Wednesday, February 25, 2015

Abbot & Costello on Unemployment

The following is one of the clearest explanations I've read of alternative unemployment statistics.  Someone sent me this so I do not know the original source. However I have updated the numbers to reflect the January 2015 unemployment statistics

COSTELLO: I want to talk about the unemployment rate in America.

ABBOTT: Good Subject. Terrible Times. It's 5.7%.

COSTELLO: That many people are out of work?

ABBOTT: No, that's 11.3%.

COSTELLO: You just said 5.7%.

ABBOTT: 5.7% Unemployed.

COSTELLO: Right, 5.7% out of work.

ABBOTT: No, that's 11.3%.

COSTELLO: Okay, so it's 11.3% unemployed.

ABBOTT: No, that's 5.7%.

COSTELLO: WAIT A MINUTE! Is it 5.7% or 11.3%?

ABBOTT: 5.7% are unemployed. 11.3% are out of work.

COSTELLO: If you are out of work you are unemployed.

ABBOTT: No, Congress said you can't count the "Out of Work" as the unemployed. You have to look for work to be unemployed.


ABBOTT: No, you miss the point.

COSTELLO: What point?

ABBOTT: Someone who doesn't look for work can't be counted with those who look for work. It wouldn't be fair.

COSTELLO: To whom?

ABBOTT: The unemployed.

COSTELLO: But ALL of them are out of work.

ABBOTT: No, the unemployed are actively looking for work. Those who are out of work gave up looking and if you give up, you are no longer in the ranks of the unemployed.

COSTELLO: So if you're off the unemployment rolls that would count as less unemployment? 

ABBOTT: Unemployment would go down. Absolutely!

COSTELLO: The unemployment just goes down because you don't look for work?

ABBOTT: Absolutely it goes down. That's how it gets to 5.7%. Otherwise it would be 11.3%. 

COSTELLO: Wait, I got a question for you. That means there are two ways to bring down the unemployment number?

ABBOTT: Two ways is correct.

COSTELLO: Unemployment can go down if someone gets a job?

ABBOTT: Correct.

COSTELLO: And unemployment can also go down if you stop looking for a job?

ABBOTT: Bingo.

COSTELLO: So there are two ways to bring unemployment down, and the easier of the two is to have people stop looking for work.

ABBOTT: Now you're thinking like an Economist.

COSTELLO: I don't even know what the heck I just said!

ABBOTT: Oh, now you're thinking like a Politician.

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