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When Policiticans Make Awkward Jokes, Mitt Romney Edition…

June 21st, 2011 · 10 Comments
Econ 101 · Macroeconomics · Policy

You may have noticed that Mitt Romney got a lot of flak last week for making an “I’m also unemployed” joke at a speech in Florida last week. Most of the people who are ranting are doing so on the grounds that Romney’s joke was insensitive and that he, with his hundreds of millions of dollars in the bank, shouldn’t even be claiming in jest to commiserate with the plight of the typical unemployed. Generally, I get as ragey as the next person over this sort of thing, but I, like my fellow econ nerds, can’t help but be annoyed for a different reason this time.

I am guessing that Mitt Romney never interned at the Bureau of Labor Statistics, because his statement isn’t even factually correct…which brings us to a lesson in unemployment statistics. I’ve explained before that there are multiple different types of unemployment, but it’s also important to understand a little bit about how the unemployment rate is calculated.

The unemployment rate, not surprisingly, is the number of unemployed people divided by the total labor force. This calculation seems simple enough, but it has a number of caveats. First, a person is counted as employed as long as he is working at all, so there is no adjustment for people who aren’t working as many hours as they would like or who are overqualified for their jobs or whatever. The second, and more relevant to the matter at hand, detail is that the labor force only consists of people who are either employed or actively looking for work. (Technically I think a person has to have looked for work in the past 4 weeks to be considered part of the labor force.) In a lot of ways, this makes sense- if people are framing unemployment as a problem that needs to be fixed, it’s a little unreasonable to count a stay-at-home mom as unemployed, for example. On the other hand, this rubric means that the labor force doesn’t include “discouraged workers,” i.e. people who have gotten frustrated with looking for a job and have given up, so these workers aren’t counted as unemployed.

The depressing thing about the explanation above is that the underemployed and discouraged worker situations described above mean that the official unemployment numbers understate the true rate of unemployment to some degree. The definition also implies that Mitt Romney is not, in fact, unemployed in an official sense, since as far as I know he hasn’t actively looked for work in the last 4 weeks. (And no, trying to get the job of President of the United States doesn’t count.) I somehow have a much larger problem with Romney misleading people about how economic statistics are calculated than I do about him making douchey jokes.

In related news, it’s interesting to note that many welfare programs (food stamps, etc.) rely on income rather than level of wealth or assets in order to determine whether people qualify for assistance. Does this mean that Mitt Romney can stuff his hundreds of millions of dollars under his mattress (thereby forgoing interest income) and go apply for food stamps? Apparently it does, since that is what a Michigan lottery winner appears to be doing.

Tags: Econ 101 · Macroeconomics · Policy

10 responses so far ↓

  • 1 Ron Cronovich // Jun 21, 2011 at 12:27 pm

    Good explanation of unemployment statistics. Best of all, I learned a new word: “douchey”.

    You know that Greg M is advising Mr. Romney once again, right?

  • 2 econgirl // Jun 21, 2011 at 1:03 pm

    Hopefully only in an economic and not a PR capacity, since that would be a bit like the blind leading the blind. 🙂 Actually, that association makes me wonder if Mitt Romney is also a perfectly nice human being who manages to make himself look disproportionately ridiculous in the public eye.

  • 3 Brad D // Jun 21, 2011 at 3:38 pm

    He may have his economics all wrong, but he does keep thousands of tanning salonists (word?) and haberdashers across this country gainfully employed. ..His hair is impressive too.

  • 4 Dan L // Jun 21, 2011 at 4:08 pm

    Seems like an odd thing to get your panties in a twist over. Just because there is a technical concept known as “the unemployment rate,” that doesn’t mean that there does not exist a plain English understanding of the word “unemployed.” In any case, the whole basis of the “joke” is that Romney is someone who has no job who is actively trying to get a certain job–in that sense his status is honestly similar to that of the (officially) unemployed.

    If you really want something to get worked up about, check this out:

    Regarding Mitt, there was interesting article about him the New Yorker.

    I think that he could be a highly effective leader. The problem is that he seems to be a man of zero conviction. It’s one thing to bend a bit for the sake of politics, but the guy seems willing to say anything and do anything to get elected (including kowtowing to Tea Party loonies).

  • 5 Peter St Onge // Jun 21, 2011 at 11:06 pm

    An unemployed politican…

    Now there’s a heart-warming thought.

  • 6 Ron Cronovich // Jun 22, 2011 at 1:11 am

    @DanL, your “panties in a twist” comment was tasteless and rude. Would you have said that if our host was a male? If you’re a decent human being, do the right thing and apologize.

  • 7 Dan L // Jun 22, 2011 at 11:29 am

    Actually, I’m sure I’ve used the “panties in a twist” comment with males many times. I’ve never really thought of it as sexist (since I have no idea what the etymology of “knickers in a twist” actually is), but of course it must be. So in short, I do apologize and I will try to refrain from saying it in the future. (Any suggestions for a similarly condescending but less sexist phrase?)

  • 8 Eat The Babies! // Jun 22, 2011 at 11:36 am

    At least Planet Money covers the discouraged worker number sometimes. That’s U7 right? It was an indicator on there really recently.

  • 9 econgirl // Jun 22, 2011 at 9:30 pm

    @ Dan: I’m surprised that you haven’t figured out by now that I sometimes get my panties in a twist regarding seemingly random things. Call me crazy, but I think that economists should get to define economic terms, and it’s confusing to have both an official and a colloquial meaning for no real reason. In this particular scenario, I get frustrated when people tell me that unemployment numbers are bogus because it’s not possible that employment and unemployment numbers move in the same direction, whereas it makes perfect sense if you understand the discouraged worker thing.

    Also, I get much more annoyed by Romney’s using the address of his son’s basement as his primary residence so he can vote for Scott Brown thing, but that isn’t directly economics-related.

  • 10 Joshua // Jun 28, 2011 at 3:27 pm

    If it weren’t for panties gettin’ twisted, there would be no bloggers.

    I’m glad you brought up unemployment – it was a MAJOR PAIN to teach my high school kids.

    By the way, I’m a tad miffed you used stay-at-home moms as your example… because, ahem, they are employed.

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