The Thread

I spent a lot of time on the forthcoming dank excel spreadsheet, so you all better read this ʕง•ᴥ•ʔง

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The Reddit thread and the article talk about how bad things are right now. Not really in the glass half empty kind of way, but the "shit's on fire" kind of way.

The article begins with:

Nearly half of unemployed Americans have quit looking for work, and the numbers are even worse for the long-term jobless, according to a poll released Wednesday that paints a grim picture of the labor market.

Some 59 percent of those who have been out of work for two years or more say they have stopped looking, the Harris Poll of unemployed Americans showed. Overall, 43 percent of the jobless said they have given up, according to the poll released in conjunction with Express Employment Professionals, a job placement service.

Pretty worrisome poll. Reading on...

Other highlights of the poll:

• 83 percent say economic benefits are skewed to the rich.
• 66 percent say they don't apply for minimum-wage jobs because the pay is too low.
• The unemployed are spending just 11.7 hours a week looking for work.
• More than half — 51 percent — say they haven't had a job interview since 2014.
• There's virtually no stand-out preference in the presidential race: 27 percent prefer presumptive Democratic nominee Hillary Clinton, while 23 percent favor likely Republican standard-bearer Donald Trump.

There's no way this could be biased right?

The Harris/Express poll was conducted from May 5-16 and surveyed 1,513 jobless Americans, and carries a 95 percent confidence level

Yep, 1,513 jobless Americans. Of the over 7.4 million unemployed, the survey is of less than 1% of that, and somehow manages a 95% confidence level. Wot.

What Reddit brings up:

Obama administration says unemployment rates are at historic lows. [+77]

The 'unemployment' statistic (regardless of who's measuring) generally doesn't include people who don't want or aren't looking for a job. [+105]

Also lol:

As a member of the underclass, I am grateful that our overlords have allowed us to continue to scurry around in the dirt and scrabble for survival, instead of slaughtering us wholesale and rendering our corpses for fat and minerals. [+250]

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What the actual numbers are:

OK, so Reddit rebukes Obama's statement with the fact that the "unemployment statistic" doesn't include discouraged workers. The headline for this article is "US unemployed have quit looking for jobs at a 'frightening' level." Let's find out if we are seeing a significant increase in discouraged workers.

First off, definitions:

• U-3: Total unemployed, as a percent of the civilian labor force (official unemployment rate)
• U-4: Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers
• U-5: Total unemployed, plus discouraged workers, plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force
• U-6: Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force

Math garbage: To figure out how many people have quit looking for jobs, because I had trouble finding data for the number of persons as opposed to the percents of people in U_4+, I extrapolated from the rates. This is because the percent-wise changes in U_n where n>3 doesn't accurately reflect changes in the number of discouraged workers. For example, the U_6 measure stayed at 9.7% for the last two months, but the total number of people in U\6 but not in U_6 actually increased; that's because the decrease in usual unemployment was offset by an increase in discouraged workers keeping U_6 the same. Suppose y = the number of unemployed, x = number of people in U_n but not in U\(n-1), z = the civilian labor force, and m is the percent in U_n. Then, to find the value of x, we do this. To clarify what x means, suppose the rate for U_3 was 5% and the rate for U_4 was 8%. That 8% is (U_3 persons + Discouraged workers) / (Labor force + Discouraged workers). So, x is just the people in U_n that don't count in U_(n-1). The focus of the article's woes is that there's been a spike in "x": people who have given up.

I went on FRED and found the data for the last 8 years (since the end of the Great Recession) of Labor Force Participation Rate, Civilians, and the U_n statistics. I found the "x" value for U_4, U_5, and U_6.

This graph shows the total number of Discouraged or Otherwise Unincluded Workers. It's stacked so you can see the total number of workers excluded from U_3. "Only in U_n" is the number of workers in U_n but not in U_(n-1). So, those in only U_4 would be just discouraged workers; those for U_5 would be only persons marginally attached to the labor force and so on. Clearly, there is no rising trend or significant spike in discouraged workers.

Here's the spreadsheet if you want it.

CNBC has graced us all with shitty surveys, and Reddit with confirmation bias.

Q.E.D.?