Many observers and commentators of the current economic recession say “unemployment may be high now, but its nothing compared to the Great Depression.”
But is that really a fair comparison? Independent Institute economist William Shugart suggests its not.
The answer: The United States in the 1930s recognized that government-funded make-work jobs were not the same as real jobs.
To be sure, jobs financed at taxpayer expense were plentiful. But back then, the Bureau of Labor Statistics didn’t count people on work relief as employed. In fact, persons listed on Depression-era work-relief rolls were not included in the labor force at all.
Nowadays, the unemployment rate equals the number of unemployed persons divided by the total civilian labor force. If you are working as a temporary census enumerator or planting road signs along the highway courtesy of a government “stimulus” grant, you are considered employed.
The employment and unemployment statistics of the 1930s excluded people who would not be employed in the absence of public largesse.
People at that time recognized that someone who holds a job only because Congress has appropriated money for the position is not creating wealth but is merely the recipient of an income transfer. Those who at the time derided the WPA as “We Piddle Around” recognized the wasteful consequences of public profligacy.
Today, people holding make-work positions “created” by stimulus spending, jobs tax credits and government-directed “investments” in alternatives to fossil fuels and other “green” initiatives are counted as employed. If they weren’t, as they shouldn’t be, the unemployment rate would be much higher than 10 percent.
So to compare the current unemployment rate with the recorded unemployment rate during the Great Depression is an apples to oranges comparison. Just imagine how high our unemployment rate would be if government make-work jobs like temporary census workers weren’t counted.