Lies, Damned Lies, and Unemployment
In my new book, The House Advantage: Playing the Odds to Win Big in Business, I have a chapter where I discuss how the media uses “statistics” to lie. This is obviously not a novel concept as we know from the following age old Mark Twain quote, “There are lies, damned lies and statistics.”
However, I was reminded of this theme when sitting in as a host on Varney and Company on Fox Business. All you liberals please hold back the boos. This is not a political argument as much as it is a discussion of the dangers that we all face as a country when influential people use numbers to push forward an agenda.
During the 90 minute show, we interviewed John Challenger of Challenger, Gray and Christmas. Challenger’s firm, experts in job placement, had just issued a press release which actually used recent employment statistics to paint a rosy picture of our current job market.
In the release, Challenger’s firm declares that “the job market is well on the road to recovery” citing “bigger trends, which indicate just how much the job market has improved over the last 12 months.”
Challenger asserts, “The statistics indicate that the job market has made great strides over the last 12 months and appears to rebounding sooner compared to the previous two recessions.”
Challenger references a decrease in planned job cut announcements and an increase in payrolls as two such “statistics” that contribute to his rosy picture. In all cases he refers back to previous recessions to draw the conclusion that we are recovering much faster than similar situations in the past.
While it is difficult to debate the statistical veracity of his claims, certainly Challenger does not try to himself, it is important to challenge Challenger from a scientist’s point of view. One of the techniques I espouse in my bookis to not simply accept numbers but instead to think like a scientist and understand the inherent underlying fundamentals.
The heroes of Michael Lewis’ book, The Big Short, literally flew to different regions of the US to see what these mortgages were all about. And that knowledge gave them the confidence to short the housing market.
Similarly if you drive around an area like Orange County, California, as I did last week, during a weekday you see lots of cars in driveways – former success stories in real estate, construction and mortgaging now out of work waiting for the market to turn.
And that is the real challenge with this recession and my gripe with Mr. Challenger’s use of statistics to paint a rosy picture. Where will the jobs come from? Challenger lists health care and energy as two major areas of growth, yet one quarter of the jobs lost in this last recession were construction related and it’s hard to see a construction worker suddenly picking up the skills necessary to work in either of these fields.
The reality is that many of the jobs lost in this recession are not coming back in the near future which may explain why both the democrats and republicans have taken to playing the blame game rather than proposing real solutions – nobody has the answer.
We all know that job creation is the key to turning this thing around but how in the world are we going to do that?