I asked my friend Seth, an economics professor at Towson University and the genius behind The Blog of Diminishing Returns, to help me through some of the ideas in this (month-old, yes, I’m a little behind in my podcasts) On the Media interview. The interview is with Kevin Phillips, a political analyst and former Nixon aid, who argued in the May issue of Harpers that in striving to improve the U.S.’s economy’s image, politicians have altered the criteria behind economic statistics to the extent that international comparisons have become less meaningful. Phillips points to the different unemployment numbers collected by the government, and its choice to use a lower number:

KEVIN PHILLIPS: Well, let me start with unemployment. It’s always a question of what the workforce is and how you define people who aren’t quite in it. And this might sound like it’s fairly simple, but it’s not remotely. Government unemployment measurements run from the U-1 to the U-3 and up to the U-6. Now I’ll stop sounding like an aircraft designation [BROOKE LAUGHS] and back up here.

The U-3 is the number that they generally report. The U-6 includes a lot more people who maybe they’re looking for a job, maybe they’re not. There’s some larger explanation of why they’re not working. And the U-6 has unemployment about twice as high as the U-3.

He goes on in the interview to argue that the use of this statistic negatively impacts Americans’ understanding of our economy:

KEVIN PHILLIPS: Well, I think Americans tend to believe that we have lesser unemployment than Europe, and part of the reason for that is the media use the number which really is better than Europe’s, because frankly [LAUGHS] it’s a little bit loaded to be that way. I think, frankly, the one that runs between nine and ten is the more revealing.

I finished listening to the interview with a Chicken Little sense that there was no way to accurately report important data like unemployment and the GDP in ways that lead to useful analysis. Seth’s response to Phillips’ thoughts on unemployment data were comforting, though. Seth thinks that the Bureau of Labor Statistics’ unemployment calculations are not as byzantine as the interview suggests, and that the agency chooses to report the U-3 in an effort to increase understanding by allowing comparisons of U.S. unemployment data over time:

In the end I don’t think the Bureau of Labor Statistics is trying to game the system. They are using the traditional unemployment definition (U-3) so it is in some sense easier to compare across time. Although it is worth noting that the measure of unemployment must change overtime. For example the reported measure only included household heads until 1978, so in many cases women were excluded.

I guess the biggest journalistic lesson I see in both discussions is to vigilantly provide context to reported numbers. I would guess that many avid news consumers could cite unemployment and other economic data, but wouldn’t last long in a conversation about the way those numbers are measured or determined. It is certainly true of me.

Maybe one of these days I can convince Seth to give us his thoughts on the GNP/GDP switch addressed in Phillips’ On the Media interview.

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