national politicians than the public. And the more centralized the industry, the easier it is for those interest groups to wield their influence. It is, as Fred describes it, government by looters.

Green shoots or red tidal wave?

The so-called lull in the foreclosure rate had nothing to do with fewer people failing to pay their mortages:

Khater said the foreclosure rate and REO rates have been impacted by government tinkering in the market. He said federal and state efforts have mostly delayed foreclosures, preventing few. The same is true for loan modifications — they fail about half the time. So to tune out the noise, just look at the 90-day rate. In Khater’s view it shows “one giant wave.”

I never understood why people were commenting on the “lull” in foreclosures and REOs when California had declared a short-term moratorium on permitting banks to foreclose. Combined with the demonstrated reluctance of banks to follow through on the procedure because of what it does to their balance sheets – they carry the delinquent, abandoned property on their books at the full value of the mortgage until the whole process is complete – the mortgage banks are terrified of taking ownership of foreclosed properties. But the graphic below shows the true picture, which indicates that there can’t be any reasonable expectation of a substantive economic recovery until 2012 at the earliest.

The gap between REOs (foreclosures on the books) and foreclosures in process is the extent to which the damage is being underestimated. And the delinquency rate is an indicator of more foreclosures in process still to come.


Of course, the reason more people are finding it difficult to pay their mortgages is because their wages and salary are continuing to drop. In 1973, the median male weekly wage was $486.10. Source: The State of Working America by Lawrence R. Mishel, David M. Frankel, p. 78. Corrected for inflation, that is $2,361.45 in 2009 dollars, or $122,795.40 annually. In its report entitled “USUAL WEEKLY EARNINGS OF WAGE AND SALARY WORKERS: SECOND QUARTER 2009”, the BLS reported the median male weekly wage is now $815, or $42,380 annually.

So, that’s what immigration, offshoring, and women’s rights have accomplished for the country, a two-thirds reduction in male wages. Inexpensive debt has hitherto concealed some of the ramifications of that collapse in real wages for a while, but as the chart shows, it can’t do it forever.