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29 October 2012

The birth of a zombie statistic

"Record numbers of people in work" is a meaningless fact.

By Alex Hern

The Daily Telegraph‘s Jeff Randall has a triumphalist opinion piece today, proclaiming that, contrary to the claims of “Armageddonistas” (who apparently count amongst their numbers our own David Blanchflower):

The British economy’s most recent data show that we’ve just experienced the fastest quarterly growth in five years, employment is going up, unemployment is coming down, public-sector borrowing is falling; pay in both the public and private sectors is rising, inflation is fading (though still above target), retail sales are positive, as are new car registrations.

Many of the counter-arguments to Randall are a question of framing, and some of the straw men he attacks aren’t worth defending.

So while we’ve experienced the fastest quarterly growth in five years, we’ve also experienced annual growth of exactly zero per cent; and the ONS explicitly stated in the press conference accompanying the figures that the quarterly fluctuations mean that looking at the longer-term is more accurate.

Similarly, pay in the public and private sector is indeed rising, as it has been for three years. But real pay – pay deflated by inflation – has been negative for years. August, the latest month data for which data is available, saw a 2.3 per cent rise in wages for the whole economy, and a CPI rate of 2.5 per cent. So while the average worker had more pounds in their payslip, they still got 0.2 per cent poorer. And even that nominal pay increase was a high point – in the last year, nominal weekly earnings have risen by above 2 per cent just three times.

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(I also can’t let it pass that in the same piece in which Randall attacks Blanchflower for “abusing those who challenge his view that fear of inflation is overblown”, he also argues that the Armageddonistas are wrong because “inflation is fading”.)

Beneath the bluster and legitimate disagreements in which to focus on – for it is just a disagreement as to whether to look at this quarter or this year, or whether falling unemployment is enough to offset falling real wages – is one very concerning use of an outright misleading statistic.

We hoped it would be confined to Prime Minister’s Questions and the DWP’s perennially dodgy press releases, but Randall’s repetition of the “record” 29.59 million in work means that this bears spelling out: the only record is how many people there are in the UK.

Population is at since 1960. This employment statistic has only been counted since 1971. If you look at the employment rate, which is 71.3 per cent, then it is at a high since just 2009. Which isn’t much of a record at all.

Of course, it may be that Randall is – against the grain for the Telegraph – cheering the economic benefits of well-managed migration into the UK, which has allowed the economy to grow far larger than it would have with closed borders, and is decrying the “lump of labour” fallacy so commonly applied by his fellow columnists.

That may be the case. Probably not, though.

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