What would you think if you read an article which described a situation with words like “slashing”, “catapulting”, ”bolted”, ”hitting” and “carnage”?   People are “fighting for their survival.” The situation is “deteriorating at an alarmingly rapid clip.”  The “grim news” is “dramatic proof” the situation is “careening deeper into…”  Well, you get the idea.

Obviously, this article is describing a situation which is dramatic, dangerous and likely involving body counts.  Right?  Perhaps it is talking about war or terrorism or genocide.  Well, not so fast.

The article is from the Associated Press and was written by Jeannine Aversa.  It was really about…wait for it…unemployment.  Seriously, all this over-heated language was used to describe the rather mundane subject of statistics.

Why does this matter?  This is the Associated Press.  The AP is quoted by virtually every major news organization in this country and around the world.  What they write is treated as fact.  Even if their reporting is inaccurate or misleading, what they write becomes the conventional wisdom and people make decisions based on it.  This is the news.  It is not an assignment for a college creative writing class.

OK, writing style aside.  Is the article at least accurate where the numbers are concerned?  Since this is the AP and they are relied upon by so many, the numbers should be accurate both in their application and their implication.  Let’s look at the numbers.

Aversa writes, “Skittish employers slashed 533,000 jobs in November, the most in 34 years.”  According to Labor Department, 533,000 jobs were in fact lost in November.  The Bureau of Labor Statistics web site confirms this is the greatest monthly job loss “since a whopping 602,000 positions were slashed in December 1974, when the country was in a severe recession.”  While the numbers are accurate in their application, what can be said about the implication inherent in her words?

The implication is that the job losses in November are comparable to those in December 1974, and therefore we must be in a severe recession as we were then.  If you look at the raw numbers, they do look comparable, but this is where statistics can be misused.  The job losses in December 1974 were out of a total employment of 78 million.  In November 2008, the total employment was over 136 million.  In other words, the impact of the November job losses relative to size of the economy was about half those in December 1974 and therefore not comparable at all.

Elsewhere in the article, Aversa writes, “the unemployment rate bolted from 6.5 percent in October to 6.7 percent last month, a 15-year high.”  She also writes the November job losses “catapult[ed] the unemployment rate to 6.7 percent, dramatic proof the country is careening deeper into recession.”  While the unemployment rate is at a 15-year high, is this relevant historically?  The last 15 years represent an unusually low period in unemployment.  The median unemployment rate for this period is only 5.1%.  The previous 20 years had a median unemployment rate of 7%.  Unemployment reached 10.8% in November 1982, and 7.8% in June 1992.  Unemployment has been greater than or equal to 6.7 percent in 147 months over the last 35 years, or roughly 35% of the time.

Is a 0.2% jump in the unemployment rate significant enough to warrant such grim reporting?  A quick scan of the last 35 years found 62 instances where the rate jumped by 0.2% or more.  Given these numbers, the jump in unemployment isn’t really dramatic proof of anything.

Now I have been throwing figures around, but there is an underlying question.  Isn’t this just quibbling about numbers?  The answer is no.  People make decisions based on what they see in the newspapers, on TV and online.  An article from AP is repeated and republished and quoted around the world.  If the information is misleading, then the decisions based on that information may well be wrong. 

In more common terms, exaggerated claims about unemployment make people afraid for their jobs.  They spend less.  They put off major purchases.  They scale back travel plans.  Businesses see a fall off in demand, so the produce less and layoff more people.  Eventually, equilibrium is restored, but not until after a recession that was deeper and longer than it otherwise would have been.

Please don’t think that I am unsympathetic to the 6.7% who are unemployed.  That is a situation which strikes extremely close to home with me.   My issue is with the media who exploit a bad situation and make it worse for personal or political gain.

Jefferson was right when he said that a free and independent press was necessary for a democracy to survive.  What is also necessary is for the people to be properly educated in the use of statistics and economics, so they won’t be taken in by members of the media.  President-elect Obama has talked about education being a priority in his administration.  He would do well to include statistics and economics to the required learning list for graduating high school students.

Here is a link to Aversa’s article:

http://www.bizzyblog.com/APaversaEmployment120508at1241pm.html