The First, Forgotten Conspiracy Theory About the Unemployment Rate

By Josh Zumbrun

Every few years, claims flare up that there’s a suppressed measure of “real unemployment,” far higher than whatever the Labor Department’s latest report says.

Thus it may come as a surprise that the first conspiracy theory about the unemployment rate, which emerged in the 1960s, was that the Labor Department was seeking to artificially inflate unemployment—to advance communist objectives, naturally.

Ironically, the claims largely revolved around efforts to measure “discouraged” people who weren’t actively seeking work. Today, the exclusion of the discouraged is often presented as Exhibit A that the numbers are manipulated. The original theory held that their inclusion was the method of manipulation.

First, some historical context on unemployment in the 1950s and 1960s when the conspiracy emerged.

The unemployment rate was relatively new. Then, as now, the survey was conducted by the Census Bureau and the data tabulated and analyzed by the Bureau of Labor Statistics, a largely independent Labor Department agency. Since 1916, the BLS had produced measures of how many people worked in factories, for example, but during the Great Depression two things became obvious: 1) many people were seeking work and couldn’t find it and 2) nobody had a clue how many.

Everyone recognized it would be useless to simply measure unemployment by taking the total population, and subtracting the number of employed people. Many women, many elderly, many students, and at least some injured or ill men weren’t working, nor were they trying to. What needed measurement was the vast pool of job seekers. So in the 1930s, the Census Bureau developed the still-novel technique of random sampling to survey how many people were without work and seeking it.

By the 1950s, the BLS’s monthly report was gaining prominence. As happenstance would have it, the jobless rate was low or falling during the 1954, 1956 and 1958 elections. The figures were published around the 10th of each month, but when President Dwight Eisenhower learned each year that favorable numbers for October were set to come out, he announced the figures in advance of the election, and ahead of their typical publication schedule.

But 1960 was different. Unemployment was rising that year, and the Labor Department announced no figures would be available before the election. The politics were obvious. 

Read the rest here.