From the pandemic to the pocketbook, policy-makers and regular people need to make important decisions right now based on flawed and incomplete data. That’s just the way it is. But they can’t use the excuse of uncertainty to cherry-pick the numbers to draw the conclusions they want — and they need to be open to changing their minds.
Take the state jobs numbers that came out last week. They’re flawed. No one meant them to be that way, and there’s nothing nefarious going on. But they are misleading in some cases and flat-out wrong in others.
The shortcomings highlight what will be an ongoing challenge during the pandemic. We need to make important and life-altering decisions based on shaky and fast-changing information, whether it be how to interpret the recent spike in coronavirus cases or how the crisis is influencing the economy.
The lesson: We must deal with the world as it is, not as we wish it were.
Let’s start with the basics. The unemployment rate in Florida jumped from 13.8% in April to 14.5% in May. That wouldn’t be surprising given our current circumstances, except that the national rate fell from month to month.
Why did Florida’s rate rise? A massive number of people — 237,000 — came back to the workforce after temporarily dropping out — meaning they weren’t working or looking for work. Some of them found jobs, or returned to their previous ones. Others didn’t.
The result: More people were employed in May, but a higher percentage of the returning workers were still looking for work, which caused the unemployment rate to rise. In some ways that’s not so bad. An expanding labor force signals that people feel confident they can find work.
Here’s where the numbers get shaky. The U.S. Bureau of Labor Statistics conceded that in recent months it misclassified people as “employed, but absent from work,” instead of “unemployed, on temporary furlough,” a hiccup that stems from how the crisis quickly altered the job status of millions of workers nationwide. Without the miscalculation, the official unemployed rate would be higher.
Plus, about 800,000 people in Florida are still missing from the workforce compared to February. There’s no way they all decided to retire. Most of them likely want to work, but they aren’t looking for a job, so they aren’t officially counted among the unemployed.
Add in the missing workers and Florida’s unemployment rate in May would be about 21%, though that is down from above 22% in April. Both numbers are stunningly high, but it shows how the uptick in the official unemployment rate is saying that things got worse in May, when they likely got a little better, said Michael Farren, an economist and research fellow at the Mercatus Center at George Mason University.
The official “definition of unemployment was not developed to accommodate a pandemic,” he said.
The takeaway shouldn’t be that the job numbers are useless. In fact, the report is based on a monthly survey of tens of thousands of people, crunched by an army of dedicated federal employees. Some economists call it the “gold standard” in monthly data collection.
Therein lies the point — the pandemic has even upset one of the most reliable ways of measuring the health of the economy. But the numbers were never perfect, just like the way we count coronavirus cases won’t be perfect. We use the best available information and adapt as the information changes. There is too much at stake for paralysis.
An editorial from the Tampa Bay Times.