Friday, October 11, 2013

Surprise! Low employment associated with bad things

I just read an extended 1,000+ word free advertisement rant column by Governor Eddie Calvo published in the Pacific Daily News today. Throughout the column, Governor Calvo talked about everything but the obvious, that most of the problems he cited are primarily caused by low employment.[1]

Just out of curiosity, I have looked at the historical employment ratios from the Bureau of Labor Statistics. An employment ratio is employment as a percent of the non-institutional civilian population. It is used by many economists as an alternative measure to the unemployment rate, since an unemployment rate can decrease from declining labor participation. The employment ratio rises and falls with the level of employment. It turns out that only three quarters since data has started being collected in 1975 have been lower than the highest employment ratio under Governor Calvo (May 1976, March 1982, September 2007).[2] Correlation does not necessarily imply causation, but this fact can certainly make one think.

I think that Governor Calvo's worry that "[O]ur society slowly is slipping from some very core values we've held for centuries" is, frankly, unfounded. Governor Calvo asserts, without evidence, that "a senior citizen going hungry on any day was just unheard of only a decade ago."[1] While, I believe that Guam's economy is deeply depressed and it is harder for those who do not have good employment to support themselves, hunger has been a perennial problem. In this case, we have a good explanation for why more seniors are probably hungry than a decade ago: the economy was doing better back then.

From March 1995 to March 2002, the average employment ratio of quarters where there is data is 60.7, but the average from March 2011 to the present is only 52.6. The lowest employment ratio during the former period was 55.3 in March 2002, during the depths of Guam's post-9/11 recession and the highest employment ratio in the current administration has been 54.3, in March 2011, just after Governor Calvo took office. Since then, many of the unemployed have stopped looking for work, altogether.[2]

Governor Calvo further cites family problems, violence and drugs. I first came to Guam in 1990 and I recall that these problems are not new, although such issues tend to be exacerbated by bad economic times, like our island faces today.

It is hard to know what to take from Calvo's column. It is meandering and makes points that really undermines the claimed accomplishments of the Governor, if one can read between the lines.

[1] Eddie Baza Calvo. We reap what was sown. Pacific Daily News. Hagatna, October 11, 2013.
[2] Guam. Bureau of Labor Statistics. Department of Labor. THE UNEMPLOYMENT SITUATION ON GUAM SUMMARY HISTORY: 1974-2013. Hagatna, 2013.

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