Thursday, March 11, 2010

Why did US unemployment go so high?

It appears that the US suffered much higher unemployment during the recession than NZ. And this has surprised me because the US, in previous recessions, has fared better than other countries in terms of unemployment.

But there is something different about their current rate of 9.7 percent.

Because the number of parents (mainly mothers and single) receiving welfare was enormously reduced due to the 1996 (and earlier) reforms and far more now have an attachment to the work place, they qualify for unemployment insurance and are officially counted as unemployed.

Just a couple of rough calculations shows what a difference that has made.

US population = 309,000,000
NZ population = 4,360,000

In the US 11.4 million are receiving unemployment benefits (insurance) or 3.6 percent of the population.

In NZ 66,300 are receiving an unemployment benefit, only 1.5 percent of the population. But if you added in 70 percent of the DPB population ( roughly the percentage the US reduced their numbers by) the proportion would rise to 3.3 percent.

I have left sickness and invalid benefits out because they equate to US Supplemental Social Security assistance - another programme. However we do have greater comparative numbers in that area.

So I am now thinking that the US isn't in quite as bad shape as their numbers would indicate.

(It goes without saying that my workings are very sketchy eg I have used total population instead of working age. This is just a blog post, not a thesis.)


Anonymous said...

So I am now thinking that the US isn't in quite as bad shape as their numbers would indicate.

Of course not! NZ has been in a longer and deeper depression than the US but our dole numbers are nowhere near up where they should be!

I think this is a structural problem in the NZ economy.
Our many government programs and make-work schemes and hugely oversized state sector is preventing the long-overdue "rebalancing" of the economy. Once unemployment gets up to 1992 levels (10%) or more - frankly I'd like to see 15% for 3-5 years - then we'll know we're actually making a serious attempt to reform the economy.

Anonymous said...

This is just a blog post, not a thesis.

No. The old "I'm right but can't prove it because of limited space, so take it on faith" is a cop-out that first-years have been using for donkeys years. It doesn't work.

An assertion without evidence is mere conjecture. A statistic is either relevant to the assertion or it isn't. If it's relevant, you can provide enough information so that others can confirm you are correct. If it isn't relevant, you might as well ditch it to provide room for more conjecture.

Most of your data seems to be publicly available, and often on the net. You've demonstrated an ability to put links in your posts, so why not make it easier for others to find the source?

If someone uses inappropriate data, or make an error (everyone does it) and fail to retract, it looks at best incompetent or at worst dishonest. Who would you trust: someone who admits to an error and distributes errata (especially when nobody else has spotted the error yet), or somebody who supplies erroneous data and doesn't (or refuses to) realise it? The latter loses all credibility very quickly.

I don't particularly disagree with you on some issues, but what really irritates me is the abuse of statistics.

I don't know enough about the US federal and state welfare systems (and how they collate their data) to examine the issue, so I won't comment on that.


Lindsay said...

Accept I am not saying I am right. I am saying, this is what I think and why. And I say what I think using my full name, unlike you.