Unemployment Drops In San Francisco, But Employment Drops As Well

Quick example to show how it works. You have ten people with jobs and ten people looking for jobs. Unemployment rate is 50% (10 workering people out of a labor force of 20). Two people get fired and five people who were unemployed give up looking for jobs. You now have 8 people with jobs and 7 people looking for work (the five people from last time that didn’t drop out of the labor force plus the two people that just lost their jobs). So the unemployment rate is now 46.67% (7 unemployed people out of a labor force of 15). So unemployment is lower while also the number of people with jobs is also lower.

confused,
Say you have a workforce of 1000 in July, and 940 employed, 60 unemployed, with an unemployment of 6%.
In August, you’ve lost 10 people in the workforce, including 8 unemployed and 2 employed
Unemployment has gone down (52/990), the workforce has gone down, the employed and unemployed #s have also gone down).
More important than the technical aspects of this oddity is the underlying phenomenon: Can it be more retirees? People leaving town? Seasonality?

This is a perfect example of why the unemployment rate is a very flawed measure. Much more useful is the labor participation rate (the number of people working / population), which is unaffected by people leaving the labor force. It has it’s own issues, but it’s far more useful than the unemployment rate.

Labor force participation decreased a lot during the Recession, and has not recovered very much (speaking nationally). Baby boomers aging only explains part of it, the bigger problem is that the economy doesn’t seem to “need” as many workers, and when you look at working during prime years (25-55) it’s still way down. If I weren’t lazy I would provide a link. But I agree with lyqwyd, it’s a much better measure.

Thanks for the replies and the explanation. I sure do love all the smart peeps on SS.

“what i find perplexing is how do they know who is looking for a job and who is not.”
The government asks people if they are. Not every person in the country but a sample of about 60000 households.
http://www.bls.gov/cps/cps_htgm.htm

Well, yeah, there’s lots of additional analysis that goes into the released number. I am sure many smart people have spent a lot of time to design a valuable and usable metric.
We can certainly say that ideology and politics are probably a secondary factor in the accuracy of these numbers, but I can also say with almost certainty that ideology and politics are a primary factor for the criticism of these metrics.
Between biased theories and the BLS #s, I’ll take the latter any minute. Now if it were China, we’d have a totally different conversation, but the accuracy of the economical metrics is the core of our credit, greatest power in the world and all that…

It takes a special kind of tinfoil hat to believe that the two parties have cooked up a number that is beneficial to them both.

Oh, and it’s not all that difficult to see how rosier employment numbers benefit elected officials:
If unemployment is worse, then an existing politician is going to have a harder time getting re-elected.
It’s not about the parties, its about the incumbents. The incumbents want better numbers so they can use them in their re-election efforts.
What sounds better:
“since I’ve been in office the unemployment rate has gone from 10% to 7%”
or
“since I’ve been in office the employment participation rate has gone from 65% to 63%”
Lastly, it’s nothing new for the parties to have a policy that benefits them both. Perhaps you’ve heard of the debt ceiling? Republicans didn’t have any problems voting to raise it when GWB was in charge, and Democrats were strongly opposed to it during the same time period. The parties simply switch there stance depending on whether they are in charge or not, but it’s still beneficial to both, and they created the limit in the first place.

I don’t remember saying the unemployment numbers benefited a party, that’s a subject you and/or lol brought up. I said the labor participation rate is a better metric than the unemployment rate. I haven’t seen anything posted here to contradict that.
You can be as surprised as you like, but I’m not really sure what chain store regulations have to do with this topic at all.
Sounds like you are more focused on who says something, and what you imagine to be their political views, than what is being said.

labor participation is a valid metric, but incomplete.
– In an ageing society, participation will go down naturally. And the US is an ageing society with the boomer generation massively entering their 60s and pretty soon their 70s.
– If a section of the population becomes wealthy enough, some workers or their spouses will drop off into “early retirement”. It’s probably a very local effect (I know a few SV wives who were professionals but are now stay-at-home moms), but in a society more and more split between upper and lower class, not to be underestimated.

@lol
In an ageing society, participation will go down naturally.
This is a long term demographic theoretical possibility, but not a certainty.
And it is certainly not what’s happening now, in fact the exact opposite is happening. The elderly are working more today than they were the last 2 decades:
http://www.bloomberg.com/infographics/2013-23-19/end-of-retirement.html
If a section of the population becomes wealthy enough, some workers or their spouses will drop off into “early retirement”.
Conversely if a section of the population becomes poorer their spouses will enter into the workforce.
These are theories without any supporting numbers to show the amount of effect, thus meaningless.

There’s no contradiction in my positions as they are unrelated. On the other hand saying somebody wears a tinfoil hat is most certainly a personal attack. You’ve also tried to put words in my mouth that I haven’t said, such as the unemployment rate benefits one party or another. Lastly, you’ve provided no information about either number to suggest one is more valid than another.
So your entire contribution to this thread has no relevance to the topic.

Once again you try to put words in my mouth.
if you view labor market-affecting regulations and the labor market as “unrelated” to one another.
Logical fallacy: straw man.
I never said the labor market-affecting regulations and the labor market are unrelated, nor is that my view. So all you’ve got so far is logical fallacies and personal attacks.
Here’s what I’ve actually said:
The labor participation rate is a better metric than the unemployment rate. Feel free to discuss this topic.

Another fail. Neither me quoting you, nor saying you can discuss the topic is not putting words in your mouth.

Lyqwyd: What sounds better:
“since I’ve been in office the unemployment rate has gone from 10% to 7%”
or
“since I’ve been in office the employment participation rate has gone from 65% to 63%”
***
Well, the response to the first one will likely draw cheers from the crowd while the second one will have them turning to each other and asking “what does that mean and is that good or bad?”
Unemployment is a double-edge sword, you can also have a challenger out there saying:
“While my opponent has been in office the Unemployment rate has gone from 7% to 10%!”
Crowd responds with boos. But if he said “While my opponent has been in office the Labor Force participation rate has gone from 65% to 63!” The crowd would be like “huh, is that good or bad?”.
Again it is more commonly used because it is more commonly understood. That isn’t political or ideological.

Again it is more commonly used because it is more commonly understood.
If the more commonly used number is better, then that’s fine, if it’s worse, then it has been chosen for political expedience.
Unemployment is a double-edge sword, you can also have a challenger out there saying
It doesn’t matter if it’s a double edged sword, since labor participation rate would also be worsening. The number is used because it benefits them more than other more valid options, which would also be double edged.
Politicians do all sorts of things that are double edged swords, Gerymandering comes to mind, but overall they benefit from these, even though it can be harmful to society in general.

More accurate does not equal better.
I guess we’ll have to agree to disagree.

slkjewiobjds oskeo j oseos leobjp leowwggi.
That is by far the best and most accurate explaination of why you are wrong.

That’s a really lucid explanation of why labor participation rate isn’t widely known lyqwyd. I too think it is a more meaningful metric since it is devoid of the semi-subjective “are you looking for work” criteria.
Labor participation rate sounds difficult and scary but it is really simple. It is the monosodium glutamate of labor statistics.

There seems to be two debates going on, one about which is better and the one I am engaged in on why the unemployment rate is the commonly used metric of the labor market in popular culture. You have presented nothing to counter my main point which is that the public recognizes the UR, so that is why it used.
People can argue all they want that the metric system is better than the archaic english system we use in the US, but proving it is better, simplier, easier, more accurate, etc doesn’t change the fact that the average person on the street is going to keep using feet, inches, gallons, pounds, etc.
Is the primary reason because of politics and ideology like you claim it is for using the umemployment rate or is it as I contend because that is what the majority of people use out of custom, history, and inertia? Scientists and those that need the better system of weights and measures will use metric, just as economists and those making financial decisions will use better measures then the unemployment rate. But that doesn’t mean people are playing politics or being ideological when they use refer to a gallon of milk.
As my glib post above points out, being more accurate isn’t better if people don’t understand what you are saying.

Approximately 19 out of 20 labor force participants in San Francisco were employed last month, as compared to 18.3 out of 20 in California as a whole.
Is that positive enough for everyone? I mean… shoot, 1 person looking for work isn’t that big of a deal.

@Jimmy
“Is that positive enough for everyone?”
That’s exactly the point, it sounds good, but nobody really knows unless you dive deep into the numbers the rate was built on.
Not only that, but if the rate goes up or down, you don’t really know if that’s because things are getting better or worse. The rate can go down because people have given up hope, (not good), and it can go up because people are coming back looking for work (good). In those scenarios the movement of the rate is exactly the opposite of the performance of the economy.
In SF fact this is exactly what happened here in SF. The rate got better, but fewer people are employed this month than last, and 2000 people left the labor force!
On top of that it’s 19 out of 20 people that are in the labor force, but the rate doesn’t tell you how many people are not in the labor force.
Now I’m not suggesting that SF’s economy is in trouble, only that the unemployment rate is a less useful number than other, simpler to understand, numbers, such as the labor participation rate, which, while sounding scary to some people, is quite a simple calculation.
I’ll point out that the very first post on this thread was by somebody confused by the numbers presented, which is understandable because they are complex.

“First the LPR is not trying to tell the story of unemployment, it’s telling the story of employment.”
The labor force participation rate is the story of the labor force, both employed and unemployed. It will show that the rate for women went from 32 percent in 1948 to around 60 percent in 1998. That is certainly an interesting fact, but it tells you nothing about how many women are out of work looking for a job.
“Second, I don’t think the UR tells much about the unemployment story either. It tells the ratio of some arbitrarily chosen parameters.”
One of those “arbitrarily chosen” parameters is the labor force. So the “arbitrary” decision whether a person is part of the labor force or just happily retired affects both the unemployment rate and the labor force participation rate. So much for the “monosodium glutamate of labor statistics.”
“So the UR is overly complex, and sometimes misleading, for the story of employment, but not complex enough to tell the story of who is not working.”
The BLS publishes six different measures of unemployment, U1-U6. U3 is the one that is quoted as the official rate, but anyone who wants can look at the other measures as well. For instance, U4 includes workers who have given up on looking for a job.
http://www.bls.gov/lau/stalt.htm
“Of course the same question applies if you believe the UR is better.”
I’ll give you a simple answer to the question regarding what the unemployment rate is a better measure of: Unemployment. If there are tons of laid-off workers worrying about how to pay their bills, it says something interesting about the state of the economy. The labor force participation rate says nothing about that since unemployed workers are still part of the labor force.

“That’s only true if unemployment is defined as everybody who is not employed, in which case the LPR tells all there is to know about unemployment.”
OK, I’ll try again and I’ll take it really slow.
You have the cohort, e.g., the number of males and females between the ages of 15 and 64. Of those,
1) some have a job,
2) some don’t have a job but want one,
3) some don’t have a job and are not looking for one.
Categories 1) and 2), the “employed” and “unemployed”, make up the labor force. Category 3) (retirees, college students, housewives, etc.) are not considered part of the labor force.
Once you’ve decided who is part of the labor force, you divide that number by the cohort to get the labor force participation rate.
And you divide the number of unemployed people by the labor force to get the unemployment rate.
Simple enough?
Now, the labor force participation rate does not distinguish between the case where 99 percent of the labor force is employed and 1 percent unemployed and the reverse case with 99 percent unemployed and 1 percent employed.
That lack of distinction makes the labor force participation rate pretty useless for measuring unemployment, whereas the unemployment rate measure makes an honest attempt to understand what fraction of the labor fore is employed and what fraction in unemployed.
Hope this explanation wasn’t too hard to understand.
“Based on the facts I posted at September 27, 2013 11:23 PM, I disagree.”
What facts? I haven’t seen single one in any of your posts on this thread, only opinions.

“No, what’s arbitrary is who’s categorized into the labor force.”
Which would be an issue for both the labor force participation rate as well as the unemployment rate.
“- The UR is not based merely on a survey.”
Care to articulate a particulate problem?
“- The UR can move inversely to the number of unemployed people.”
And?
“- The UR acts as if there are only 2 categories of those not working: those not looking for work, and those who are. But the reality is more complicated.”
This is actually a far more interesting topic than the previous two issues. Let me give you two answers:
1. Both the labor force participation rate and the unemployment rate require criteria for deciding whether a person should be considered to be part of the labor force or not. I have no doubt that those criteria may include some elements of arbitrariness. But why would you consider that as a negative issue for the unemployment rate and not the labor force participation rate?
2. The BLS publishes six different unemployment rates in recognition of the fact that you could define “unemployed” differently. U3 is the widely quoted one, but no one stops anyone from looking at all six in order to form an opinion about the state of the economy.
“1) You explain a simplified version of who makes up the labor force according to the UR, but that’s not what’s being debated. It’s the value of the labor force as defined in the UR.”
The “labor force” has to be defined in either case. Using the labor force participation ratio does not avoid that.
“2) You’ve claimed that the UR is better at telling the unemployment rate, but not provided arguments to support that.”
My argument is very simple: For a given labor force, the labor participation rate does not tell you whether 99 percent of the labor force is employed or unemployed — you could have 99-1 or 1-99 with the same participation rate. That’s a pretty huge ding for the claim that this measure tells you a whole lot about employment, unemployment, or the state of the economy in general.
“3) Most importantly, even if the UR is better at telling what is going on with unemployment, you need to explain why understanding unemployment is more important than understanding employment or the economy at large.”
All I’ve ever claimed is that the unemployment rate is a better measure for unemployment that the labor force participation rate which doesn’t attempt to differentiate between people who are employed and unemployed. Again: the answer to the question of what the unemployment rate is a better measure of is simple: Unemployment. (And by the same argument, the labor force participation rate suffers as a measure of unemployment, employment, and the general state of the economy; but that is not to say that the measure is completely uninteresting.)
As for measures that you would use the judge the state of the economy, there are tons of them. Unemployment rate, inflation rate, GDP growth rate, etc. Not sure if it’s productive to get into a pissing contest as to what measure is more important.