I don't have time to go through each of his points individually, but I will simply point out the key error in his second point on unemployment. He writes:
It's not hard to predict what President Bush, who sounds increasingly desperate, will say tomorrow. Here are eight lies or distortions you'll hear, and the truth about each:
Mr. Bush will boast about the decline in the unemployment rate from its June 2003 peak. But the employed fraction of the population didn't rise at all; unemployment declined only because some of those without jobs stopped actively looking for work, and therefore dropped out of the unemployment statistics. The labor force participation rate - the fraction of the population either working or actively looking for work - has fallen sharply under Mr. Bush; if it had stayed at its January 2001 level, the official unemployment rate would be 7.4 percent.First, let's identify the part that Krugman gets right. The employment-population ratio is unchanged between June 2003 and September 2004: 62.3 percent of the population over age 16 is employed. The labor force participation rate has fallen over that period of time from 66.5 percent to 65.9 percent, and the unemployment rate has fallen from 6.3 to 5.4 percent of the labor force.
Next, consider the part that Krugman gets wrong. The BLS keeps track of information on several different types of unemployment rate, precisely to make sure that changes in the unemployment rate are not driven by changes in discouraged workers. The BLS uses the following concepts:
- Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.
- Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for a job.
- Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.
How have the unemployment rates including these groups as unemployed members of the labor force changed? According to the data at the BLS:
Unemployment Rate: Fell from 6.3 to 5.4 percent between 6/2003 and 9/2004
UR, Incl. discouraged workers: Fell from 6.6 to 5.7 percent
UR, Incl. discouraged and marginally attached workers: Fell from 7.2 to 6.4 percent
UR, Incl. marginally attached workers and those employed part-time for economic reasons: Fell from 10.3 to 9.4 percent
In no case is Krugman's statement, "unemployment declined only because some of those without jobs stopped actively looking for work, and therefore dropped out of the unemployment statistics" supported by the data. When those workers are included, we still get about a 0.9 percentage point drop in the unemployment rate, however it is measured.
What, then, is the explanation for how the labor force participation rate dropped, if it is not due to people becoming dissatisfied with the labor market? Consider more people voluntarily taking time out of the labor force--whether to retire, raise a family, or go back to school--as just three possibilities.
Sadly, if you are going to read Krugman, then you probably also have to read Luskin, and you should double-check for yourself any facts asserted by either one.More importantly, I think it is incredibly poor form for the "paper of record," or any newspaper at all, to not insist that all of its columnists have their writing fact-checked. Every statistic I have just listed is available at the BLS website that reports on the household survey of employment, which is the source of all data about the unemployment rate. The alternative measures of unemployment are in Table A-12 each month. (Follow this link, click the boxes for "Seasonally Adjusted" on items U-3 through U-6, and see for yourself.)