Dodgy statistics help deliver decade-low unemployment rate

Buckets of free money, no migrant workers and dodgy statistics helped Australia record its lowest unemployment rate in 10 years last month.

Two things have delivered Australia’s lowest unemployment rate in ten years – interestingly and tellingly, since the middle of 2011.

The first is the biggest bucket loads of free money that have ever being shovelled into peoples bank accounts.

First are those utterly unprecedented 2 per cent home loan interest rates: no wonder people have money to spend; what used to be the single biggest household bill, paying the mortgage, has been waived away.

Second are those 200,000-plus migrants every year that ain’t arriving; and not only them not arriving, but the almost as many ‘special visa’ people that were so crucial to plugging skills gaps.

You cut supply of workers, you boost demand for workers, and you get what the numbers suggested – a big jump in employment and a fall in the jobless.

Now, I don’t have a sense that anyone is thinking much about therefore what portends if we reverse all this – in the aimed-for post-virus future; if we go back to a 200,000-plus permanent arrivals plus as many special visa people.

Hmm, I could say a word or 10,000 on that – starting with Melbourne and Sydney becoming even more ‘unliveable’ than they are now. Another day.

But in relation to jobs and wages; clearly and simply, the jobless rate would go up and those first blossoms we are now seeing of rising wages would be crushed again. Now there’s a ‘third’ factor that helped deliver an ‘official’ jobless rate of less than 5 per cent: dodgy statistics.

A better guide to the real jobless rate comes from Roy Morgan Research.

The ABS says the June quarter rate was 4.9 per cent; Morgan says it was, statistically amusing, exactly the other way around at 9.4 per cent.

There’s just the slightest difference between those numbers. So, read my lips, the Morgan numbers are a better guide to the real story.

The ABS numbers are concocted by people living in a bubble, inside a computer, in Canberra and international protocols still locked in the 20th century.

The ABS defines you as employed if your work one hour - let me stress that, one single hour – in a week. You are also not jobless if you ain’t actively looking for work.

Why do they, so ludicrously, do that? At best, it’s a relic of 20th century work patterns?

Hmm, I could say or word or 10,000 on that. Another day.

The significance is that the ‘official’ ABS rate has to go below 4.5 per cent for wages to start to rise significantly and sustainably.

Then there’s the question of timing.

These ABS numbers tell us the state of play as at the first two weeks of June.

They therefore capture Victoria – one-quarter of the national economy – in the middle-to-end of its (last) lockdown. They give us NSW before its lockdown.

Somewhat surprisingly, Victoria came in with the lowest rate of just 4.4 per cent.

Heading into its lockdown, NSW was 5.1 per cent.

The Morgan numbers are for all of June; they show NSW right down (in Morgan terms and pre-lockdown) at 7.3 per cent and Victoria at 8.3 per cent – both below the (Morgan) national average.

Now, I noted these were the lowest ABS numbers since 2011.

That was when we were in the middle of all the post-GFC fiscal and monetary stimulus.

Although, in retrospect, that earlier stimulus looks almost anodyne.

The budget deficit only got to $54bn, now it’s just been around $150bn.

The RBA’s rate only went down to 4.25 per cent, now it’s zero.

China was pumping then and now; but then the iron ore price didn’t get to $US200, now it’s gone above $US220 – and we’re getting it on much more exports.

Again, hmm – there’s 10,000 or more words to be written on all that.