Activities

     Playing the Spin

Many people enjoy playing ping-pong. Good players know that the way to win is to put a deceptive spin on the ball, to make it hard for the opponent to figure out where it's going. Applying "spin" is also a major part of reporting economic news! One important part of becoming an informed citizen is learning to decode the "spin" -- so as not to be "played" by politicians and special interests. In this exercise, we'll take a closer-than-usual look at unemployment statistics between 1997 and 2003.

What is Unemployment?

That might seem like a silly question, but statistics aren't meaningful unless we clearly define what's being counted. According to the United States Bureau of Labor Statistics, people are employed if they did any work at all for pay or profit during the week in which the survey was taken. Part-time workers -- and even teenagers who did fifteen or more hours of unpaid farm chores -- are counted as employed.
    People are counted as unemployed if they do not have a job (as defined above) but have actively looked for work in the last four weeks. Looking for work can be as minimal an effort as asking family and friends if they're heard about any jobs.
    People are considered to be outside the labor force if they are over sixteen years of age and are not institutionalized, in prison or on active duty in the armed forces, and they have not looked for work (as defined above) during the last four weeks. Subsets of this group include discouraged workers, who have stopped looking for work because they don't believe they can find employment.

1.  Here are three graphs from the US Bureau of Labor Statistics, and all use the definitions stated above. All three cover the same time period. The first shows the percentage of the labor force that was unemployed.
2.  The second shows the percentage of the civilian population, over 16, participating in the labor force.
3.  The third shows the number of people in the labor force.

This table displays some calculations based on the graphs shown above (all numbers are in thousands).

Potential
labor force		Actual
labor force		Number
unemployed		Number not working
who could be
1998204,172137,0006,30273,474
2000210,995142,0005,68074,675
2003220,211146,0008,32282,533

Please answer the following questions:

  1. What are some reasons why people would not participate in the labor force?
  2. Why do you think labor force participation declined in 2003?
  3. How many potential workers were not working in 2003? Why was there such a sharp increase?
  4. Would you expect the number of discouraged workers to have changed between 2000 and 2003? What makes you think so?
  5. Why do you think the "unemployment rate" does not take labor force participation into account?
  6. If you were to design a more accurate measure of unemployment, what other factors would you include?

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