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.