The Highest US Unemployment Rates: Obama Years Compared With Historic Highs in Unemployment Levels

The Highest US Unemployment Rates
The Obama years and Historical Data (1941-2011)
From want a job to dont want a store! A brief look at the US economy from 1941-2012.
Courtesy: Great Depression Pictures http://techbuddha.files.wordpress.com/2009/09/nobody_knows_you.jpg Protests on June 27, 2012 against the opening of a new Walmart store in Los Angeles. No Store = No Jobs = Poverty ??? What happened in the USA? http://i.huffpost.com/gen/668692/thumbs/s-LA-WALMART-PROTESTlarge300.jpg
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Table of Contents
No. 1. 2. 3. 4. 5. 6. 7. 8. 9. Topic Summary List of Figures and Brief Captions Introduction The BIG Picture Brief Discussion Summary and Conclusions Appendix I: Reinterpretation of the data using the Work Function and review of Historical data for Presidential terms Appendix II: Effect of time on unemployment stats Appendix III: Legendres linear regression and Millikans method of determining the Planck constant h Page No. 3 4 6 8 17 23 25 44 47
Everyone is forced to act helplessly according to the qualities they have acquired from the modes of material nature; therefore no one can refrain from doing something, not even for a moment. From the Bhagavad Gita, chapter 3, verse 5. The universal law, y = hx + c, relating the labor force x and the number of unemployed y, also implies the existence of a critical labor force x = x0 below which the number of unemployed y will go to zero, y = h (x - x0), where the critical labor force x0 = - c/h can be deduced from the empirical observations on the economy. Our observations suggest a single universal h = 0.0946 for the US economy, based on three very unique values (x, y) pairs observed over the past 70+ years. It is also possible to reduce unemployment level to zero (with x < x 0). http://books.google.com/books?id=dSA3hsIq5dsC&pg=PA151&lpg=PA151&dq= na+hi+kascit+ksanam+api&source=bl&ots=nY3FJfKF6m&sig=OJUaurIscnjtxkbp 3OAttE7HhsY&hl=en&sa=X&ei=mT0AUIyuGqfk6QHM0bSFBw&ved=0CEcQ6 AEwAzgK#v=onepage&q=na%20hi%20kascit%20ksanam%20api&f=false http://www.thebhagavadgita.com/bg_3.html http://www.ahwan.org/article65.htm http://www.bhagavad-gita.us/categories/The-Gita%3A-Chapter-3/
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1. Summary
A quick review of the significance of the three periods with the highest recorded unemployment levels in the last 70+ years, from 1941-2011, is presented here to gain additional insights into the current jobs crisis facing the US economy in the Obama years. This is best understood by reviewing the data compiled below.
The highest US unemployment levels on record

Year Labor force, x Unemployed, y (millions) (millions) 55.91 5.56 1941 110.204 10.678 1982 153.889 14.825 2010 Data Source: http://www.bls.gov/cps/cpsa2011.pdf
A careful analysis of the above data provides further evidence for the universal law y = hx + c relating labor force x and unemployment level y. It also suggests a sound empirical approach to determining the numerical values of h and c by considering the highly unique data points for the three periods with the highest unemployment levels. The universal value of h = 0.0946 is thus deduced as a fundamental characteristic of the US economy, a unique property akin to other fundamental constants observed in the hard sciences, like physics. The intercept c in this law is exactly analogous to Einsteins work function in the photoelectric law. Improvements or deteriorations in the economy can be interpreted as evidence for changes in the intercept c, which can be viewed as the work function for the economy. P. S. This document will be further revised and updated to improve any faults in the current presentation and is being posted here, in preliminary form, because of the obvious and urgent attention this problem needs.
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2. List of Figures and brief captions

Figure 1: The US unemployment data for the years 1941-1960. Figure 2: The US unemployment data for the years 1941-1995. Figure 3: The unemployment data for the period 1941-2011. Figure 4: The highest unemployment levels on record in the data compiled by the Bureau of Labor Statistics (see http://www.bls.gov/cps/cpsaat01.pdf) for 1941 and the years 1982 and 1983 and the Obama years (2009-2011). Figure 5: The unemployment rate, defined as the ratio y/x (converted to a percent) for the years 1941-2011 plotted as a function of the labor force, x. Figure 6: The unemployment rate, y/x converted to a percent, for 1941-2011, is plotted here as a function of the unemployment level y. Figure 7: Series of parallels with the general equation y = hx + c = 0.0946x + c superimposed on to the US unemployment data in Figure 3. Figure 8: The unemployment diagram for the period 1990-2008, which covers the two Bush presidencies and the Clinton presidency. Figure 9: The unemployment data for the period 1990-2008. Figure 10: Reinterpretation of the unemployment data for the period 1990-2011 using the idea of the economic work function and a single universal constant h = 0.0946. Figure 11: Reinterpretation of the unemployment data for the period 1970-1983 which covers the Nixon, Ford, Carter, and Reagan years, using the idea of the economic work function and a single universal constant h = 0.0946. Figure 12: The unemployment diagram for the Kennedy-Johnson era and the first two years of the Nixon presidency (1960-1970). Figure 13a: The complex zigzag path taken by the economy, in the unemployment diagram for the period 1941-1952 which includes the terms of Presidents FDR (last term) and Truman, beginning 1945.
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Figure 13b: The unemployment diagram for the period 1941-1952 which includes the terms of Presidents FDR (last term) and Truman, beginning 1945. Figure 14: The unemployment diagram for the period 1953-1960 which includes President Eisenhowers two terms. Figure 15: The Kennedy-Johnson era, which followed Eisenhowers terms, has already been considered (in Figure 12). Figure 16: The unemployment diagram for 1975-1983, covering the Presidential terms of Ford (1975 only), Carter, and Reagans first three years. Figure 17: The unemployment diagram for the period 1980-1988 which covers President Reagans two terms. Figure 18: The unemployment diagram for the period 1988-2000 which covers the terms of Bush I (1988-1992), Clintons two terms and the first year of Bush II presidency. Figure 19a: The reduction in the economic work function between 1961 and 1966 (the Kennedy-Johnson years, see also Figure 12) is illustrated here. Figure 19b: The unemployment diagram for the years 1992-2002 which covers the Clinton years. Figure 20: The unemployment data for 1941-952 along with the data for 1958 (Eisenhower era) is plotted here. Figure 21: The labor force has increased steadily over the last 70+ years due to the overall increase in the population. Figure 22: The unemployed y, has been going up and down over the years with changes in economic conditions. Figure 23: The unemployment rate, y/x, expressed as a percent, for 1941-2011. Figure 24: The unemployment rate y/x, for the years 1941-2011 (expressed here as a fraction), versus labor force x. This is the same as the graph in Figure 5, along with three members of the family of hyperbolas y/x = h + (c/x) = 0.0946 + (c/x) superimposed on to the data (see Appendix III).
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3. Introduction
The unemployment rate is defined as the ratio y/x where the numerator y is the number of unemployed workers and the denominator x is the total labor force. Although large volumes of tables of x and y, which include the monthly, quarterly, and annual values of these two variables, are available, attention has always been focused on the behavior of the ratio y/x instead of an analysis of the nature of the underlying x-y relationship. In a companion article, which discusses the US unemployment data during the Obama years, see http://www.scribd.com/doc/99647215/The-US-UnemploymentRate-What-happened-in-the-Obama-years, I have shown that (based on a careful study of the unemployment data compiled by the US Department of Labor, Bureau of Labor Statistics BLS, see http://www.bls.gov/cps/cpsa2011.pdf ) 1. The labor force x, which was growing slowly during the 2008 Presidential campaign, from Jan 2008 to Oct 2008, suddenly began shrinking and the number of unemployed y suddenly increasing rapidly in Nov 2008 and Dec 2008, even before President Obama was sworn in office. 2. During Obamas first full year in office, the labor force continued to shrink and the number of unemployed jumped by 5.341 million (from 8.924 million in 2008 to 14.265 in 2009). The US economy had literally made a U-turn, as shown dramatically on the x-y graph (number unemployed y versus labor force x) and was heading in the WRONG direction. 3. The number of unemployed reached a peak value of 15.421 million in October 2009 and has since been coming down slowly, with a simultaneous increase in the labor force. The number unemployed was 12.75 million in June 2012. While this recent trend (from second quarter 2009 to second quarter 2012) is definitely favorable, the absolute number of unemployed is still too high compared to the 8 million levels during 2005-2008. 4. A simple linear law y = hx + c seems to relate the general trends revealed in the x-y graphs of labor force versus the number of unemployed. Of great fundamental interest is the fact that the US economy seems to be operating on essentially parallel tracks, moving up and down parallel lines when the
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number of unemployed was going up and then coming down, with increase and decrease in the labor force.
Table 1: The highest US unemployment levels on record Extracted from Bureau of Labor Statistics
Year Labor force, x Unemployed, y (millions) (millions) 55.91 5.56 1941 56.41 2.66 1942 55.54 1.07 1943 110.204 10.678 1982 111.55 10.717 1983 154.142 14.265 2009 153.889 14.825 2010 153.616 13.747 2011 Data Source: http://www.bls.gov/cps/cpsa2011.pdf
It should be remembered that the labor force decreased for a while, during the Obama years, since discouraged workers (who had stopped looking for work) were no longer counted as a part of the labor force x. They, however, still contribute to the high unemployment rate, y/x, since they move from unemployed column in the BLS tables to the not in the labor force column. Instead of contributing to a higher numerator y (when they are looking for work), they were contributing to the lower denominator x (when not looking for work and so not in the labor force). A review of the historical data for US unemployment (1941-2011) is presented in this article since it reveals some unique insights into the unprecedented and historically record levels of unemployment that we are currently experiencing since President Obama took office. This is best illustrated by considering the data compiled in Table 1, which includes the three highest unemployment levels on record since 1941. The three years, 1941, 1983, and 2010 represent a significant jump in the number of unemployed for that era and the size of the labor force, see also the graphs presented in Figures 1 to 3. Each of these years, with the then highest recorded unemployment levels, represents a unique era in US history.
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Imperial Japan attacked Pearl Harbor on December 7, 1941, a date which will forever live in infamy, as proclaimed by then President FDR. In 1983, Reagan was facing re-election, having been elected President following the disastrous Iranian hostage crisis of 1979-1980, which consumed the final year of the doomed Carter Presidency. And, 2010, the era that we are now witnessing, follows the near total economic collapse and the financial crisis of 2008 which propelled Obama into office. Yet, there is a remarkable relationship between the unemployment levels for these three years as will become clear from a review of Figures 1 to 3.
4. The Big Picture

The high unemployment level for 1941 is quite clearly an outlier on the x-y graph in Figure 1. For the labor force level x in 1941, the number of unemployed y was very high, compared to all the subsequent years. The labor force first increased and then decreased, between 1941 and 1943, but the unemployment levels dropped for three consequent years to reach the lowest level of 0.67 million in 1944. After this, both the labor force x and the number of unemployed y were rising until they reached the highest level (for this era) in 1958. The relationship between labor force x and the number unemployed y appears to be a simple linear relation of the type y = hx + c = h(x x0) where x0 = -c/h may be thought of as the cut-off labor force level at which the number of unemployed will go to zero. The graph prepared in Figure 1 begs the conclusion that if the labor force is less than some critical level (x < x0), there will be ZERO unemployed. One could extrapolate, after imposing a straight line on to this graph, to deduce the numerical value for this cut-off labor force x = x0. This leads us to the next question. How do we fix the numerical values of the constants h and c in y = hx + c? One could, using linear regression analysis to deduce the numerical values. Or, to keep things simple, one could just take the line joining (x, y) pairs for 1944 and 1958, the two extreme points in the data set, as a good description of the general trend for this era. Or, one can envision a number of nearly parallel lines, defined by the slope of the line joining the (x, y) pairs for 1942 and 1958, sweeping through this data set. The (x, y) pairs for 1942, 1949, and
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1958 seem to fall on single straight line. Many cut-off values are therefore suggested, depending on the (x, y) pair that is chosen to fix the numerical value of h. However, all these arguments overlook the significance of this outlier, the highest unemployment level observed in 1941.
6.0
1941
Unemployed, y [millions]
5.0
1958
4.0
1949
3.0
1942
2.0
1.0
1944
0.0 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0
Labor force, x [millions]

Figure 1: The US unemployment data for the years 1941-1960. Is this high unemployment level to be simply ignored as a mathematical nuisance, since it is not amenable to any kind of elegant statistical analysis? So, before we hasten to determine the numerical values of h and c, let us consider the data for the next time period, 1961-1995 and merge it with the 1941-1960 dataset. The overall trend in Figure 2 is exactly similar to the trend in Figure 1. As the labor force x increases, the number of unemployed y also seems to increase. The (x, y) pairs for the years 1982 and 1983 now appear as outliers in this graph. We can connect the (x, y) pairs for 1941 and 1982 or 1941 and 1983 with a straight
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line. The slope h = 0.0927 for the line joining the 1941 and 1983 data and h = 0.0943 for the line joining the 1941 and 1982 data. The average of these two slopes is h = 0.09345. This is illustrated by the blue line joining these highest unemployment levels. This straight line, to which we are naturally led by the unemployment data, clearly seems to have some fundamental significance. Indeed, it is possible now to again imagine a series of parallel lines joining the various (x, y) pairs on this graph all having the slope h = 0.0935. One need not do any actual number crunching to accept that the argument that the numerical value of the slopes h determined by considering many (x, y) pairs in the data set will agree with the slope h = 0.0935 deduced from the highest unemployment levels.
12
10
0 0 20 40 60 80 100 120 140

Figure 2: The US unemployment data for the years 1941-1995. In other words, it appears that we have discovered a universal law, and also a method of fixing the numerical value of the constants h and c in this universal law, by considering all of the US unemployment data. Whenever the labor force goes
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up by a fixed amount x, the number unemployed seems to increase by the same fixed amount y= hx. Let us now consider the next time period as well which lends additional support to these findings.
16 14 12 10 8 6 4 2 0 0 25 50 75 100 125 150 175 200

Figure 3: The unemployment data for the period 1941-2011 reveals three outliers. These are periods of very high unemployment: 1941, 1982 and 1983 and the most recent period 2009-2011. An interesting pattern is again revealed by this simple graphical representation of the data. It appears that the (x, y) pairs corresponding to the three highest levels of unemployment lie on a single straight line. The slope h = 0.0946 for the line joining 1941 to 2010 is virtually identical to the slope h = 0.0943 for the line joining 1941 and 1982. Many other slopes between these three data points with the highest unemployment levels can be determined to find some kind of an average slope (at least 11 different slopes were determined). However, the virtual identity of the slopes of the lines joining 1941 to 1982 and 1941 to 2010 is the slope that
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recommends itself as the fundamental characteristic of the US economy for the last 70+ years. We will take h = 0.0946, the slope of the line joining the two extreme points 1941 and 2010 as the defining slope. This is illustrated in Figure 4.
20.0 18.0
16.0
14.0
12.0 10.0 8.0
6.0
4.0 2.0 0.0 0 20 40 60 80 100 120 140 160 180 200
1941, 1982: h = y/x = 5.118/54.294 = 0.0943 1982, 2010: h = y/x = 4.147/43.685 = 0.0949 1941, 2010: h = y/x = 9.265/97.979 = 0.0946

Figure 4: The highest unemployment levels on record in the data compiled by the Bureau of Labor Statistics (see http://www.bls.gov/cps/cpsaat01.pdf) for 1941 and the years 1982 and 1983 and the Obama years (2009-2011) is plotted here. The three highest unemployed levels data fall on a PERFECT straight line with the equation y = hx + c = 0.0946x + 0.2731. This specific equation was determined by connecting the 1941 and 2010 data points. The above straight line is a precise computer generated straight line based on the mathematical equation here. From the average slope of h = 0.0935 deduced from 1941, 1982, and 1983, we arrive at h = 0.0946 for the line joining 1941, 1982, and 2010.
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Clearly, what appears to be a mind bogglingly high level of the unemployment, more than 15 million at its peak in October 2009 (with an average household size of just 3 to 4, this means between 45 to 60 million of the current population was affected), is simply a reflection of the expansion of the labor force. When things turn sour in the economy, more will be unemployed in an economy with a higher labor force than in an economy with a lower labor force. This is the simple and dispassionate explanation for what seems to be unacceptably high unemployment levels (and, likewise, budget deficits and national debt levels) that we are witnessing in the Obama years. The law relating the highest unemployment levels, and by extension, ALL unemployment data is the simple law y = hx + c, where h and c are determined by considering at least three such highest unemployment levels! This is really what the graph in Figure 4 is telling us. The US economy in 1941 (that was before I was born and many who are reading article this were born), the US economy in 1982 and 1983 (that I have lived through, the Reagan years that I can vividly recall) and the US economy in 2009-2011, that we are all living through now, the Obama years, have something in common that has escaped the attention of economists, academic scholars, and our business and political leaders. The significance of the apparently often puzzling and the erratic variations in the unemployment rates, see Figures 5 and 6, can now be understood, as follows. Let y = hx, where h is a constant. This is the simplest type of x-y relationship with c = 0. The x-y graph passes through the origin (0, 0). The number of unemployed y goes to zero when the labor force x goes to zero. There is no cut-off! This means the unemployment rate y/x = h = the unknown constant. If the labor force x increases or decreases, the number of unemployed y will also increase or decrease, correspondingly. Hence, the changes in the unemployment rate y/x are entirely due to the changes in this unknown constant h. Now, compare this with the slightly modified relation y = hx + c, a universal law, which has been deduced here from the empirical observations on the US economy. Now, the unemployment rate y/x = h + (c/x) = h {1 + [c /(y c)}. Because of the nonzero intercept c, the unemployment rate will be affected by both the changes in
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the unknown constant h and also by the size of the labor force x. Depending on the numerical values of h and c, which may be positive or negative, the unemployment rate can go up or down even if the slope h is PERFECTLY constant and does not change with the size of the labor force x.
12.0
Unemployment rate, 100 (y/x)
10.0
1941
1982-83
2009-11
8.0
6.0
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25
50
75
100
125
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175

Figure 5: The unemployment rate, defined as the ratio y/x (converted to a percent) for the years 1941-2011 plotted as a function of the labor force, x. The three periods with the highest unemployment rates observed (in 1941, 1982 and 1983, and 2009-2011) again separate themselves in this graphical representation of the data. Why did the ratio y/x = h go up and down with increasing labor force x? Or, why is it nearly constant at the highest rates although labor force had increased? If we take y = 0.0946x +0.2731, as the law relating the highest unemployment rates, then the unemployment rate y/x = 0.0946 + (0.2731/x) 0.0946 (about 0.1 or 10%) since the intercept c = 0.2731 is quite small compared to the labor force levels which varied from about 55 million to 155 million.
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It is interesting, in particular, to see the data separating itself into three periods in Figure 6: the 1941 era with unemployment rates below the peak value, the 1982-83 era, again with unemployment rates below the peak but with higher unemployed, and the current era. This is still evolving, with very few data points.
12.0
Unemployment rate, 100 (y/x)
1941
10.0
1982-83
2009-11
8.0
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2008
4.0
2000
2.0
0.0 0 2 4 6 8 10 12 14 16
Figure 6: The unemployment rate, y/x converted to a percent, for 1941-2011, is plotted here as a function of the unemployment level y. The three periods with the highest unemployment rates observed (in 1941, 1982 and 1983, and 2009-2011) again separate themselves in this graphical representation. We also see the unfortunate reversal from 2000 to 2012 (highlighted by the red dashed line). Two important observations can be made from the plot in Figure 6. First, the absolute unemployment level y was very nearly the same in 1941 and in 2000. But, the unemployment rate was at its peak in 1941 and very low in 2000. This is entirely due to the differences in the labor force x. This emphasizes the importance of systematically accounting for the size of the labor force in all unemployment
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studies. Second, this also suggests the very real possibility that we might witness a similar drop in the unemployment rates in the years ahead, with increasing labor force x but lower unemployment levels y than the current high levels. The x-y graph, on the other hand, see Figure 7 for example, accounts for the complex interaction between the effects of the labor force size x, the unemployment level y, and the unemployment rate y/x via the simple linear law y = hx + c.
20
2011
15
B
C
10
D
5
2008 Start of Obama years
x0 = 82.39
-5
-10 0 25 50 75 100 125 150 175 200

Figure 7: Series of parallels with the general equation y = hx + c = 0.0946x + c superimposed on to the US unemployment data in Figure 3. The intercept c varies from c = 0.2731 for the highest unemployment levels (Line A) and decreases as the unemployment levels decreases. The parallels with c = - 0.938 (Line B), c = -4.496 (Line C), c =-7.791(Line D) are added and cover the entire range of data. The corresponding value of the cut-off labor force x0 are 9.924 million (Line B), 47.54 million (Line C) and 82.39 million (Line D).
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The lowest parallel D is chosen so that it passes through the data for 2000 (final year of Clintons two terms) with the lowest unemployment level of 5.692 million (labor force 142.583 million). Since 2000, the unemployment levels first increased (work function increased to value on Line C) and then decreased (during the Bush II term) before the dramatic increase that began in the Obama years (starting November 2008). Parallel B passes through the 1975 data (Fords term) and also the current (2011) data. Parallel C passes through 1944 data (FDRs last term). It is of interest to see that the financial meltdown of 2008 took the unemployment levels to well below what they were in 1944 (after accounting for the increased labor force) when the economy was on the upswing in the final year of FDRs term after the record high unemployment in 1941.
5. Brief Discussion
The x-y graphs, or the unemployment diagrams, for different Presidential terms are presented in Appendix I. In each case, we find that the economy has taken many complex turns (or what may be called a random walk, or a drunkards walk) to get from point A to point B at the start and end of each term, see for example Figure 8 for the George W Bush years (W-like pattern, with unemployment levels going up and then down) or Figure 13 for the FDR-Truman years (a complex zigzag, the slopes h for individual segments vary from h = -5.8 for 1941-42 to h = 0.02 for 1946-47 to h = 6.46 for 1950-51). Instead of these complex zigzags, we can just as easily envision a series of parallels with a slope h = 0.0946 and the general equation y = hx + c = h(x x0) = 0.0946x + c, with various values of the economic work function c or the cut-off labor force x0 = - c/h, see Figure 7. As the work function c decreases (more negative), the cut-off labor force x = x0 increases. There is no unemployment when the labor force x is less than this cut-off value x0. When the labor force x > x0, the number unemployed always increases by the same fixed amount y = hx when the labor force increases by x. Also, the constant h = 0.0946 for the US economy for the reasons just discussed.
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This, in brief, is the new philosophy, see also the detailed numerical calculations presented later in Figure 19 of Appendix I. The change in the work function is proportional to the span of the bracket (in blue) added on the labor force axis. The reduction in unemployment levels is due to this change. What we are witnessing here in the unemployment data may indeed like other universal laws of nature, which can often be expressed in simple mathematical formulations. Some well-known examples that, I am sure, most of us have studied at some point in our high school and college years, are: 1. Hubbles law V = H0D relating distance D of a galaxy and its recessional velocity V. This is a linear law describing the expansion of the universe. The slope of the line, H0, is called the Hubble constant. The intercept c = 0, see further discussion of this point in the bibliography cited. 2. Newtons law of viscosity for a fluid, = (d/dt). This law relates the shear stress and the shearing rate (d/dt). The viscosity is the slope of the straight line. Again, we have a zero intercept. The viscosity of water, air, motor oils, blood, and many other fluids is determined using this law. The thicker a fluid, the higher its viscosity. 3. Newtons force law, F = ma, relating force F and acceleration a is another example of a linear law with zero intercept. In this case, the slope of the straight line is the mass m of the body on which the force acts to produce the acceleration, a. 4. Ohms law, V = RI, relating voltage V and current I flowing through a simple electrical circuit (zero intercept). 5. Hookes law relating stress and strain , a linear law, with zero intercept, = E with the slope E being the Youngs modulus, or simply the elastic modulus. 6. Charles law relating volume V and temperature T of an ideal gas. This is a linear law with a finite positive intercept on the volume-axis. V = a + bT. 7. Pascals law relating pressure p and depth d below the free surface of water, again with a finite positive intercept, p = p0 + gd, where is the density of water (or any other liquid) and g is the gravitational acceleration.
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8. Einsteins photoelectric law (linear law relating maximum kinetic energy K of an electron to the energy of a photon, negative intercept on K-axis). Also, since we are dealing with a simple linear law, with a nonzero intercept, this also suggests at least three possibilities, depending on the numerical values of the constants h and c (positive or negative). 1. Case I: Positive h, negative c. Both the absolute number of unemployed y and the unemployment rate y/x increase as the labor force x increases. 2. Case II: Positive h, positive c. The absolute number of unemployed y increases but the unemployment rate y/x decreases as the labor force x increases. 3. Case II: Negative h, positive c. The unemployment level y and the unemployment rate y/x decreases (or increases) as the labor force x increases (or decreases). This is quite commonly observed during periods of decreasing unemployment levels. All three cases are, indeed, observed if we study unemployment data, for short periods of time, at the county level, the state level or the national level. For example, I remember reading an article in The Wall Street Journal, in the early 2000s (the Bush years) entitled, If the unemployment rate is going down, why are so many people unemployed? Or, something very close to this (unfortunately, have not been able to find the exact citation). The author of this nice investigative article was discussing the devastating effect of the high unemployment levels in various counties in Ohio, around the Cleveland area that I am intimately familiar with. The author was obviously unaware that the unemployment data for Ohio, in that time period, followed a linear law, Case II above, with a positive slope h and a positive intercept c. This is the reason why the unemployment rate y/x was going down but the number of unemployed y was going up. This can be understood using a simple example. Let y = hx + c = 0.5x + 2. Hence, as the labor force x increases, the number of unemployed y increases. The unemployment rate y/x = h + (c/x) = 0.5 + (2/x).
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Hence, as the labor force x increase the number of unemployed y increases but the unemployment rate y/x goes down and y/x = h = 0.5 when x becomes infinite. Table A: Operating Equations for the Unemployment Law in different eras Years President Equation Comments Case III, Decreasing unemployment Case I, Rising unemployment Case III, Decreasing unemployment Case I, Rising unemployment Case III, Decreasing unemployment Case I, Rising unemployment Case I, Rising unemployment Case III, decreasing unemployment Case I, Rising unemployment Case III, decreasing unemployment Case I, Rising unemployment Case III, decreasing unemployment Case III, decreasing unemployment Case I, Rising unemployment Case III, decreasing unemployment Case I, Rising unemployment INVERSE Case III, Rising Unemployment INVERSE Case I, Decreasing unemployment
FDR y = -1.08x +66.5 1941-43 1944-46 FDR/Truman y = 0.554x -29.58 Truman y = - 2.06x +129.8 1949-52 y =0.301x 17.4 1953-60 Eisenhower Kennedy/ y = -0.352x + 29.56 1961-66 Johnson Nixon y = 0.177x -11.12 1968-74 Ford y = 0.535x -44 1974-76 Carter y = -0.144x +21.27 1976-79 1980-82 1983-88 1990-92 1992-95 1996-99 2000-02 2003-06 2007-08 2008-09 2010-11 Reagan Reagan Bush I Clinton Clinton Bush II Bush II Bush II Obama Obama y =0.932x - 92 y = -0.397x + 54.99 y = 1.133x 135.5 y = -0.526x + 77 y = -0.25x + 40.72 y = 1.18x -162.28 y = -0.361x + 61.59 y = 1.59x 236.4 y = -37.1x + 5731.4 y = 2.51x 371.5
Notice the rather unusual numerical values of the constants h and c for Obama. Also, the only example of what might be called INVERSE Case I (positive but decreasing employment, most recent trend) and INVERSE Case III (negative slope but rising unemployment, unlike any other earlier period). All these operating equations can be reinterpreted using the economic work function introduced here. The x-y graphs are presented in Appendix I for different Presidential terms. ******************************************************************
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Table B: Operating Equations for the Unemployment Law in different eras Years President Slope h Intercept, c Cut-off Labor force, x0 (millions) Constants h, c for Periods of Decreasing Unemployment levels Obama -37.1 5731.4 154.49 2008-09 Truman -2.06 129.8 63.01 1949-52 FDR -1.08 66.5 61.57 1941-43 Clinton -0.526 77 146.39 1992-95 Reagan -0.397 54.99 138.55 1983-88 Bush II -0.361 61.59 170.61 2003-06 -0.352 29.56 83.98 1961-66 Kennedy/Johnson Clinton -0.25 40.72 162.88 1996-99 Carter -0.144 21.27 147.71 1976-79 Constants h, c for Periods of Increasing Unemployment levels Nixon 0.177 -11.12 62.82 1968-74 Eisenhower 0.301 -17.4 57.81 1953-60 Ford 0.535 -44 82.24 1974-76 FDR/Truman 0.554 -29.58 53.39 1944-46 Reagan 0.932 -92 98.71 1980-82 Bush I 1.133 -135.5 119.59 1990-92 Bush II 1.18 -162.28 137.53 2000-02 Bush II 1.59 -236.4 148.68 2007-08 Obama 2.51 -371.5 148.01 2010-11
The values of the constants h and c in Tables A and B above are determined by considering the individual x-y diagrams for the periods indicated. These do not take into account the idea of a single universal h = 0.0964 proposed here by considering the data for the years with the highest levels of unemployment. In Table B, the data is sorted by increasing values of the slope h. ****************************************************************** In the companion article, it was shown that during the second Clinton term, the unemployment levels decreased with increasing labor force (Case III above), see
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Figure 3 in that article. We also see evidence for Case III if we consider the improvement in the economy, between 1941-1944, and again between 1958-1970. The unemployment levels were decreasing with an increase in the labor force, during these local subperiods. These points are discussed further in Appendix I where some additional graphs are being presented. Nonetheless, local observations of both Case II and Case III can be reinterpreted in terms of a changing intercept c with the economy fundamentally exhibiting only the linear law of Case I, as evidenced by its behavior in the periods of the highest unemployment levels. This line of reasoning can be restated as follows. a) There is a single value of h that is a characteristic of the US economy that is manifested by considering special points in the economy, such as the three eras with the highest unemployment levels. (Likewise, we can deduce the value of h for any other economy, if we make empirical observations similar to what has been possible with the US economy, for say, Canada, UK, Germany, Japan, Singapore, Australia, Norway and Sweden, and Denmark, the BRIC countries, Brazil, Russia, India and China). b) The nonzero intercept c suggested by this observation of a universal h is to be treated like the work function in Einsteins photoelectric law K = E W = hf W. This point is discussed more completely in the Appendix here. The reader is also referred to the articles on Google and Research in Motion (RIM), Limited, and Kia Motor Company, where the analogy with Einsteins photoelectric law is used to explain financial data. The intercept c in the universal law, y = hx + c, governing the unemployment problem is exactly like the work function W. It is the changes in the work function for the economy, i.e., the intercept c, which can go from a negative value (for low unemployment levels) to a high value (for high unemployment levels and period of the peak unemployment), determine the unemployment level. When the economy improves, or worsens, a fixed change in the labor force x always yields the same change in the unemployment level y = hx, where the universal constant h is deduced as discussed here.
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6. Summary and Conclusions

1. A review of the unemployment statistics for the past 70+ years (1941-2012) is presented here to gain some insights into the current unprecedented and historically high unemployment (15.421 million at its peak in October 2009). This review indicates that there were three periods of very high unemployment: 1941, 1982 and 1983, and the current period 2009-2011. 2. The labor force x and the number of unemployed y can be shown to be related by the simple linear law y = hx + c, where the constants h and c are to be deduced from the empirical observations on the economy. 3. It is shown that the historically high unemployment data (labor force and unemployment levels) fall on a PERFECT straight line with a slope h = 0.0946. It is suggested that h is a universal constant, a unique property of the US economy, akin to other natural constants in the hard sciences, such as physics. The constant c in this law can therefore be compared to the work function W in Einstein's photoelectric law. The changes in c, the economic work function, determine the absolute levels of unemployment, with the increase and decrease in the unemployment level, at any labor force, always proceeding at the fixed rate h. If labor force increases or decreases by a fixed amount, the economy will respond with the same fixed increase or decrease in the unemployment levels, if the economic work function remains constant. The situation is exactly analogous to Millikans photoelectricity experiments, with different metals, to test Einstein's law. 4. The highest unemployment levels observed in 1941 (5.6 million), 1983 (10.7 million) and 2010 (14.8 million) can be seen to be roughly proportional to the increase in the size of the labor force from 1941 (56 million) to 1983 (112 million) to 2010 (154 million), or about 10% for each 50 million labor force. This is consistent with h = 0.0946 and the fact that the intercept c 0 for the line joining the highest unemployment data. 5. A review of the unemployment data from 1941-2011 also leads to some general observations. Although this does have some obvious political overtones, the observations are firmly rooted in the mathematical facts of the x-y unemployment diagrams presented in Appendix I).
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a) The sizeable shrinking of the labor force (due to discouraged workers leaving the work force) during the Obama years appears to be unprecedented. Most presidential terms, with increasing or decreasing unemployment levels, have generally been accompanied with an increasing labor force. b) Unemployment levels have generally increased under most Republican presidents (with Reagans second term, actually starting 1983, being an exception; with Bush II it is a mixed record as revealed by the W-pattern on the x-y graph) and decreased under most Democratic presidents (with FDR-Truman being an exception). The current unprecedented high level of unemployment thus seems to be exceptional for a Democratic President. c) Unemployment levels also went up immediately after Reagan took office and reached record high levels before the steady decline began after 1983. This process seems to have begun with Obama since early 2010. But the jump 2009 was unprecedented and so the recovery can also be expected to take an extended period. Can the Presidents policies make a difference? YES. (This is the only person opinion being expressed here!) 6. A fuller understanding of the meaning of the economic work function proposed here as a fundamental characteristic of the economic system (akin to the work function in physics which also alludes to a rather complex phenomenon) will help device policies that will keep unemployment levels low. At least two periods of record high unemployment levels revealed in this analysis were followed by a healthy recovery. Hence, we can expect the coming years to witness a return to the much lower unemployment levels that have been a hallmark of the US economy.
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7. Appendix I
Reinterpretation of the Unemployment data in terms of the Economic Work Function
If we accept the idea of a universal constant h = 0.0946, in the unemployment law y = hx + c, it is possible to reinterpret all the US unemployment data as merely a reflection of the changes in the work function. When light shines on the surface of a metal, such as lithium or sodium in Millikans Nobel Prize winning experiments, it is being bombarded with a stream of photons with an energy E = hf where h is the universal constant, called the Planck constant and f is the frequency of light. According to Einstein, the photon produces an electron with the maximum kinetic energy K = E W where W is the work function, a unique characteristic of each metal. Here W represents the work that must be done to eject the electron from within the metal. This means the K-f relation is a linear, K = hf W = h(f f0). The graph of K versus f will have a slope equal to the Planck constant h and will make finite positive intercept f = f0 = W/h on the frequency axis. When f < f0, K = 0, i.e., no electrons are produced. All of the energy E is absorbed fully by the metal. Since the cut-off frequency, or what is the same the work function W, depends on the metal on which the light shines, the data on the photoelectric effect (if we plot say the K-f data for experiments with Li, Na, K, Cu, and Zn) will be represented by a series of parallel lines with a slope h, the Planck constant, and an intercept W (on K-axis) or f0, on the f-axis. The same ideas can now be extended to the unemployment data which seems to obey the law y = hx + c = h(x x0). Mathematically speaking, this is exactly analogous Einsteins photoelectric law. When the labor force is less than a critical level, x < x0, the cut-off level, which is akin to the cut-off frequency f0 in physics, there is no unemployment and the number of no unemployed workers y = 0. As the labor force increases above this level, the number of unemployed workers increases. However, the rate of increase is always constant and is given by the fixed slope h which was deduced, as shown by consider the three rather unique
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points of highest unemployment levels observed in the last 70+ years. Thus, h = 0.0946 is similar to the other universal constants observed in nature and is a fundamental property of the US economy. At this point, this is merely a bold suggestion and it is obvious that further studies will be required to confirm the universality of h by studies on the economy at different levels and in different countries (akin to Millikans photoelectricity experiments with different metals). With this background, let us how we can reinterpret data, such as the data presented in the first article on the Obama years using the idea of the economics work function (see http://www.scribd.com/doc/99647215/The-US-UnemploymentRate-What-happened-in-the-Obama-years ). We start with the x-y unemployment diagram in Figure 8, which represents the data for the years 1990-2008, which covers the Presidencies of the Senior Bush (George H W Bush), Clinton, and the Junior Bush (George W Bush). The data also interestingly reveals a W-like pattern. The labor force was increasing and the unemployment level was also increasing (although the economy was not in any real crisis mode, as in the Obama years). This is revealed by the first three points (1990-1992) which seem to fall on a straight line with a positive slope. Nonetheless, it was sufficient to get Bill Clinton elected President, with the slogan, Its the economy, Stupid, a hallmark of the 1992 Presidential campaign. The unemployment levels started falling promptly in the Clinton years, with a concurrent expansion of the labor force. The general trend is indicated by the straight line with a negative slope h = -0.25 joining the (x, y) pairs for 1996 and 1999. There is nothing special about this line, other than the fact it seemed like the correct one to pick, before I was able to deduce the universal value of h = 0.0946 by considering historical data (after publishing the analysis for the Obama years on July 10, 2012). One could just as easily have used a lower slope h = -0.181 (1991 and 1999) or a higher slope h = -0.31 (1993 and 1999). If Legendre could say that his least squares line is just one of many lines that could be superimposed to reveal a linear trend, then the choice of the line with h = -0.25 picked earlier is also just one of many lines that describes this data. The reversal in the slope began in 2000, just as the first term of the George W Bush was beginning after a historic election that decided by the courts. The
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unemployment levels started rising again, with a further expansion of the labor force. This gives the rising first leg of the interesting W-pattern. This was followed by a reversal in the trend in 2003 followed again with increasing unemployment levels between 2007 and 2008, before we got into the current crisis mode with the total meltdown of the economy in 2008.
12
10
0 120 125 130 135 140 145 150 155 160

Figure 8: The unemployment diagram for the period 1990-2008, which covers the two Bush presidencies and the Clinton presidency, reveal an interesting W-like pattern. The evolution of this trend has been discussed in the text. Notice that the labor force x was increasing continuously even as the unemployment levels were going up and down. However, the economy was not in a crisis mode (data obtained from http://www.bls.gov/cps/cpsaat01.pdf)
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12.0
11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 100 110 120 130 140 150 160 170 180

Figure 9: The unemployment data for the period 1990-2008, with the straight line y = hx + c = - 0.25x + 40.722 (Case III), see also Figure 3 in the companion article discussing the Obama years. The W-pattern is much less prominent here based of the difference in the scales used for the graph. The same data can, however, be interpreted in terms of the changing economic work function if we accept the notion of a single universal h = 0.0946 for US economy, deduced as discussed in this article. This is illustrated in Figure 7 and again in Figure 10. To show how the data can be reinterpreted, we expand the scale of the graph once again to include the highest unemployment level recorded in 2010. Now, draw a straight line y = hx + c through the 2010 (x, y) pair with the slope h = 0.0946, the universal constant for the US economy. The equation of this line, as shown earlier is y = hx + c = 0.0946x + 0.267. Notice that the intercept c is positive and the graph therefore does not cut the labor force axis. Instead it cuts the unemployed yaxis at y = 0.267. The intercept c 0 and this defining line can be taken virtually as a straight line passing through the origin (0, 0).
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Now, since h is fixed, we can now construct a series of parallel lines (the dashed lines in Figure 10) through any point we choose. The intercept c = y hx can be deduced since h and the values of x and y are now known. Thus, we can construct a family of parallels sweeping through the data, with the economic work function c having different values on each line.
18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 0.0 50.0 100.0 150.0 200.0 250.0

Figure 10: Reinterpretation of the unemployment data for the period 1990-2011 using the idea of the economic work function and a single universal constant h = 0.0946, deduced from the data for the years with the three highest unemployment levels recorded over the last 70+ years. Notice how the data for the Clinton years, which seemed to fall unmistakably on a straight line with a negative slope, now appear to be merely cascading down the parallels with decreasing values of the work functions. The rising unemployment levels, which began during the second term of the Bush II presidency and
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deteriorated greatly in the Obama years can be seen to represent an increase in the work function, a reversal of the trend during the Clinton years. An exactly similar reinterpretation of the data is presented in Figures 8 for the period 1970-1983 which includes the years 1982 and 1983 when the unemployment levels were at record high levels for that era. Again, the two straight line segments, labeled A and B with falling (negative slope, A) and rising (positive slope, B) unemployment levels, with an increasing labor force, can interpreted in terms of the changing economic work function.
12.0 10.0
A
8.0 6.0 4.0 2.0 0.0 -2.0 -4.0 0 20 40 60 80 100
120
140
160

Figure 11: Reinterpretation of the unemployment data for the period 1970-1983 which covers the Nixon, Ford, Carter, and Reagan years, using the idea of the economic work function and a single universal constant h = 0.0946, deduced as discussed here. The line segments A with the negative slope is for period 19751978 and covers the Carter presidency (doomed as a result of the Iranian hostage crisis). This was followed by increasing unemployment levels during the first
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Reagan term, line segment B, leading to the highest recorded levels for that era in 1982-1983. The labor force was increasing during these years of reversals in the slope, which can be interpreted as the back and forth changes in the economic work function.
7.0 6.5
6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 48
1941
1961 1970
1966
52 56 60 64 68 72 76
1969
80 84

Figure 12: The unemployment diagram for the Kennedy-Johnson era and the first two years of the Nixon presidency (1960-1970). The straight line with the negative slope, with the equation y = -0.352x + 29.563, joins the (x, y) pairs for 1961 and 1966. The expansion of the labor force was accompanied with a decrease in the unemployment levels. This trend was reversed in 1969 and 1970 when the unemployment levels started rising again, with the labor force continuing to increase. The same data can be reinterpreted using the idea of a work function by referring to Figure 2. The high unemployment level of 1941 looms in the background in this plot.
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The following x-y unemployment diagrams are included here for completeness for different Presidential terms revealing significant patterns. Table A and B summarize the operating equations.
6.0
1941
5.0 4.0 3.0 2.0
1952
1.0 0.0 52 54 56 58 60 62 64
Figure 13a: The complex zigzag path taken by the economy, in the unemployment diagram for the period 1941-1952 which includes the terms of Presidents FDR (last term) and Truman, beginning 1945. The slopes of the individual line segments go from high negative to high positive values: h =y/x - 5.8 for 1941-42 (decreasing unemployed y, increasing labor force x) to h = 6.46 for 1950-51 (decreasing unemployed and decreasing labor force) with h = 0.02 for 1946-47. The accompanying graph in Figure 13b suggests a less perplexing view based on the universal law y = hx +c.
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6.0
1941
5.0 4.0 3.0 2.0
1949
1952 1945
1.0
1943
0.0 52 54 56 58 60 62 64

Figure 13b: The unemployment diagram for the period 1941-1952 which includes the terms of Presidents FDR (last term) and Truman, beginning 1945. The unemployment level came down rapidly from its high of 5.56 million (which was used to deduce the constant slope h = 0.0946 for the US economy) to about 1 million in 1942. It then started increasing starting 1944 and reached a high of 3.63 million before falling again to about 2 million by 1951-52. The straight line joining the 1944 and 1946 data has the equation y = 0.554x 29.6 and is shown above. The many zigzag turns taken by the economy to get to the lower unemployment level in 1952 from the then highest level in 1941 can just also easily be understood by envisioning a series of parallels with a slope h = 0.0946 and equation y = hx + c = 0.0946x + c, with various values of the economic work function c. The reduction in unemployment levels can thus be attributed to the reduction in the economic work function, as follows. The defining equation y = hx + c = h(x - x0). Hence, the line through 1941point with slope h = 0.0946 has the equation y = 0.0946x + 0.271 = 0.0946 (x + 2.86). The parallel line through the 1952 point has the equation y = 0.0946x 3.995 = 0.0946 (x 42.23). The change in the numerical value c, or equivalently the numerical value of x0 (the cut-off labor force
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when unemployment y = 0) is the change in the economic work function. As the cut-off value x0 increases more of the labor force will be employed before unemployment levels increase at the fixed rate y = hx = 0.0946x when x > x0; see Figure 19 for a more detailed numerical calculation.
6.0
5.0
4.0
3.0
2.0
1.0
0.0 60 62 64 66 68 70 72 74 76

Figure 14: The unemployment diagram for the period 1953-1960 which includes President Eisenhowers two terms. The straight line y = 0.305x 17.395 joins the (x, y) pairs for 1953 and 1960. The overall trend was one of increasing unemployment levels with an increasing labor force. The four data points that lie above the line could be taken as suggestive of changes in the economic work function which led to the higher unemployment levels during those years.
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6.0
5.0
4.0
3.0
2.0
1.0
0.0 78 80 82 84 86 88 90 92 94

Figure 15: The Kennedy-Johnson era, which followed Eisenhowers terms, has already been considered (in Figure 12). This diagram is for the period 1968-1974 which covers President Nixons terms. The straight line y = 0.177x 11.122 joins the (x, y) pairs for 1968 and 1974. As with Eisenhower, the overall trend is again one of increasing unemployment levels with an increasing labor force. The data points that lie above and below the line again suggest changes in the work function which lead to the higher (or lower) unemployment levels during those years.
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12.0
1982 Unemployed, y [millions]

10.0
1983 1975
8.0
1979
6.0
4.0
2.0
0.0 90 95 100 105 110 115

Figure 16: The unemployment diagram for 1975-1983, covering the Presidential terms of Ford (1975 only), Carter, and Reagans first three years. The labor force was increasing and the unemployment levels were going down in the Ford-Carter years. This trend reversed itself and unemployment levels started rising by 1980 reaching their highest recorded for the era by 1982 and 1983 (two years that contribute to the determination of the universal constant h = 0.0946 for the US economy). As seen earlier, in the latter part of the Reagan years, the unemployment levels again started going down, with an increasing labor force.
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12.0
10.0
8.0
6.0
4.0
2.0
0.0 105 110 115 120 125
Figure 17: The unemployment diagram for the period 1980-1988 which covers President Reagans two terms. The initial trend was one of increasing unemployment levels with an increasing labor force. This was followed by a sustained period of decreasing unemployment levels, again with increasing labor force. The straight line y = 0.932x 92 joins the (x, y) pairs for 1980 and 1982 whereas the downward sloping line y = - 0.347x + 48.91 joins the data points for 1982 and 1988. The Bush I, Clinton, Bush II and Obama years have been discussed using similar graph in the companion article to highlight the dominant trend during their terms. From Figure 18 presented earlier in the main text, under discussion of the work function, this era witnessed the lowest unemployment levels recorded in US history, just before George W Bush (Bush II) took office, see also Figure 9 presented earlier in the text and Figure 18 that follows next.
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10.0
1992
9.0
8.0
7.0
6.0
2000
5.0
4.0 120 125 130 135 140 145

Figure 18: The unemployment diagram for the period 1988-2000 which covers the terms of Bush I (1988-1992), Clintons two terms and the first year of the Bush II presidency. The unemployment level dropped every year from 1992 to 2000 falling from a high of 9.613 million in 1992 (final year of Bush I presidency) to its historically lowest level of 5.692 million in 2000 (final year of Clinton presidency). The declining trend is indicated by the downward sloping line with a negative slope. The best-fit line (linear regression) for the period 1992-2000 has the equation y = -0.268x + 43.34 = -0.268(x 161.76) with the linear regression coefficient r2 = 0.923. (The above is just a trend line, see also Figure 19.)
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10.0
8.0
6.0
4.0
2.0
a b
0.0 0 20 40 60 80 100 120 140

Figure 19a: The reduction in the economic work function between 1961 and 1966 (the Kennedy-Johnson years, see also Figure 12) is illustrated here. (Please also see explanation offered in the next figure caption.)The equation of the line joining 1961 and 1966 is y = -0.352x + 29.56. The labor force changed by x = 5.221 and the unemployed changed by y = - 1.839; unemployed decreases with increasing labor force. The parallels with the slope h = 0.0946 are: Line through 1961: y = 0.0946x 1.96 = 0.0946 (x 20.72), see x-axis intercept. Line through 1966: y = 0.0946x 4.29 = 0.0946 (x 45.38), see x-axis intercept. The change in the work function c is proportional to the difference in the x0 values (span of the bracket on x-axis) given by the parallels: (45.38 20.72) = 24.66. From 1961-1966, y = 1.839. Move along the top parallel for 1961 with slope h = 0.0946, with constant c, to produce the change y. The labor force has decreased. Thus, let a = y/0.0946 = 19.44. This equals the x1 needed to reduce unemployed
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and keep labor force unchanged. Now add b = y/0.352 = 5.221, the numerical value of the change x2 (change in labor force). This also equals the move along the blue operating line with slope h = -0.352, intersecting the parallels. Hence, the sum (a + b) = x1 + x2 = 19.44 + 5.22 = 24.66. This is exactly the change in the work function or the difference in x0 values (span of the bracket) given by the parallels: (45.38 20.72) = 24.66 = (19.44 + 5.22). Thus, labor force matches and unemployed match the observed value due to reduced work function!
12.0
10.0 8.0 6.0 4.0 2.0 0.0 0 20 40 60 80 100 120 140 160 180

Figure 19b: The unemployment diagram for the years 1992-2002 which covers the Clinton years. The unemployment levels were decreasing year after year, starting 1992, and reached the lowest recorded level in US history, 5.692 million in 2000. Linear regression yields the best-fit line, y = -0.268x + 43.34 = -0.268(x 161.76) The negative slope h = - 0.268 is due to the decreasing unemployed y with increasing labor force x. This will be referred to as the operating line since this is what we obviously perceive given the (x, y) data. The two parallels A and B, with the slope h = 0.0946, can be superimposed with c = -2.51 and c = - 7.796. Start with the 1992 data point. The number unemployed will decrease if the labor force
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decreases along parallel A (c = - 2.51, x0 = -c/h = 26.5, see intercept on x-axis). Move down to the horizontal red line, which is the reduced unemployment level in 2000. This is reduction of unemployment at constant work function. But actually, the labor force increased. So, now we move along the red horizontal to the labor force observed. The change in the work function can be seen to correspond to the increased labor force. As in Figure 19a, we first bring labor force level to the vertical from the 1992 data point and then proceed to the parallel B to match increased labor force. At the vertical from the 1992 point, there is zero change in labor force. This means work function must be reduced from the 1992 value to produce both reduced unemployment and also an increase labor force. Or, equivalently, the cut-off labor force x0, below which there is no unemployed, must increase to reduce the unemployment levels. Perhaps, the following observations from the FDR-Truman era provide some more insights into the how changes in the work function increase/decrease the unemployment levels.
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6.0
1941
5.0 4.0
1958 1949
3.0
1942
2.0 1.0 0.0 0 20 40 60 80

Figure 20: The unemployment data for 1941-952 along with the data for 1958 (Eisenhower era) is plotted here. The line y = 0.173x 7.1 = 0.173 (x 41.02) joins the (x, y) pairs for 1942 and 1958 with the 1949 data lying practically on this line. The dashed line through the 1942 data has the universal slope h = 0.0946 and has the equation y = 0.0946 (x 28.29). The cut-off labor force equals 28.29 million below which y = 0. If the work function is constant, and the labor force increases, the unemployed will increase following this line. Notice that the data for 1950 falls almost on this line. It also appears that other data points here can be joined by parallel lines with different values for work function c, or the cut-off labor force x0. Now, the task is to a) understand what specific factors control this economic work function and b) to promote policies that lead to low unemployment.
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8. Appendix II Effect of time on unemployment stats

For completeness, let us consider now the direct effects of time, the ravages of that all-powerful time, if any, on the unemployment statistics, by plotting the three key parameters, the labor force x, the number of unemployed y, and the unemployment rate, y/x, as a function of time, expressed in calendar years.
180 160
140 120 100 80
60
40 20 0 1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
Time, t [years]
Figure 21: The labor force has increased steadily over the last 70+ years due to the overall increase in the population. However, there are two notable exceptions. The labor force decreased during WWII (the FDR-Truman years), decreasing from 56.41 million in 1942 to 53.86 million in 1945. This is the small dip seen in the initial years of the graph. More significant is the decrease in the labor force in the Obama years, between 2009 and 2011. The labor force was 154.286 million in 2008 and decreased to 154.142 million in 2009 and was down to 153.616 million
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in 2011. This is largely due to the fact that discouraged workers, the long-term unemployed, decided to leave the labor force.
16.0
14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
Time, t [years]
Figure 22: The unemployed y, has been going up and down over the years with changes in economic conditions. The three highest unemployment levels ever recorded again clearly separate out in this plot. The data again falls on a NEAR PERFECT straight line. The equation y = at + b = 0.134 t 255.1, where t is time in calendar years, describes this trend in the highest recorded unemployment levels. The equation is determined by considering the 1941 and 2010 data. Interpolating to 1983 gives 11.2 million unemployed, which is slightly higher than the observed 10.72 million.
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Unemployment rate (percent), 100(y/x)
12.0
10.0
8.0
6.0
4.0
2.0
0.0 1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
Time, t [years]
Figure 23: The unemployment rate, y/x, expressed as a percent, for 1941-2011. This has been going up and down with the highest recorded rates again separating out on this graph. This rate is roughly constant and is essentially independent of time. This suggests that the huge technological changes that we have witnessed since WWII have played little or no effect as far as the high unemployment rates are concerned.
Thus, it appears that we can draw the following conclusions based on these empirical facts. When things get sour in the economy, at least in the US economy, the unemployment rate seems to climb to a maximum of about 10%. It was 9.94% in 1941, reached 9.69% in 1982 (and 9.61% in 1983). The current highs were 9.25% in 2009 and 9.63% in 2010. This suggests that the fundamental idea of a work function c (or the cut-off labor level x0 = - c/h) is worthy of further study.
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What are the socio-political and economic factors, including technological factors that affect this economic work function? Can it be readily controlled via sound economic policies? Is population the over-riding factor? Does employability, via right educational and experiential skills, affect the economics work function? If so, what policies can be adopted to affect the longer term societal objective of having a vibrant economy with the lowest levels of unemployment?
9. Appendix III
Legendres Linear Regression and Millikans determination of the Planck constant h from Einsteins Photoelectric Law Although a simple linear law y = hx + c recommends itself, with the huge scatter that we see in the unemployment data, one is forced to wonder what justification there is, if any, for the choice of the numerical values of h and c. For example, in the companion article on the state of the US unemployment levels during the Obama years, the constants h and c were fixed using certain unique points in the data being examined. However, such an analysis is of limited value unless we can develop some kind of a theoretical justification for the choice of h and c. The obvious solution to this dilemma is statistical analysis, such as the linear regression analysis. This was developed by the French mathematician Legendre, in a famous 1805 paper. It is also worth recalling here what Legendre himself says, in this paper, when he introduces this new method, also called the method of least squares. Legendre presented his ideas in a really short paper, with a worked out example. Within ten years, the method came to be widely accepted and used in all statistical analysis. Legendres exact words are, Of all the principles which can be proposed for that purpose, I think there is none more general, more exact, and more easy of application, that of which we made use in the preceding researches, and which consists of rendering the sum of squares of the errors a minimum. http://www.stat.ucla.edu/history/legendre.pdf English translation of the original paper. (see also Stigler, Stephen M. (1986). The History of Statistics: The
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Measurement of Uncertainty Before 1900. Cambridge, MA: Belknap Press of Harvard University Press. ISBN 0-674-40340-1.) When we see data points that seem to fall approximately, but NOT exactly, on a straight line, any line is as good as any other. We only need two very good data points that we fully trust in order to determine the slope h and the intercept c. This is what Legendre is pointing out here. So, how do we choice a best-fit line? Legendre recommends his method of least squares. Imagine a line that we think is the best-fit line through the data points. The equation of this line is yb = hxb + c. Some of the (x, y) pairs will lie above this line and some lie below this line. We can determine the deviation (y yb) of each point in our data set from the best-fit line. The sum of all such deviations from the best-fit line will be zero. This does not tell us much. However, the square of the deviation (y yb)2 will always be positive and the sum of all the squares (y yb)2 will also be positive. Using elegant mathematical arguments, Legendre provides us with a mathematical formula for the slope h which minimizes the sum of these squares. Hence, the name least squares method. However, there is nothing unique or sacrosanct about the best-fit line, or linear regression analysis, as Legendre himself points out. It is just a simple and elegant way of fitting a straight line when we are confronted with a huge scatter but with an underlying linear trend (with either positive or negative slope). Now, let us compare this with what Millikan does in his Nobel Prize winning experiments (reported in 1916) on the photoelectric effect to deduce the value of the universal constant h, one of the fundamental constants of nature. Millikan published two papers on this subject, both in 1916, describing his direct determination of the Planck constant h, from the slope of the K-f graph predicted by Einsteins photoelectric law K = E W = hf W. Without getting into details (this is discussed more completely in the article on Google Inc.), Einsteins theory states that the Planck constant h is the slope of the graph of the maximum kinetic energy of the electron K and the frequency of light f, with an intercept W which is a property of the metal on which light is shining.
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Only two points on the K-f graph are required to fix the slope h. And, this is exactly what Millikan does in his first paper of 1916. He published his results on the experiments with lithium where he had determined the value of K accurately using light of two different frequencies. Only two (K, f) values are presented, promising more in the future, with the first direct determination of the numerical value of the universal constant h. Only two points were needed to fix the Planck constant h because a simple theory had been proposed to explain this complex problem of photoelectricity that was puzzling physicists of the late 19th and early 20th centuries. It is of interest to note here what Millikan does in his second paper. Here publishes his results with lithium (K-f graph with five light frequencies) and sodium (K-f graph with six light frequencies). One can determine at least 10 different slopes and determine the average value of h for lithium. Or, better yet, use Legendres least squares method and fix the slope h. Likewise, one can determine 15 slopes for the sodium experiments and determine an average. Millikan, however, does NOT go through all these exhaustive slope determinations to arrive at the numerical value of one of the most fundamental constants of nature. He determines an average value of the Planck constant h for considering only a few slopes I suspect the slopes corresponding to what he believes are his best measurements, considering the accuracy with which the frequency f of light is determined (the color light used determines the frequency f). The same approach has been taken here to determine the numerical value of h in the universal law y = hx + c which applies to the unemployment problem of interest to us. The observations with the highest unemployment levels fix the value h. If this suggestion is accepted the rest of the data is quite simply understood as merely a change in the value of the intercept c, which can become either positive or negative. Thus, the intercept c is exactly analogous to the work function W in Einsteins law. The work function W is a very complex property of the metal from which electrons are being produced. The electrons are being held in their place by complex
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electromagnetic forces. A metal is usually viewed as a sea of electrons that move through an array of positively charged nuclei held at fixed lattice positions. Hence, the process of removing an electron from the metal is a complex one and the forces that bind the electron are not easily determined. Einstein proposes a magically simple solution by writing E = K W. Some of the energy E must be given up. Hence, the maximum energy of the electron K will be less than E. Let this difference be called W, the work function of the metal. The focus, however, was on the K-f relation. Einstein also emphasizes the need to determine the maximum value of K to determine h precisely. This too was recognized by Millikan who takes great care to ensure that the maximum K was being measured. Likewise, there is a work function W that determines the unemployment level. And, just as the maximum K must be determined to fix the Planck constant h, it looks like we have arrived at an appropriate empirical criterion for determining the value of h in the unemployment problem. Once h is fixed, the rest of the data is explained via the changes in c, or the work function for the economy. It would, no doubt, be of interest, to extend this study to unemployment data at different levels, the county and state level to see if the same or different values of h are observed. Also, unemployment data for different countries, mentioned earlier, will yield more insights into the universal character of h for the global economic system as a whole. Is there is single universal value of h? It would be exciting indeed to explore. But more important would be to use the insights gained from such an analysis to understand the meaning of the economic work function and reduce unemployment levels, including attaining the even the goal of FULL EMPLOYMENT that has eluded all economic theories to date. Finally, let us consider what Galileo did in the 17th century, even before Newton (who was born on Christmas day, the year Galileo died) which led to the law of falling bodies. Galileo constructed an inclined plane and studied how spherical balls, of different masses (made of a variety of commonly available materials like wood, and heavy metals like lead, iron, and copper), roll down the plane. The idea was to investigate how fast the bodies fall and if heavier object fall faster than
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lighter ones, as was then believed. So, he carefully measured the distance s travelled along the inclined plane (the symbol s is used to denote the space coordinate, distance markers were obviously used) and the time t to cover the distance. (Galileo used a water clock; pendulum clocks had not been invented as yet. The times t were taken to be directly proportional to the mass of the water flowing down a small narrow tube attached to the bottom of a huge pail of water to ensure that the pressure head on the water was constant.) Then, he computed the speed, or velocity, v = s/t. Now, Galileo had two choices. He could prepare a plot of velocity v versus distance s. Or, he could plot the velocity v versus time t. The first graph yields a rising curve but the second graph yields a nice straight line. The slope of the graph a = v/t is the acceleration of the body. (The graph of s versus t could also be prepared. This is a rising parabola, which we can all now appreciate, but it was not so easy to do this in Galileos time. The investigation of v versus s and v versus t was more fruitful and leads to a simpler and more elegant result that is also readily understood.) AMAZINGLY, Galileo found that a = constant for all bodies and is independent of the mass of the body. Heavier objects did NOT fall faster than the lighter ones. Besides sounding the death knell on the age-old Aristotelian ideas about motion, this was also the first experimental demonstration and quantification of what we now take for granted the idea of acceleration. Everyone who has ever won a race knows that he or she must accelerate to get to the finish line before the others. This was always intuitively understood. But, what does this mean? The athlete must increase his or her speed, or velocity, momentarily, and draw upon that last burst of energy, or muscle power, to finish and win the race. Likewise, here we are faced with two parameters, labor force x and unemployed y, both of which vary as a function of time t. We can compute the ratio y/x. But, like Galileo, in order to discover any new underlying law that governs this process, we must do more. The unemployment rate y/x is like the velocity v. It can be plotted versus either x or y. The graph is a hyperbola (see Figure 24) and can be deduced
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from the law y = hx + c. Here, the important conclusion is the constant rate h at which unemployment levels y increase, as the labor force x increases. The velocity v = ds/dt was constant in Galileos experiments. Here, h = dy/dx = y/x = constant for brief periods with h = 0.0946 for all periods with the constant c (the economic work function) having different values for different periods.
0.12
0.10
0.08
0.06
0.04
0.02
0.00 0 20 40 60 80 100 120 140 160 180 200
Figure 24: The unemployment rate y/x, for the years 1941-2011 (expressed here as a fraction), versus labor force x. This is the same as the graph in Figure 5, along with three members of the family of hyperbolas y/x = h + (c/x) = 0.0946 + (c/x) superimposed on to the data. A single universal constant h = 0.0946 is used. The three numerical values of the work function c = -1.691 (red), c = -3.995 (middle), and c = -7.796 (lowest) cover the entire range of data. As the labor force increases, the unemployment rate increases following one of the hyperbolas. When labor force x becomes very large, the ratio y/x will increase to its maximum value of h = 0.0946. Notice also that the highest values of the unemployment rate y/x, for a given era, are also approximately constant if plotted versus time t. Otherwise, the unemployment rate y/x is a complex function of time t.
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While President Obama and Mitt Romney bicker over whose policies will send more jobs overseas, there is one side of the job creation coin that both candidates agree on: that the government should do its darndest to keep manufacturing jobs in America. http://news.yahoo.com/made-americapolicies-hugely-popular-survey-shows-210425838--abc-news-politics.html
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Compilation of the US unemployment data (1941-2011)

The relevant data for the time period 1941-1960 is compiled, for convenience, in Table 2. This period covers World War II and the prosperous post-war years, the highly successful Presidency of the war hero, Eisenhower, and culminating with the election of President Kennedy in 1960.
Table 2: US Unemployment data (1941-1960)

Year 1941 1942 1943 1944 1945 1946 1947 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 Labor force, x 55.91 56.41 55.54 54.63 53.86 57.52 60.168 59.35 60.621 61.286 62.208 62.017 62.138 63.015 63.643 65.023 66.552 66.929 67.639 68.369 69.628 Unemployed, y 5.56 2.66 1.07 0.67 1.04 2.27 2.356 2.311 2.276 3.637 3.288 2.055 1.883 1.834 3.532 2.852 2.75 2.859 4.602 3.74 3.852 % Unemployment rate, 100(y/x) 9.94 4.72 1.93 1.23 1.93 3.95 3.92 3.89 3.75 5.93 5.29 3.31 3.03 2.91 5.55 4.39 4.13 4.27 6.80 5.47 5.53
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Table 2 (Contd): US Unemployment data (1961-1970)

% Unemployment rate, 100(y/x) 70.549 4.714 6.68 1961 70.614 3.911 5.54 1962 71.833 4.07 5.67 1963 73.091 3.786 5.18 1964 74.455 3.366 4.52 1965 75.77 2.875 3.79 1966 77.347 2.975 3.85 1967 78.737 2.817 3.58 1968 80.734 2.832 3.51 1969 82.771 4.093 4.94 1970 84.382 5.016 5.94 1971 87.034 4.882 5.61 1972 89.429 4.365 4.88 1973 91.949 5.156 5.61 1974 93.775 7.929 8.46 1975 96.158 7.406 7.70 1976 99.009 6.991 7.06 1977 102.251 6.202 6.07 1978 104.962 6.137 5.85 1979 106.94 7.637 7.14 1980 108.67 8.273 7.61 1981 1982 9.69 110.204 10.678 1983 9.61 111.55 10.717 113.544 8.539 7.52 1984 115.461 8.312 7.20 1985 117.834 8.237 6.99 1986 119.865 7.425 6.19 1987 121.669 6.701 5.51 1988 123.869 6.528 5.27 1989 125.84 7.047 5.60 1990 126.346 8.628 6.83 1991 128.105 9.613 7.50 1992 129.2 8.94 6.92 1993 131.056 7.996 6.10 1994 132.304 7.404 5.60 1995 The data for the years 1996-2011 has been compiled in the companion article.
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Year
Labor force, x
Unemployed, y
Table 2 (Contd): US Unemployment data (1996-2011)

Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Labor force, x 133.944 136.297 137.673 139.368 142.583 143.734 144.863 146.510 147.401 149.321 151.428 153.125 154.286 154.142 153.889 153.616 Unemployed, y 7.236 6.739 6.210 5.880 5.692 6.801 8.378 8.774 8.149 7.591 7.001 7.078 8.924 14.265 14.825 13.747 % Unemployment rate, 100(y/x) 5.40 4.94 4.51 4.22 3.99 4.73 5.78 5.99 5.53 5.08 4.62 4.62 5.78 9.25 9.63 8.95
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About the author V. Laxmanan, Sc. D.

The author obtained his Bachelors degree (B. E.) in Mechanical Engineering from the University of Poona and his Masters degree (M. E.), also in Mechanical Engineering, from the Indian Institute of Science, Bangalore, followed by a Masters (S. M.) and Doctoral (Sc. D.) degrees in Materials Engineering from the Massachusetts Institute of Technology, Cambridge, MA, USA. He then spent his entire professional career at leading US research institutions (MIT, Allied Chemical Corporate R & D, now part of Honeywell, NASA, Case Western Reserve University (CWRU), and General Motors Research and Development Center in Warren, MI). He holds four patents in materials processing, has co-authored two books and published several scientific papers in leading peer-reviewed international journals. His expertise includes developing simple mathematical models to explain the behavior of complex systems. While at NASA and CWRU, he was responsible for developing material processing experiments to be performed aboard the space shuttle and developed a simple mathematical model to explain the growth Christmas-tree, or snowflake, like structures (called dendrites) widely observed in many types of liquid-to-solid phase transformations (e.g., freezing of all commercial metals and alloys, freezing of water, and, yes, production of snowflakes!). This led to a simple model to explain the growth of dendritic structures in both the ground-based experiments and in the space shuttle experiments. More recently, he has been interested in the analysis of the large volumes of data from financial and economic systems and has developed what may be called the Quantum Business Model (QBM). This extends (to financial and economic systems) the mathematical arguments used by Max Planck to develop quantum physics using the analogy Energy = Money, i.e., energy in physics is like money in economics. Einstein applied Plancks ideas to describe the photoelectric effect (by treating light as being composed of particles called photons, each with the fixed quantum of energy conceived by Planck). The mathematical law deduced by
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Planck, referred to here as the generalized power-exponential law, might actually have many applications far beyond blackbody radiation studies where it was first conceived. Einsteins photoelectric law is a simple linear law, as we see here, and was deduced from Plancks non-linear law for describing blackbody radiation. It appears that financial and economic systems can be modeled using a similar approach. Finance, business, economics and management sciences now essentially seem to operate like astronomy and physics before the advent of Kepler and Newton.
Cover page of AirTran 2000 Annual Report
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The Highest US Unemployment Rates: Obama Years Compared With Historic Highs in Unemployment Levels

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The Highest US Unemployment Rates: Obama Years Compared With Historic Highs in Unemployment Levels

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The Highest US Unemployment Rates

The Obama years and Historical Data (1941-2011)

The highest US unemployment levels on record

2. List of Figures and brief captions

4. The Big Picture

Labor force, x [millions]

0 0 20 40 60 80 100 120 140

Labor force, x [millions]

Labor force, x [millions]

Labor force, x [millions]

Unemployment rate, 100 (y/x)

Labor force, x [millions]

Unemployment rate, 100 (y/x)

2008 Start of Obama years

-10 0 25 50 75 100 125 150 175 200

Labor force, x [millions]

6. Summary and Conclusions

0 120 125 130 135 140 145 150 155 160

Labor force, x [millions]

Labor force, x [millions]

Labor force, x [millions]

Labor force, x [millions]

6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 48

Labor force, x [millions]

5.0 4.0 3.0 2.0

Labor force, x [millions]

5.0 4.0 3.0 2.0

Labor force, x [millions]

Labor force, x [millions]

Labor force, x [millions]

1982 Unemployed, y [millions]

0.0 90 95 100 105 110 115

Labor force, x [millions]

0.0 105 110 115 120 125

Labor force, x [millions]

4.0 120 125 130 135 140 145

Labor force, x [millions]

0.0 0 20 40 60 80 100 120 140

Labor force, x [millions]

Labor force, x [millions]

Labor force, x [millions]

8. Appendix II Effect of time on unemployment stats

Labor force, x [millions]

140 120 100 80

14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 1930

Unemployment rate (percent), 100(y/x)

0.00 0 20 40 60 80 100 120 140 160 180 200

Made in China US Olympic Uniforms

Lawmakers Want 'Made in China' U.S. Olympic Uniforms Burned

U.S. Olympic Committee to Promise (???) American Made Uniforms by 2014

'Made In America' Policies Hugely Popular, Survey Shows

Compilation of the US unemployment data (1941-2011)

Table 2: US Unemployment data (1941-1960)

Table 2 (Contd): US Unemployment data (1961-1970)

Table 2 (Contd): US Unemployment data (1996-2011)

About the author V. Laxmanan, Sc. D.

Cover page of AirTran 2000 Annual Report

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