Because political campaigns can rise and fall on the health of the economy, spats often flare over the gauges used to measure growth and unemployment.
The latest dust-up, raised by the campaign of Republican presidential nominee Donald Trump, focuses on the monthly employment numbers. A long streak of hiring has nudged the jobless rate down to 4.9%.
Donald Trump Jr., the nominee’s son, recently criticized the official statistics as “artificial numbers…massaged to make the existing economy look good.”
The nominee himself has said unemployment is far higher than the Labor Department’s headline 4.9% rate would suggest, part of his message that the economy is in a dire state. After he won the New Hampshire primary in February, Mr. Trump called the official jobless figures “phony” and said the real number could be as high as 42%.
This isn’t the first time people have cast aspersions on the jobs numbers in an election year, but the Trump claim is also part of a larger discussion over how best to assess the health of the labor market.
The Labor Department’s monthly statistics, which date to 1948, have always defined unemployment as the state of being without a job while actively looking for work. The definition, unchanged for decades, was designed to exclude people who didn’t want jobs, like pensioners, students or those raising a family. But Mr. Trump Jr. suggested the longstanding method is flawed since it excludes some people who want jobs but aren’t looking. His father has made this case, too.
“The way we actually measure unemployment is after X number of months if someone can’t find a job, congratulations, they’re miraculously” not counted as unemployed, Mr. Trump Jr. said.
This isn’t quite right, but it’s close. The headline unemployment rate includes anyone actively searching for work, even if they haven’t worked in years. People it doesn’t include are those who want jobs but become so discouraged or marginally attached to the labor market they stop looking.
The Labor Department doesn’t ignore them, but nor does it count them as “employed.” Beginning in 1994, the department has provided monthly estimates of the unemployment rate if you include discouraged workers. It also produces an estimate including people who work part-time but would prefer full-time work.
If you include all these, you get a higher rate: 9.6% underemployment in June, according to the Labor Department.
There is longstanding debate among economists about the best measure to focus on. One economist who often highlights the broader gauge of underemployment is Federal Reserve Chairwoman Janet Yellen, who mentions it as justification for the Fed’s strategy of raising interest rates slowly.
Accusations of fudging the numbers crop up from time to time. During the 2012 election, former General Electric CEO Jack Welch accused President Barack Obama’s campaign of manipulating the numbers to help defeat Republican Mitt Romney.
Mr. Welch’s claim never won much support, and Mr. Romney didn’t echo the claim. Independent measures of unemployment, such as from Gallup surveys, find similar numbers as the official stats.
Despite his criticism, Mr. Trump has sometimes opted for the traditional narrower measure of joblessness. Last week, for example, he touted the record of his running mate, Indiana Gov. Mike Pence.
“Indiana’s unemployment rate — this is the primary reason I wanted Mike, ” Mr. Trump said when introducing Mr. Pence, noting Indiana’s jobless rate had fallen below 5%.
That is true, but only by the traditional definition of unemployment. The broader gauge of underemployment was 8.8% over the past year in Indiana.