The Fuzzy Numbers Behind Initial Job Claims

"Fuzzy Numbers” is one of the most popular video chapters within The Crash Course.

It explains many of the ways that government statisticians routinely distort economic truth, making things seem rosier than they are:

(Video length: 00:20:26)

Please note that this is a non-partisan observation – every administration since LBJ has perpetuated and expanded the practice of economic self-delusion.

Debunking The Initial Jobs Claims Number

Today we’re going to solve the mystery of the low Initial Jobless Claims number we've been seeing recently. It's not nearly as low as advertised once you dig into the underlying 'fuzzy' math.

The 'Initial Jobless Claims' statistic measures the number of people filing for unemployment benefits. If more people are filing, the number goes up; presumably, more people are losing their jobs and the employment rate is falling.

Oppositely, if fewer claims are filed, fewer people are losing their jobs and the employment rate is rising.

So low is good, and rising is bad. 

According to government statistics, this number is now pegged at four-decade lows. Things haven’t been this good for the workforce in nearly 40 years!

As Zero Hedge recently reported, “Initial jobless claims remain stuck at four-decade lows (254k this week)... so where are all the jobs?”

(Click on image to enlarge)

Jobless-claims-departrues-9-22-2016.jpg (613×690)

(Source)

You’d think that with claims being at 40-year lows, there would be a robust jobs market you could point to -- a lot of confident, happy workers enjoying rising wages. And along with those rising wages, we’d see rising tax receipts.

But we're seeing none of these. So what gives?

The answer is once again found by digging into the "fuzzy numbers" underlying the reported claims.

To understand the '40 year lows' statistic, all you really need to realize is that the proportion of workers eligible to receive such compensation is also at four-decade lows:

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