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Home Publications Blogs Beat the Press NYT Gets Germany's Unemployment Rate Wrong, Again

NYT Gets Germany's Unemployment Rate Wrong, Again

Wednesday, 01 February 2012 06:06

People who report on Germany's economy should know that the unemployment rate reported by the government is not calculated the same way as the U.S. unemployment rate. It includes people who are working part-time but would like full-time jobs as being unemployed. This means that the rate reported by the government is not directly comparable to the U.S. rate. This means that the NYT misled readers when it told them that Germany's unemployment rate fell to 6.7 percent in January.

However, the OECD does publish unemployment rates for Germany that are calculated in a similar manner to the U.S. unemployment rate. By this measure, Germany's unemployment rate was 5.5 percent in November. Assuming that the OECD rate followed the same path as the German government rate, German's unemployment rate would be 5.3-5.4 percent today if calculated on a comparable basis to the U.S. rate.

Comments (11)Add Comment
And in other news...
written by David, February 01, 2012 8:16
Apples are oranges.
Bankrupting Your Neighbors is Sound Economic Policy
written by PAUL, February 01, 2012 9:38
Germans have figured out that using trade as a weapon of mass destruction is a great way to get ahead. Unfortunately for the rest of euroland, Keynes advice is prophetic:

"International trade would cease to be what it is, namely, a desperate expedient to maintain employment at home by forcing sales on foreign markets and restricting purchases, which, if successful, will merely shift the problem of unemployment to the neighbour which is worsted in the struggle . . ." The General Theory, p. 382-3
written by Jim, February 01, 2012 11:44
Germans have much smarter way of handling unemployment than US. If company is going to lay off 10 of their 100 employees, they simply reduce work hours by 10% instead and cut pay for everyone by 10%, and the government kicks in 60% of the 10% in lost pay. Keeps people working.
written by Arne, February 01, 2012 11:54
Does the way they handle this issue in Gremany lead to a different NAIRU? If so, then even after correcting for the way it is caclulated, it is still not going to help US readers unless we understand what is the sustainable unemployment rate in each country.
Flubed either way....
written by deutscher, February 01, 2012 2:09
I have difficulty understanding what Dr. Baker is complaining about. Like the US rate, the German unemployment rate is determined by political considerations. Recently it was reveled that older German workers, i.e., over 58 were removed from the unemployment statistics because the unemployment office said they could theoretically apply for early retirement and therefore did "need" a job. (Yes you have to give up 20% of your social security, but hey, its for the good of the statistics!)

Please Dr. Baker, concentrate on real issues not statistical mirages.
Hast du das nicht verstanden?
written by Ethan, February 01, 2012 5:35
Dr. Baker is not complaining about which way is proper to calculate unemployment. He is pointing out that when different jurisdictions calculate a statistic in different ways, it is not proper to compare them directly.
comparing statistics
written by IF, February 01, 2012 10:34
The cited article does not compare anything with the US. It compares rates between Germany, Spain and Italy. As long as it gets these three rates comparable there is no reason to invoke any rebasing with the US.

A second thought: why adjust German rates down and not US rates up? After all there are U-5 and U-6 if you prefer to compare to Germany.
Can you explain Reaganomics relative success?
written by Commentator, February 02, 2012 12:04
Well, I believe Germany has maintained tight money supply, low inflation, and restrained government spending, right?

But my main point is this:

One year later; the Democratic view is to keep increase spending (with or without taxes) until unemployment is 5%, basically. If this means increasing the government size to 50% and suffering slow growth until then, espcially if it means hiring and/or overpaying government workers, federal, state, and local. That might take another 20 years.

What you never explain is the success of Reaganomics. He cut spending and cut taxes and growth and jobs soared. By your theory, the spending cuts should have led to long term misery. Austerity may have provided a short term downward shock in the 80s, but in any case, it was well worth it. Why did it work?

It seems the take-away from your analysis is that austerity will cause short term recession, but it looks like it produces exponentially better mid-term and long-term results. Obamanomics is the opposite; it creates short term growthy but long term misery. Right?
written by S. D. Jeffries, February 02, 2012 9:12
Commentator: are you kidding? Is this satire - or sarcasm? Reagan did not cut spending; in fact he increased it and simply redirected it into the military industrial complex. And because he reduced taxes, he didn't pay for that spending. The debt ballooned under Reagan. And if you think the federal debt is a problem now, the problem started with Reagan.
Y? Y? Y? Can you explain why some stubborn people still believe that Reaganomics (sic) was relative success?
written by David, February 02, 2012 10:26
Or why they refer to the current policy as "Obamamics", when it is a very slighly modified version of Reaganomics/Bushonomics?

That 30 years of "Reaganomcs" nearly destroyed the US auto industry?

Or why they ignore the fact that Reagan created this debt crisis (with his Voodoo Economics (Bush Sr.'s words!), Bush Jr. worsened it 2001-2009, and that Obama has fared rather well, considering? http://zfacts.com/p/318.html

Or ignore the fact that this recession is FAR worse than the one Reagan had to deal with (and, in the end, worsened, forcing Bush senior to raise taxes, despite his campaign promise).?

Commentator shows us that we still have much public education to do yet, and advertise the facts more broadly.
Mirages influence behaviors and decisions
written by David, February 02, 2012 10:46
IF misses the obvious point: the most important audience of the NYT are US citizens. Most of them are unaware that there is some differences in how unemployment is tallied. The reporter, not the readers, are under the obligation to provide valid comparisons. Then the reporter could have used U-5 or U-6, as IF says, but the fact is that this reporter, and the editors, did not and therefore provided an invalid comparison.

But deutscher also pops in to say that it's all smoke and mirrors anyway. Statistics influence perception, rightly or wrongly, and alter opinion thereof. An error of 20% is something that arises only when attempting to influence opinion; in this case, Germany's unemployment rate is depicted as being 2/3 of the US unemployment rate, whereas, using the same (politically colored) standard reveals that actually Germany is doing far better than that, more like for every 90 serious job seekers who are unemployed in the US there are 51 (not 65) such job seekers in Germany. This is just yet another version that the current meme in the US tries to depict the plight of workers in the US as being nearly on par with that of a (currently) stronger economy. Unlike deutscher, I believe this is a real issue, and I am ecstatic that Dr. Dean continues to stand up for the working class in the US, and blow that smoke back on those who would (perhaps unintentionally) spread what is basically propaganda from a small but well-heeled portion of the population.

So, forget deutscher. He's right, it's politically colored and a mirage; but he's wrong that it's a waste of time to attach these things. It's a real giant, not a windmill.

Similarly, IF is right intellectually, but IF clearly does not have the political savvy or interest in the working class that Dr. Dean has, if IF is so unwilling (or too thick-headed?) to see the true intent of Dr. Dean's complaint.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.