Tuesday, August 13, 2019

Unemployment rate down - benefit numbers up

According to Statistics NZ:

The seasonally adjusted unemployment rate fell to 3.9 percent in the June 2019 quarter, down from 4.2 percent in the March 2019 quarter, Stats NZ said today.
This is the lowest unemployment rate since the June 2008 quarter, when it was 3.8 percent.
That's a drop over the year to June 2019 from 4.4  to 3.9 percent.

Many have expressed puzzlement over this  given Jobseeker benefit numbers are rising. As a percentage of the working age population the number rose from 4.2 to 4.5 percent over the year to June 2019.

How can this be explained.

First we need to look at the denominator.

In the case of the Jobseeker benefit the denominator is the working age population defined as 18- 64 year-olds.

The unemployment rate uses a denominator also called the working-age population but is defined as "the non-institutionalised population 15 years and over, who usually live in New Zealand."

So apples are not being compared with apples. 15,16 and 17 year-olds are counted when calculating the unemployment rate.

Of course this has long been the case and it's the trend that matters.

But it may be that demographic changes are more influential in the low unemployment rate than the health of the economy.

If the cohort size of the 15-17 year-olds is larger than previously, that will lower the resulting unemployment rate. As these cohorts mature they will start affecting the older working age population used by MSD.

Immigration is also effecting the denominators constantly.

What we do know for sure is that those on Jobseeker benefits; 136,233 at June 2019, are actual numbers.

All other percentages are estimates.

Note also that last time the unemployment rate was so low, according to Stats NZ, 3.8% in June 2008 the numbers on the unemployment benefit were also very very low:

At that time there were many more on DPB and the Sickness benefit.

For all the jiggery pokery here's the bottomline:

258,317 people were on any type of benefit at June 2008  - or 9.9% of the working age population
291, 969  people were on any type of benefit at June 2019  - or 9.7% of the working age population

Absolute numbers up - percentage down.

Not much in it though and sad to say, this might be as good as it gets.

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