Manipulating unemployment

There are two basic sets of numbers related to unemployment: the number of people receiving unemployment benefit, which is easy to measure because the government knows who they are and makes them check in regularly; and the actual number of unemployed people, which is harder to measure and not perfectly well-defined.

Essentially everyone in the world uses the same definition of the unemployment rate: number of people looking for jobs divided by number of people who have jobs or are looking.  This isn’t ideal — it excludes people who’ve given up looking for jobs because there aren’t any — but it’s standard (and endorsed by, eg, the International Labour Organisation).  These numbers are estimated in two ways: by a survey of people (in New Zealand, the Household Labour Force Survey) and by data from businesses (LEED, and the Quarterly Employment Survey, in New Zealand)

In countries such as NZ, with well-run, independent national statistics agencies, the unemployment rate is hard to manipulate because the official statisticians won’t let you. The number on benefits is hard to manipulate because it’s easily measured.  So both numbers are trustworthy measurements of what they measure.  Sometimes, deliberately or accidentally, people confuse the two and say that unemployment has gone down when in fact it’s only the number on benefits that has gone down. If anyone sees examples of deliberate or reckless confusion of numbers on benefits and numbers unemployed, I’d welcome a note either to me or as a Stat-of-the-Week nomination, since it’s an important issue and an easy target for a post.

The current government is not, actually, particularly culpable in confusing these numbers; they prefer to take unjustified credit for the economic improvements following the global recession. For example, Paula Bennett has tended to talk about her ministry’s success in reducing the number of people on benefits (whether it’s true or  not, and whether it’s good or not).

So, I was surprised to see a column by Matt McCarten in the Herald accusing the Government of manipulating the unemployment statistics. He doesn’t mean that Stats New Zealand’s unemployment rate estimates have been manipulated — if he had evidence of that, it would be (minor) international news, not a local opinion column. He doesn’t mean that the published numbers on people receiving unemployment benefits are wrong, either. In fact, none of his accusations are really about manipulating the statistics. Mr McCarten is actually accusing the government of trying to push people off unemployment benefits. Since that’s one of the things Paula Bennett has publicly claimed credit for, it can hardly be viewed as a secret.

Personally, I’m in agreement with him on his actual point, but not on how it’s presented. Firstly, if the problem is the harassment of unemployed people to stop them claiming unemployment benefits, you should say that, not talk about manipulating statistics. And secondly, if there really is widespread public misunderstanding when politicians talk about the state of the economy, it’s hard to see who could be more to blame than the Herald.