Workforce drops outs soaring

Non responders to the unemployment survey

I get resume clients who say the unemployment rate of 4.2 per cent just can’t be right. It’s not. About one million people are on furlough (waiting to restart a job due to Covid) and they’re not counted as unemployed. Another million are doing a few hours work here and there just to survive. They’re not counted as unemployed either. One key reason why the unemployment number is so low is people are dropping out of the workforce. They’ve given up. I not only write resumes and cover letters, I write critical essays on unemployment and employment. The edited story below is an example.

“According to the ABS, Australia’s unemployment figures were now better than before Covid-19 hit. The official ABS data show the unemployment rate dropping from 4.6 to 4.2 per cent, with an estimated 64,800 jobs created between November and December. The figures are laughable. Sydney and Melbourne CBD’s are wastelands (Adelaide was bad before the virus). Hospitality is on its knees, international air travel is comatose and our universities are tumbleweed cities. People have dropped out of the workforce in droves.

There are about 13.8 million people in labour force. 26,000 specific households (about .32 per cent of the civilian population over 15 years of age) are sent a survey each month for eight months, with one-eighth of the sample replaced each month to bring in new people. The first interview is completed face-to-face and subsequent interviews are conducted by phone and online. The ABS preference, for cost reasons, is for people to reply online. The official LFS survey non-response rate is between 5-7 per cent.

We are witnessing a staggering rise in the number of discouraged ‘job seekers’, officially around 300,000, although no one really knows the exact figure. I suggest the true figure is closer to 700,000. Since the GFC and before, they’ve been knocked back from jobs either because of their age, lack of schooling, training, experience or age or race prejudice. Some were the victims of the GFC, previous recessions and more recently, the Covid-19 lockdowns and retail stagnation. These discouraged job seekers are members of a rising Australian lumpenproletariat or civil dead.

Some years ago I worked for the Australian Government in Labour Market Strategy in Canberra. I examined the demographic profiles of some of the poorest regions in Australia (once called the Priority Employment Areas). The Federal Government, its departments and agencies, are generally not held in high regard by the unemployed in these areas. The longer one is unemployed, the greater the antipathy and ennui.

Those who were hounded by Robodebt or so-called ‘job placement’ agencies, don’t give a damn for labour force data or those collecting it. They do not want to answer questions which reaffirms their unemployed status. When one is battling poverty, the requirement to complete and lodge eight Labour Force Surveys, whether online or by telephone, ranks very low on their hierarchy of needs.

Those who do not respond to the survey or who fail to complete each survey, are excluded from the count. They are ‘adjusted’ later in the weighting process. Weighting is a mathematical technique that makes the results reflect variables such as non-responders. Data from previous local population surveys is used to ‘fill in’ the missing information. The data is massaged to show validity rather than accuracy. Statistical validity is not the same as representative truth.

The ABS state that between 93 and 95 per percent of people complete the LFS survey. This is an extraordinarily low non-response rate compared to other nations using the same methodology. So low, it’s false. It’s one reason why we get ridiculously low unemployment numbers.

In the UK, LFS non-response rates fell to 20 per cent in the early 1990s and are now around 40 per cent. Those who dropped out were mainly in the 20-29 years age group and unemployed.

In the USA, non-response rates are around 12-15 per cent. Non-response in some of its largest national surveys is climbing because poorer Americans have lost faith in their political system.

American studies show that Blacks, Hispanics, the unemployed and those subsisting on the margins of society, tend to not complete the American version of the LFS, which leads to undercounts of up to 30 percent for those cohorts. That alone accounts for a 2 per cent underestimate in the national unemployment figures.

The Australian media doesn’t interrogate the unemployment figures. Its fetish for numbers coincides with a decline in an understanding – or rising apathy – of how those statistics are created and what they mean. Statistics are a shadow of the phenomena they claim to represent, not the thing itself. We ascribe a veracity to them which is dangerous and foolhardy.

Since the mid 1980s, the labour market has been undergoing radical change with the atomisation of various industries, the decline in full time jobs, the causualisation of the workforce, the rise of the ‘gig economy’ and ‘robot jobs’, people dropping out of the workforce and the fallout from the GFC. There will also be significant long terms effects in the labour market from the Coronavirus.

The unemployment figures are massaged and weighed through a statistical machine that feeds delusion rather than clarity. We need tools and methods that accurately reflect the dynamics of a rapidly changing labour market and the rise of a large, disaffected underclass.”

Put your best foot forward

Malcolm builds expert resumes, cover letters and LinkedIn profiles, which unleash an unbeatable business case to promote you as a ‘must have’ asset to an employer.