Labor statistics history: it rhymes. About the consistency of economic statistics
Does, contrary to the assumptions of many economic models, ‘involuntary unemployment’ exist? Of course. We measure it (for the definition see below). And in the USA it is going down. About two months ago I posted this graph, which showed that what I call involuntary unemployment in the USA tended upwards. Two months of additional data show that this was, fortunately, just a hiccup – though the decline is not as fast as it used to be. Some musings about models and measurement, starting with a somewhat exasperated Josh Mason: “Economics the discipline is to the economy the sphere of social reality as chess theory is to medieval history: The statement, say, that “queens are most effective when supported by strong bishops” might be reasonable in both domains, but studying its application in the one case will not help at all in applying it in the other.” . And I agree with the next remark: ” One consequence of this is, as I say, that radical criticism of the realism or logical consistency of orthodox economics do nothing to get us closer to a positive understanding of the economy.”. Pointing out that the ‘periodic system’ of economic theory is packed with inconsistencies and unobservables is not enough. We need a fundamentally better system. One way to do this is to look outside the circle of academic economists to the people who measure (macro-)economic variables, the economic statisticians. As it happens, the journal of the USA Bureau of Labour Statistics, the Monthly Labour Review, was established one hundred years ago (it is no coincidence that the battle of the Somme was one hundred years ago, too). Aside: the Review is online and, as the BLS is a government agency, not gated – a fine example of path dependent productivity and mood boosting technology).
Interestingly, one hundred years ago the same things occupied the minds of the statisticians as today. Like immigration and jobs. Recently, I posted a graph from the British ONS which showed the number of jobs in the UK occupied by immigrants (first published: april 2016). About the same subject he first of a number of articles published to commemorate the centennial of the Review states about the Review in 1916:
“Thus was born the feature “Federal employment work of the Department of Labor,” a listing of, among other things, the number of applications by immigrants for employment positions, and the number of actual hires, over a given period, from 1908 to June 1915 in the July 1915 issue and usually the previous month or two in subsequent issues. The feature brought to the public’s attention two important aspects of those years following the turn of the century: that, as in colonial America, immigrants were coming to the nation in impressive numbers and that the federal government was doing important work keeping track of not just how many had come, but also how many were being hired into gainful employment.”
“Topics and issues covered were wide ranging, spanning the gamut from employment and unemployment, to wages and work hours, to labor–management relations and collective bargaining, to pensions and health insurance, to workplace safety and health, and more—the vast majority still relevant today.”
“Besides the sampling of articles listed next, there were regular, usually monthly, sometimes less frequent, features on each of these topics listing current statistics related to them. Though separate, these features, combined, were similar to the “Current labor statistics” feature begun in the July 1947 issue of the Review“.
Returning to the statements of Josh Mason: “Economics the statistics” is, as far as I’m concerned, based upon a kind of ‘periodic system’ and aims to measure and track the elements of this system, a complicated tas as these elements change and are part of the. moving target of “economics the sphere of social reality”. This system has evolved, to keep track of the movements and as technological and scientific progress enabled better measurement. It seems, however, that the core elements of the system have changed less during the last century than one might expect. Occupational hazards, jobs, unemployment are, today, as important as they were one hundred years ago (they might change more in the future, of course, but that’s not for certain!). Measuring this reality requires ’empirical discipline’ when it comes the phrases, definitions and names of variables. Definitions have to be precise, variables should be directly observable and the names of variables should not be apt. Returning to the graph: it shows the number of people who were unemployed in at least two subsequent months, while actively searching for a job. Which allows us to call this ‘involuntary unemployment’. Never mind the theory.