Table of Contents
1. Introduction
2. Multiple Job Holders
2. Multiple Job Holders
3. “The” Unemployment Rate
4. Working Overtime
5. Additional Factors in Employment
Content
1. Introduction
On
July 13th,
2018, U.S. House Democratic primary winner Alexandria Ocasio-Cortez
(NY-14) appeared on PBS's program Firing
Line,
to discuss her campaign with host Margaret Hoover.
Ocasio-Cortez,
a former Bernie Sanders campaign staffer who has been described as a
democratic socialist, was criticized for her response to Hoover's
question about unemployment. The following is a transcript of that
exchange:
Margaret
Hoover:
In
your campaign. It was always about working-class Americans. You talk
about the top versus the bottom, not the left versus the right.
Alexandria Ocasio-Cortez:
Right.
MH:
Now, the economy is going pretty strong, right? There's roughly four percent unemployment, 3.9% unemployment... um... Do you think that capitalism has failed to deliver for working-class Americans, or is [it] no longer the best vehicle for working-class Americans?
MH:
Now, the economy is going pretty strong, right? There's roughly four percent unemployment, 3.9% unemployment... um... Do you think that capitalism has failed to deliver for working-class Americans, or is [it] no longer the best vehicle for working-class Americans?
AOC:
Well, I- I think the numbers that you just talked about is part of the problem, right? Because we look at these figures, and we say, “Oh, unemployment is low, everything is fine”, right? Well, unemployment is low because everyone has two jobs. Unemployment is low because people are working sixty, seventy, eighty hours a week, and can barely feed their kids. And so, I do think that we have this no-holds-barred, Wild West hyper-capitalism. What that means is profit at any cost. Capitalism has not always existed in the world, and it will not always exist in the world. When this country started, we were not a capitalist- we did not operate on a capitalist economy.
Ocasio-Cortez's comments were quickly criticized by numerous figures in conservative media, including Tomi Lahren and Dan Bongino on Fox. On July 17th, former Republican congressman turned conservative radio host Joe Walsh tweeted “@Ocasio2018 is proof that just because you have a degree in Economics doesn't mean you actually understand economics.”
Alexandria
Ocasio-Cortez graduated from the College of Arts and Sciences of
Boston University in 2011, with a bachelor's degree in economics and
international relations. Her critics have also pointed out their
reasons for suspecting she is as unqualified to speak about
international relations as they feel she is about economics,
specifically her position on what she called “the occupation of
Palestine”.
Although
many news outlets and fact-checking sites were determined to prove
her wrong, she did have a point. While her comments on unemployment
were not technically correct in the strictest and most literal sense,
the way she articulated her position on why unemployment is low is,
at the very least, understandable and on the right track.
That's
because, as Harvard economics professor Gabriel Chodorow-Reich
says – as quoted in “Ocasio-Cortez Wrong on Cause of Low
Unemployment”, written by Corey Berman and Robert Farley, published
on FactCheck.org on July 18th,
2018 - “if she meant 'The unemployment rate is low[,] but that
doesn't mean the economy is at its potential[,] because many people
don't have a solid job and instead are forced to work two jobs to
make ends meet', you could find economists willing to agree or
disagree with the statement.”
I
suspect that that's exactly what
she meant.
2. Multiple
Job Holders
Ocasio-Cortez's
critics say that one reason she is wrong about unemployment, is that
the percent of workers who have multiple jobs is near an all-time
low.
That
is true; however, that low was achieved in 2013, in the middle of the
Obama presidency, and thus, could arguably be attributed to
Democratic policies. But on the other hand, that rate increased from
2013 to 2016, and decreased from 2016 to 2017. This rate has ranged
between 4.8% to 5% since 2010, and ranged between 5-6% during the
previous 25 years before that.
Ocasio-Cortez
never claimed that the number of people working two jobs was at an
all-time high. Although it was hyperbole for her to use the word
“everyone” to describe who has two jobs, it would be incorrect to
say that she claimed that the multiple job holders rate is higher
than it has ever been. While she arguably may have appeared
to imply that,
she did not directly say it.
Despite
the fact that that figure is actually near its all-time low, many
people, nevertheless, still do have two or three jobs. George W. Bush
said this is possible “only in America”, but it's also
only necessary in
America.
One
job ought to be enough for people to make ends meet. But a
minimum-wage job is not enough to support a small family in a
two-bedroom apartment in any state
in the nation. And that statistic is not made-up; it's the people who
say the minimum wage doesn't support a one-bedroom who
are wrong.
The
reason Ocasio-Cortez was not technically correct
about the cause of low unemployment rates, is that employed people
getting second and third jobs, does not, by itself, increase, nor in
any way affect, the unemployment rate.
But
that's because the figure we're talking about is the “proportion of
employed persons with more than one job”; that is, the number of
total workers, divided by the number of workers with multiple jobs.
That statistic is not based
on the relationship between the number of multiple job holders and
the number of unemployed people.
That's
why the unemployment rate does not change when a job goes to a person
who is already employed, instead of someone who is non-employed, who
arguably needs the work more badly than the already employed person.
Focusing
on the multiple job rate instead of unemployment, blinds us to the
fact that unemployment can stay about the same, even while the number
of jobs rises, which is largely attributable to people getting a
second job, and having both jobs' hours fall to 25 to 30 hours a week
each.
The
last thing I want to do is to pit unemployed people against employed
people who are struggling to balance two jobs. But the truth is that
people who take-on a second job are “taking jobs” from unemployed
people who actually need those jobs.
This
is a struggle related to the ease of obtaining employment, yet
changes in the number of people with two or more jobs does not affect
the unemployment rate the way it is currently measured. Alexandria
Ocasio-Cortez rightfully drew attention to that fact, when she said “
I think the numbers that you just talked about is part of the
problem”. The way we measure unemployment does not in
any way give us a clear picture of the general woes the people are
experiencing as it pertains to obtaining employment opportunities.
3. “The”
Unemployment Rate
As
Margaret Hoover noted that the unemployment has been hovering between
3.8% and 4.1% lately, Ocasio-Cortez's detractors have noted that as
well. Some conservative commentators have described this as an
all-time low, and some have even credited President Trump for this
supposed achievement.
The
idea that the U.S. is currently experiencing all-time low
unemployment rates is false. Around the year 1970, the unemployment
rate hovered around 3.5%, which is lower than it is now. Since the
unemployment rate's history began in 1948, the lowest unemployment
rate ever measured was 2.5%, in 1953.
Additionally,
the decline in unemployment numbers began long
before Trump
took office, near the beginning of the Obama administration.
Alexandria
Ocasio-Cortez was correct when she implied that the decline in the
unemployment rate has to do with the way they're measuring it.
You
see, when people say "the unemployment rate", that's a
misnomer, because there really is no single way that the U.S.
government measures unemployment. But what is almost always meant by
"the unemployment rate" is the so-called
"official unemployment
rate"; a measurement called "U3". According to
the Bureau of Labor Statistics, the "Current U3 Unemployment
Rate" is defined as the total number of unemployed people, as a
percent of the civilian labor force.
The
Bureau of Labor Statistics measures unemployment in a variety of
ways; known as U1, U2, U3, U4, U5, and U6. There have been conflicts
between presidents, the Congressional Budget Office, and the Bureau
of Labor Statistics, about how to measure unemployment, and these
different ways of measuring unemployment reflect some of those
differences of opinion.
The
Bureau of Labor Statistics defines U6 as “Total unemployed, plus
all persons marginally attached to the labor force, plus total
employed part time for economic reasons, as a percent of the civilian
labor force plus all persons marginally attached to the labor force”.
Using
U3 instead of U6 is basically a way to “fudge the numbers” on
unemployment, resulting in a lower “official” unemployment rate
than the “real unemployment" rate (U6). And U6, itself,
represents a number of workers that's about half as much as the total
number of people who are out of the work force and could potentially
be employed (we might call this the "real real unemployment
rate").
The
U3 unemployment rate excludes a lot of people who aren't technically
“unemployed” in the sense that they have filed for, and collect,
unemployment benefits from the government, and are currently
searching for work, and have not yet become discouraged enough to
stop looking. Such people are “non-employed”,
but they are not “unemployed”.
People who are between jobs, and think they'll find a job soon, and
never file for unemployment, fall in this class, and so do college
students who do not work due to having support from their parents.
The
U3 excludes not only non-employed people, but 1) underemployed
people; 2) structurally unemployed people (whose industries or
professions are uncertain or struggling due to long-term changes in
the economy); 3) seasonally unemployed people; and 4) “non-attached
workers” who work on-and-off, and also couch surfers who lack a
permanent residence, some of whom might work in the gig economy; as
well as homeless people who cannot file for unemployment benefits
because they have no permanent residence.
The
U6 unemployment rate is about 90% higher than the U3 unemployment
rate. If you factor-in everyone I
mentioned in the last two paragraphs, then the real unemployment
rate might be four
times higher than
the stated unemployment rate of 3.8% - that is, 15-16% - if not more
than that. In fact, to prove that Donald Trump is wrong that
unemployment is low, I'm going to cite one of his harshest critics,
Donald Trump. In an August 2015 interview for Time
Magazine,
Trump told Pete Schroeder that he doubted the official unemployment
rate, saying “our real unemployment rate is 42 percent” because
“ninety-three million” people “aren't working”.
In
summary, we're measuring unemployment the wrong way, and the official
unemployment rate (U3) is not the best way to measure the general
economic woes of the country as it pertains to obtaining quality
employment. Again, that's because U3 includes neither the
non-employed, the structurally unemployed, the seasonally unemployed,
non-attached workers, the underemployed, nor the homeless.
4. Working
Overtime
Ocasio-Cortez's
critics also took issue with her claims that “people are working
sixty, seventy, eighty hours a week”. Again, at no point did she
claim that the number of people who work long hours is at or near an
all-time high. Whether her critics have alleged she said that or not,
her critics are not wrong to point out that the
average number of hours worked per week is near its all-time low.
That
is correct; however, the Obama presidency saw an overall rise in
the average number of weekly hours worked. Under Obama, that number
did not quite rise to the numbers seen under Bill Clinton and George
W. Bush. For the past twenty years, the average number of hours
worked, has ranged between 34.25 and 34.5 hours, with a brief but
significant dip to 34 hours in 2009.
Average
weekly hours worked is near its all-time low, but nevertheless, it is
true that many people still do work sixty hours per week or more. I
work as a private security guard, and I do know people who work such
long hours like that. The fact that historically
few people
work long hours, should not distract from the fact that there
are many
individual human beings who
are working long hours; just like the fact that historically few
people work multiple jobs, should not distract from the fact that
there are many individuals who are working multiple jobs.
It
is certainly a good thing that many people work less than forty hours
a week, and the facts show that a 34-hour week is not only possible
but the norm. Weekly hours worked could be much lower, especially if
we utilize technology to its full potential and allow automation to
flourish. Nearly 250 years ago, Benjamin Franklin predicted that a
20-hour work week would soon be possible, and Franklin D. Roosevelt
declined to sign a bill that would have established a 30-hour work
week about 85 years ago.
Another
thing to consider is that low average
weekly hours worked, might not even be desirable, especially if it is
caused by policies that incentivize people to work fewer hours than
they want to. Examples of these policies include: 1) laws limiting
the number of consecutive days which may be worked (which can
negatively impact farm laborers); and 2) Obamacare's exemption of
“part-time workers” (defined as people who work less than 30
hours a week), a policy which arguably gave employers an incentive to
cut employees' hours in order to avoid being legally required to
provide them with health insurance.
5. Additional
Factors in Employment
Here
are some additional factors which indicate the general prospects of
the American people as it pertains to obtaining employment, which do
not directly relate to unemployment, but which affect non-employment
nevertheless.
First,
fewer people on unemployment benefits might simply mean that people
have stopped looking for work, and have declined to file for
unemployment benefits.
Second,
lower unemployment numbers could also mean
that more people have given up trying to become self-employed, given
up trying to start their own businesses, and given up trying to make
money through investments. In general, that they given up looking for
other ways to get by without selling their labor to an employer
(which arguably indicates desperation to
find a job; desperation to
prostitute themselves to potential employers by giving up rights to
organize on the job, rights to full pay, etc.).
Third,
even if it were true
that the economy is fine, and that the low unemployment rate reflects
that, then more people having jobs is
still not
necessarily a good thing. Remember, a lot of the jobs people are
getting, are jobs in industries that were given multi-trillion dollar
bailouts just a decade ago. The jobs might be in industries which are
being favored and privileged and bailed-out by the Trump
Administration.
The
jobs might be in industries which are destroying our environment for
profit. Maybe some of those jobs aren't all they're cracked up to be.
The employees at the job in question might be overworked. The
employees might be working multiple jobs, or might hope for full
hours or raises, so that they can avoid taking on a second job. The
workplaces might have safety and health hazards. Not every job is
respectable; not every job saves lives; and not every job and
industry should be subsidized, protected, and bailed-out by
taxpayers.
Alexandria
Ocasio-Cortez is not “mad because people have jobs”, nor mad
because low unemployment numbers are accurate and prove her wrong.
She is “mad” (read: heartbroken) because when someone who already
has a job takes a job that somebody else needs, it doesn't change the
unemployment rate. Similarly, when someone who needs Food Stamps
loses them because the government throws them off, it's counted as a
success, as though they stopped needing Food Stamps and got off the
S.N.A.P. program voluntarily. And that affects people's ability
to feed themselves and their children.
There
are many
people,
who struggle to feed their families, whether they are working or not,
and whether they are on government assistance or not. Some people are
on government assistance even
though they have jobs;
not always because they're lazy and greedy, but often because their
job doesn't pay them what they need to subsist. Alexandria
Ocasio-Cortez is in the spotlight now because the electorate is ready
to hear from a candidate who considers these issues to be serious
problems, even if these problems are not as bad as they have ever
been.
President Donald J. Trump,
explaining why unemployment and the economy are doing just fine
Sources
http://www.slate.com/blogs/moneybox/2015/08/20/donald_trump_says_the_real_unemployment_rate_is_42_it_s_not.html
http://ritholtz.com/2012/10/u3-versus-u6/
http://ritholtz.com/2012/10/u3-versus-u6/
Visit the Following Links to Read My Previous Articles on Unemployment
http://aquarianagrarian.blogspot.com/2018/02/reflection-upon-use-of-forced-labor.html
Written
on July 4th,
20th,
26th,
and 27th,
and August 1st through
4th,
and 6th,
2018
Originally
Published on August 6th, 2018
Table of Contents and Aquarian Agrarian Links Added on August 8th, 2018
Table of Contents and Aquarian Agrarian Links Added on August 8th, 2018
