A First Look at Australian Unemployment Statistics: A New Methodology for Analyzing Unemployment Data

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<ul><li><p>7/31/2019 A First Look at Australian Unemployment Statistics: A New Methodology for Analyzing Unemployment Data</p><p> 1/21</p><p>Page 1 of21</p><p>A First Look at Australian Unemployment Rates</p><p>A New Methodology for Analyzing Unemployment Stats</p><p>Courtesy images:http://www.travelnotes.org/Oceania/images/australia_regions.gif</p><p>https://reader009.{domain}/reader009/html5/0429/5ae4a981ed67a/5ae4a98506c3f.jpg https://reader009.{domain}/reader009/html5/0429/5ae4a981ed67a/5ae4a9867492b.jpg </p>http://www.travelnotes.org/Oceania/images/australia_regions.gifhttp://www.travelnotes.org/Oceania/images/australia_regions.gifhttp://www.travelnotes.org/Oceania/images/australia_regions.gifhttp://www.sydney-australia.biz/western-australia/graphics/western-australia-kangaroo-beach.jpghttp://www.sydney-australia.biz/western-australia/graphics/western-australia-kangaroo-beach.jpghttp://resources3.news.com.au/images/2012/02/26/1226282/095447-australia-politics-gillard.jpghttp://resources3.news.com.au/images/2012/02/26/1226282/095447-australia-politics-gillard.jpghttp://resources3.news.com.au/images/2012/02/26/1226282/095447-australia-politics-gillard.jpghttp://www.sydney-australia.biz/western-australia/graphics/western-australia-kangaroo-beach.jpghttp://www.travelnotes.org/Oceania/images/australia_regions.gif</li><li><p>7/31/2019 A First Look at Australian Unemployment Statistics: A New Methodology for Analyzing Unemployment Data</p><p> 2/21</p><p>Page 2 of21</p><p>Table of Contents</p><p> No. Topic Page No.</p><p>1. Abstract 3</p><p>2. Brief Introduction to Analysis 4</p><p>3. Unemployment Diagrams 9</p><p>4. Unemployment rate of 6% in 2013: Implications 15</p><p>5. Summary and Conclusions 17</p><p>6. Appendix 1: Compilation of some news items 18</p></li><li><p>7/31/2019 A First Look at Australian Unemployment Statistics: A New Methodology for Analyzing Unemployment Data</p><p> 3/21</p><p>Page 3 of21</p><p> 1. Abstract</p><p>There has been a significant improvement in the Australian economy, especially</p><p>the unemployment situation (which is the focus here), between 2011 and 2012, as</p><p>revealed by an analysis of the unemployment data, using a new methodology, as</p><p>described here.</p><p>Instead of the exclusive focus on the unemployment rate y/x, the focus here is on</p><p>the nature of the underlying x-y relation where x is the labor force and y the</p><p>number of unemployed.</p><p>As with the earlier analysis for the USA (for the period 1941-2012), a simple linearlaw y = hx + c relates the two variables of interest. As the labor force x increases</p><p>(or decreases), the unemployment levels y will also increase or decrease, following</p><p>this simple linear law. However, the unemployment rate y/x = h + (c/x) can either</p><p>increase or decrease depending on the numerical values of the constants h and c</p><p>(which can be either positive or negative).</p><p>The significant improvement in the Australian unemployment situation, between</p><p>2011 and 2012, can be appreciated by the fact that h &gt; 1 in 2011 but has now</p><p>decreased to h 0.20 in 2012. The number of unemployed y is, therefore, growing</p><p>at a lower rate in 2012, compared to 2011, with increase in the labor force.</p><p>NOTE: More than 100 hits had been recorded after posting, in the first hour</p><p>or so, prompting this clarification. I found an unfortunate numerical error in</p><p>the PREVIOUS version, in Table 1. I had converted unemployed to millions</p><p>and added this to the employed before converting it also to millions. This</p><p>affects the labor force values. All graphs and Table 1 have been updated in</p><p>this revision. The slope calculations were obviously affected by the numerical</p><p>error and have also been fixed. Sorry, folks. I have been much too busy with</p><p>several of these articles and, sometimes, mistakes are made. This is the first</p><p>one that I discovered after posting. It was bugging me why I got 5.4% for</p><p>unemployment rate for June 2012 instead of 5.2% (news media, or 5.1% as</p><p>quoted on the ABS website).</p></li><li><p>7/31/2019 A First Look at Australian Unemployment Statistics: A New Methodology for Analyzing Unemployment Data</p><p> 4/21</p><p>Page 4 of21</p><p> 2. Brief Introduction to Analysis</p><p>Australias unemployment rate rose to 5.2% according to the most recent monthly</p><p>data for June 2012, seehttp://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0/.</p><p>Some economists have already warned that the unemployment rate could exceed</p><p>6% in 2013 (see links to news items complied at the end of this article). Retiring</p><p>baby boomers and youth who choose to stay in school longer are masking the more</p><p>grim unemployment outlook.</p><p>The unemployment rate is the ratio y/x, converted to a percentage, where the</p><p>numerator y is the number of unemployed workers and the denominator x is the</p><p>total labor force, the sum of the employed plus the unemployed. The data is</p><p>obtained from various surveys, conducted monthly, and then extrapolated to the</p><p>larger population, see website of Australian Bureau of Statistics, link given above</p><p>for the June news release. The monthly data, from January 2011 to June 2012 has</p><p>been compiled in Table 1 and will be analyzed here briefly.</p><p>Notice that the labor force x has increased between Jan 2011 and June 2012, see</p><p>Figure 1. The unemployment rate, y/x, on the other hand has been going up and</p><p>down and revealed a pronounced peak, as seen in Figure 2. An expanded scale isused in both figures to reveal these trends. As discussed in two recent articles (see</p><p>links below) which discuss the high US unemployment rate during the Obama</p><p>years and how it compares with other periods of high US unemployment rates</p><p>(from 1941-2011), the focus has always been on the ratio y/x. The relation between</p><p>the labor force x and the number of unemployed y has generally not been</p><p>investigated and tells a very different story.</p><p>1. http://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-</p><p>happened-in-the-Obama-years Published July 10, 2012.2. http://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-</p><p>Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levels</p><p>Published July 12, 2012.</p>http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0/http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0/http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0/http://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-happened-in-the-Obama-yearshttp://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-happened-in-the-Obama-yearshttp://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-happened-in-the-Obama-yearshttp://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-happened-in-the-Obama-yearshttp://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-happened-in-the-Obama-yearshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-happened-in-the-Obama-yearshttp://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-happened-in-the-Obama-yearshttp://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0/</li><li><p>7/31/2019 A First Look at Australian Unemployment Statistics: A New Methodology for Analyzing Unemployment Data</p><p> 5/21</p><p>Page 5 of21</p><p>12.020</p><p>12.040</p><p>12.060</p><p>12.080</p><p>12.100</p><p>12.120</p><p>12.140</p><p>12.160</p><p>0 3 6 9 12 15 18 21</p><p>580</p><p>590</p><p>600</p><p>610</p><p>620</p><p>630</p><p>640</p><p>650</p><p>0 3 6 9 12 15 18 21</p><p>Time t [months]</p><p>Laborforce,x[millio</p><p>ns]</p><p>Time t [months]</p><p>Unemployed,y[in000s]</p><p>Oct 11</p><p>Oct 11</p></li><li><p>7/31/2019 A First Look at Australian Unemployment Statistics: A New Methodology for Analyzing Unemployment Data</p><p> 6/21</p><p>Page 6 of21</p><p>Figure 1 (Top): Australian labor force x plotted as a function time t expressed in</p><p>months, with Jan 2011 being taken as month number 1. More than one value can</p><p>be obtained for any given month because of revisions being made for prior month.</p><p>Some of these are included here in this plot (vertical line at same month number).</p><p>Figure 2 (Middle): Australian unemployment level y, plotted as a function time t</p><p>expressed in months. The Oct 2011 peak in the unemployed y coincides with a</p><p>local maximum in the labor force x.</p><p>Figure 3 (Bottom): Australian unemployment rate plotted as a function time t</p><p>expressed in months. The maximum in the unemployed y in Oct 11 coincides with</p><p>the maximum in the unemployment rate, also observed in October 2011.</p><p>4.7</p><p>4.8</p><p>4.9</p><p>5.0</p><p>5.1</p><p>5.2</p><p>5.3</p><p>5.4</p><p>0 3 6 9 12 15 18 21</p><p>Time t [months]</p><p>Unemploy</p><p>mentrate,y/x[perce</p><p>nt]</p><p>Oct 11</p></li><li><p>7/31/2019 A First Look at Australian Unemployment Statistics: A New Methodology for Analyzing Unemployment Data</p><p> 7/21</p><p>Page 7 of21</p><p>For example, for the USA, the study of all of the historical data reveals a simple</p><p>linear relation, y = hx + c = h(x x0), between the labor force x and the</p><p>unemployed y. The numerical values of the constants h and c in this law can be</p><p>fixed by considering the data for different periods. Interestingly, this also fixes the</p><p>cut-off labor force, x0 = - c/h, below which the number of unemployed y = 0.</p><p>For the USA, we find that there were three periods when the unemployment level y</p><p>was its highest for that era: in 1941, in 1982 and 1983, and now in 2009-2011.</p><p>These highest ever recorded unemployment levels can be shown to fall on a</p><p>PERFECT straight line, with the equation y = 0.0946x + 0.2731, thus revealing a</p><p>unique relation between the labor force x and the unemployed y, see Figure 4 in</p><p>Ref. [2]http://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-</p><p>Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levels. The</p><p>slope h = 0.0946 is therefore akin to a universal constant of nature, or at the very</p><p>least a unique property of the US economy.</p><p>All of the US unemployment data can thus be explained by merely postulating a</p><p>change in values of the constant c. A series of parallels with the general equation y</p><p>= 0.0946x + c, with various values of c sweep through the data. The unemployment</p><p>level (y) falls when c decreases and rises when c increases. When the constant c</p><p>decreases, the cut-off labor force x0 = - c/h increases and more will be employed.</p><p>The constant c is just like the work function W introduced by Einstein in 1905 toexplain certain puzzling aspects of the photoelectric effect (which engaged the</p><p>attention of physicists of the late 19th</p><p>and early 20th</p><p>centuries) and x0 is just like the</p><p>cut-off frequency f0. The photoelectric law can be written as K = EW = hfW =</p><p>h(ff0). This is exactly analogous to the linear y = hx + c = h(xx0). The reader is</p><p>referred to the article cited above for more details.</p><p>Are these findings, unique to the United States, or will we see exactly similar</p><p>trends in other technologically advanced economies, such as Australia, UK, Japan,</p><p>Germany, and other European economies? However, the observations just maderegarding the USA suggest that we must look for unique points in the historical</p><p>unemployment datafor the highest unemployment levels, or may be even the</p><p>lowest unemployment levels. The constants h and c have unique values for a given</p><p>economic system and this property is only revealed under these special conditions.</p>http://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levels</li><li><p>7/31/2019 A First Look at Australian Unemployment Statistics: A New Methodology for Analyzing Unemployment Data</p><p> 8/21</p><p>Page 8 of21</p><p>Table 1: Monthly Australian unemployment data</p><p>Month Month</p><p>No.</p><p>Labor force,</p><p>x (millions)</p><p>Unemployed, y</p><p>(millions)</p><p>Unemployment</p><p>rate %, 100(y/x)</p><p>Jan-11 1 12.0325 0.6079 5.052Feb-11 2 12.04 0.6001 4.984</p><p>Feb-11 2 12.0478 0.6041 5.014</p><p>Mar-11 3 12.0432 0.5947 4.938</p><p>Mar-11 3 12.0329 0.5917 4.917</p><p>Apr-11 4 12.0318 0.5857 4.868</p><p>May-11 5 12.0332 0.5895 4.899</p><p>Jun-11 6 12.0366 0.5891 4.894</p><p>Jul-11 7 12.0519 0.6123 5.081</p><p>Aug-11 8 12.0602 0.6203 5.143</p><p>Sep-11 9 12.0808 0.6333 5.242Oct-11 10 12.0928 0.6395 5.288</p><p>Nov-11 11 12.0763 0.634 5.250</p><p>Dec-11 12 12.0743 0.6342 5.252</p><p>Jan-12 13 12.0704 0.6268 5.193</p><p>Feb-12 14 12.0696 0.625 5.178</p><p>Mar-12 15 12.0912 0.6176 5.108</p><p>Apr-12 16 12.0984 0.6142 5.077</p><p>Apr-12 16 12.1188 0.618 5.100</p><p>May-12 17 12.1287 0.6217 5.126May-12 17 12.1328 0.6158 5.075</p><p>Jun-12 18 12.1404 0.6228 5.130</p><p>More than one (x, y) values are obtained for a month due to revisions being</p><p>made to the tables. Some of these are included here.</p><p>Are these findings, unique to the United States, or will we see exactly similar</p><p>trends in other technologically advanced economies, such as Australia, UK, Japan,</p><p>Germany, and other European economies? However, the observations just made</p><p>regarding the USA suggest that we must look for unique points in the historicalunemployment datafor the highest unemployment levels, or may be even the</p><p>lowest unemployment levels. The constants h and c have unique values for a given</p><p>economic system and this property is only revealed under these special conditions.</p></li><li><p>7/31/2019 A First Look at Australian Unemployment Statistics: A New Methodology for Analyzing Unemployment Data</p><p> 9/21</p><p>Page 9 of21</p><p> 3. Unemployment Diagrams</p><p>Nonetheless, a preliminary analysis of the monthly data starting January 2011 is</p><p>presented here to show that new insights can be gained by careful study of the x-yunemployment diagrams, instead of only focusing on the unemployment rate, y/x.</p><p>Figure 4: The x-y unemployment diagram for Australia based on the monthly data,</p><p>for the period January 2011 to June 2012.</p><p>In the unemployment diagram of Figure 4, the monthly data separates itself clearlyinto two periods with the most of the data for 2011 falling along the line with the</p><p>steeper slope (h = 1.044). The procedure used to determine these slopes will be</p><p>discussed shortly. The lowest unemployment level (0.5857 million) was in April</p><p>2011 and the highest (0.6395 million) in Oct 2011. The unemployment levels were</p><p>dropping between Dec 2011 and March 2012 and then started climbing...</p></li></ul>

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