President Donald Trump says lots of nutty, made-up things that invariably generate lots of appalled reactions from the news media and the wonkocracy. His statements about the unemployment rate have generated lots of appalled reactions, too. But, as I’ve written before, they’re not entirely nutty or made-up. In fact, they address — albeit in exaggerated Trumpian fashion — a real measurement problem.
Here, for example, is the president in his much-discussed (and yes, in parts quite nutty) interview last week with Time’s Michael Scherer:
I inherited a mess with jobs, despite the statistics, you know, my statistics are even better, but they are not the real statistics because you have millions of people that can’t get a job, OK.
OK! Although I wouldn’t put it exactly that way. Here’s what Trump should have said if he wanted to do more to court the crucial econowonk demographic:
Yes, the unemployment rate is low — and going lower! But the job market still isn’t in great shape, which the unemployment rate misses because it fails to count the millions of people who have given up looking for work. A better measure to focus on would be the prime-age employment-to-population ratio, or the Hornstein-Kudlyak-Lange Non-Employment Index. Did I pronounce Kudlyak right?
The latter measure was devised in 2014 by Andreas Hornstein of the Federal Reserve Bank of Richmond, Marianna Kudlyak of the Federal Reserve Bank of San Francisco and Fabian Lange of Montreal’s McGill University in an attempt to better reflect the role played by labor-force dropouts. These are the people who tell government survey-takers that they neither have a job nor have looked for one in the previous four weeks, and they don’t show up at all in the headline unemployment rate. Those who haven’t looked for a job in the past four weeks but have in the past 12 months are considered “marginally attached to the labor force” and show up in alternative Bureau of Labor Statistics measures, such…