Unemployment Moneyball

 

This post is the second in a series called “500 Words To Save The World.” Each day I will use just 500 words to address a problem that has been bugging you or me. If you want to get in on the conversation, tell me the problem you’d like discussed in the comments section of this post, or email me directly at steve@stevenazarian.com. You may start counting words… now!

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The 2003 book (and 2011 film) Moneyball, tells the story of Billy Beane and how he and the Oakland A’s turned Major League Baseball upside down with a completely different approach to statistics called sabermetrics.

The crux of the story is that the conventional wisdom on player statistics was rooted in a 19th-century view of the game, and that measurements such as batting average, stolen bases, and RBIs, while accurate, were meaningless in the modern game.

The A’s started focusing on statistics they believed were more accurate, and in turn were able to acquire highly effective players at lower prices; players that everyone else was ignoring.

They stopped doing things the way they had always been done…
and they won, big.

 

With the third lowest payroll in the league, they won the AL west in 2002, 2003 and 2006. Every team in baseball now uses sabermetrics.

The other day Jim Clifton the CEO and Chairman of the Gallup polling organization, published a piece about the problems with the Unemployment Rate.

To be sure it was politically motivated (it was called The Big Lie), furthermore a criticism of statistics by the head of a polling organization should be taken with a chunk of salt. That said, the manner by which we measure how many Americans are working is long overdue for an Oakland A’s style makeover.

You would think that the National Unemployment Rate, issued monthly by the Bureau Of Labor Statistics would simply be this… the percentage of adult Americans that want full time jobs, but don’t have them. Unfortunately this is not the case.

The current stated unemployment rate is 5.6%, but that number does not include:

  • Anyone who has given up looking for a job, but would still work if they could find one
  • Anyone who wants full time employment, but works a minimum of one hour each week and is paid at least $20 for that work. Basically anyone who wants a full time job, but is trying to get by on what they can find
  • Anyone who is out of work, but has not applied for unemployment benefits

Basically the people who have been unemployed the longest, and the people who are doing whatever they can to scrape by, are not being counted at all.

What I’m talking about here is not political. Politicians of every persuasion for have used the current measure for as long as it has been in existence. I am not talking about policy or ideology, I am simply asking our government (no matter who is running it) to give us meaningful, accurate data.

I propose a new unemployment rate that is simply the percentage of adult Americans who would like to have a full time job but don’t, period.

 

By the way, they already have the numbers. It is something called the “U6 Report” which is found in the “Alternative measures of labor underutilization.”

That number is not 5.6%… it is 11.2%. I think Billy Beane would approve!

 

 

Copyright © 2015 – Stephen S. Nazarian – All rights reserved.(Unemployment Moneyball)

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2 thoughts on “Unemployment Moneyball

  • Well said. It is a joke to listen to the White House cheer about the current unemployment number.
    -Clifon said the percent of full time jobs in this country as a percent of the adult population “is the worst it’s been in 30 years.”
    -the labor force participation rate of working age men (ages 25 to 54) now stands at the lowest level since the BLS started keeping records more than 60 years ago

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