Getting To Trump's Unemployment Rate: Count Students, Retirees And Dogs

After winning the New Hampshire Republican primary, Donald Trump claimed the unemployment rate might be as high as 42 percent. Trump continues to make these types of claims repeatedly on the campaign trail as part of his message that only he can, “Make America Great Again.”

According to the Bureau of Labor Statistics, the government agency tasked with tracking employment trends, the national unemployment rate was 4.9 percent in January 2016. The economy added an estimated 151,000 jobs that month.

“Don’t believe these phony numbers when you hear 4.9 and 5 percent unemployment,” said Trump in his New Hampshire victory speech. “The number’s probably 28, 29, as high as 35. In fact, I even heard recently 42 percent.”

Where are these numbers coming from? The campaign did not respond to requests for comment, and it is not clear what sources Trump is referencing.

The lack of clarity seems to extend to Trump himself, as the number he refers to has changed over time. At a speech at Liberty University, he previously suggested that the “real” unemployment rate could be 22 or 23 percent.

Fact checkers have roundly criticized these claims. Most believe we have good reason to trust the bureau’s official statistics, and they find Trump’s alternative figures doubtful.

Give this much to the Donald: As Neil Irwin points out at The New York Times, we can and do measure unemployment in different ways.

Trump may be referring to alternative measurements. However, if he is, he seems to use these numbers loosely, and he doesn’t acknowledge that there even are different ways to measure unemployment.

To calculate the unemployment rate, the Bureau of Labor Statistics relies on household surveys. By asking questions in different ways, these surveys can generate very different numbers. So there is more to the story than any one figure might suggest.

When asked to comment on Trump’s claims that the bureau’s statistics are false or mistaken, an economist from the Department of Labor laughed. “Politicians can say what they want,” he said.

“We have been doing this [measuring the unemployment rate] for a long time. Many other countries have learned from our methodology,” he continued. “We have top economists who studied at places like MIT and Harvard who look at these numbers. I don’t know what [Mr. Trump’s] qualifications are.”

“Scholars are free to look at the numbers and come to different conclusions. But these are the numbers we have.”

When the bureau cites the 4.9 percent, it’s referring to the number of people who are actively looking for work and not finding it. These people do not have a job but want one. This metric is called U-3.

An alternative metric, called U-6, measures the number of people who have looked for and wanted a job in the past year, including those who may be underemployed, working part-time, or are discouraged from searching for work by economic conditions. This number is 9.9 percent.

Both these numbers are also “seasonally adjusted.” This means that they are modified to account for seasonal effects on unemployment, such as the large layoffs that tend to occur in January following the retail Christmas rush. The bureau relies on seasonal adjustments so that they can measure larger macroeconomic conditions rather than the expected annual fluctuations in hiring patterns.

Another measure many economists refer to is the prime-age employment-to-population ratio. This is less complicated than it sounds. It simply measures the percent of individuals between the ages of 25 and 54 who are currently employed.

According to the bureau, this figure stands at about 77.5 percent. This may be the number Trump was referring to when he said unemployment was at 22 or 23 percent, which he gets by subtracting 77.5 from 100. The bureau’s graph of this measure over time is worth considering:

The trends in this measurement tell a different story than the usual 4.9 percent headline figure. While that number has dropped near the level it was at prior to the 2008 financial crisis, the prime-age employment-to-population ratio has not. Prior to the crisis, this number peaked around 80 percent.

However, by citing 23 percent as the unemployment rate, Trump would be including people on disability, stay-at-home parents, and adults who have returned to school full time.

It’s possible that Trump thinks this kind of unemployment is a big problem, but don’t expect him to start complaining that we have too many stay-at-home moms in this country.

The reason journalists often cite the U-3 number is that it counts people who really seem to be suffering because of their unemployment. It’s not a perfect measure, of course, because some people might just stop looking for work after some time even if they really would like to have a job. But it’s the measure we’ve been using for decades, so trying to say that another measure tells us about “real” unemployment would paint a distorted historical picture.

Statistics, after all, can tell almost any story you want, if you pick the right data.

You can even get close to an unemployment number of 42 percent if you count all the people in the United States not working – but this includes people like college students and retirees. (You could include family dogs and cats who don’t have jobs – Trump likely thinks of them as moochers? – to reach Trump’s 42 percent claim.)

If Trump wants to claim that it’s a national tragedy that people go to college and retire, he is free to do so. But he should come out an say that, rather than conflating completely different statistics.

There’s not necessarily one unemployment measure that is better than any other. The estimates measure different but related phenomena, and which one is most appropriate depends on what question you’re asking.

None of this suggests that the 4.9 percent figure is “phony,” as Trump suggests. Indeed, rhetorical confusion of these different measurements can lead to a misleading perception on the country’s economic health.

Since the number Trump is citing keeps changing, it’s likely he’s referring to any of these different measures at different times. Whether or not his figures reflect what most people or experts mean when they refer to the unemployment rate, it’s clear they communicate the message he wants people to receive.

Photo Credit: Gage Skidmore