Unemployment lenses: Salmond edition

Rob Salmond thinks NZ Prime Minister John Key is playing silly buggers with employment stats. Salmond puts up a graph showing unemployment rates since 2000; it's higher now than it's been since 2000. He's then less than impressed with Key looking instead to numbers of people in employment:

Both in question time and the budget debate last week, [Key] trumpeted National’s incredible jobs achievement:

“… New Zealand now has more jobs that it has ever had in the history of this country. I do not call that failure.” Taddah!

Um, John, more people have jobs now because New Zealand has more people now. It has very little to do with you. Unless, of course, you are about to start taking credit for breeding...

As the chart shows, the number of people in work rises pretty much every quarter, unless there is a large-scale problem like a Global Financial Crisis. More people, more jobs.

The unemployment rate is a much better indicator of government economic management than is the raw number of jobs around.

Then again, what if we did adopt John Key’s “more jobs than ever before” standard for judging government economic success? How would the last two governments perform on that score?  

It's a bit odd that Salmond cuts his data series at 2000; most Stats NZ series go back to 1986. If we extend the data series showing number of persons employed back to 1986, we see a few declines in numbers employed despite there being no drop in year-on-year population growth.* All of my charts are drawn from the Stats NZ HLF series "Total Labour Force Status by Sex by Age Group (Annual-Dec)"**, taking the total for both sexes over all ages [nothing much changes in restricting things to a 20-59 age cohort if you prefer that].

There's a decline in total employment from '87 through '92, a nice rise from '93-'96, a levelling off from '97-'99, then the rise Salmond shows from 2000 through the most recent recession. Note that the y-axis cuts at 1200; this makes dips and rises seem larger than they really are [Salmond's has a similar cut].

But, as Salmond rightly says, total employment really isn't a great measure without some correction for population; we really need to look at the employment rate. So, how's the employment rate doing? Here's the graph:

When I look at that chart, I see an abnormal bulge starting around 2005 - about the period when RBNZ let inflation get a bit out of hand - then levelling down to more more normal ranges. The employment rate isn't higher than it's ever been, but neither is it completely out of whack relative to the full Stats NZ time series or relative to the drop in the employment rate in prior recessions.

And, the unemployment rate isn't as bad as Salmond suggests. Let's start by going back to the start of the data series in 1986 instead of cutting it at 2000.

Put in a bit of a broader historical context, it's not bad. I'd expect that Salmond was cutting things at 2000 to get a rough decade period, but the impression left by the time series sure changes depending on our choice of start date. And, when we remember that the period from 2008 onwards has been rather worse for the global economy than any period since '86, and that the 2002-2007 period was part of a global boom, we might well be reasonably pleased at current outcomes; it's far worse elsewhere. HLFS data has a nice way of showing what lenses folks are using.

Update: Rob Hosking at NBR agrees and adds that, with employment rates this high and wage growth picking up, there's less room for non-inflationary growth. It's also worth remembering that our employment rates stay high and our unemployment rates stay low in part because of the big labour sink across the ditch: it's easy for our unemployed to move to Oz, and it's not always easy to draw them back when things here pick up. But the iPredict markets don't see inflation anywhere on the horizon.

* Update: dumb typo. Of course population growth rates vary. But population always grows. So absolute drops in numbers employed can't be due to drops in population. Last line and link added in too as I realised I'd forgotten to add it and that the post title made no sense without it. Oops. It's also worth remembering that Key talked about numbers employed at least in part because Shearer kept talking about the increase in the number of people unemployed over the last 4 years. Check the links to Hansard in Salmond's post.

** I'm not sure if the Table Builder link will keep working or whether it's using a session ID. I'm using the annual series to get a cleaner x-axis.