2.5 million unemployed Americans were not counted as unemployed

October 5. Today’s employment report from the Bureau of Labor Statistics shows 114,000 new jobs in September and a drop in the rate of unemployment from 8.1% to 7.8%. As 114,000 new jobs are not sufficient to stay even with population growth, the drop in the unemployment rate is the result of not counting discouraged workers who are defined away as “not in the labor force.”

According to the BLS, “In September, 2.5 million persons were marginally attached to the labor force.” These individuals “wanted and were available for work,” but “they were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.”

In other words, 2.5 million unemployed Americans were not counted as unemployed. The stock market rose on the phony good news. Bloomberg’s headline: “U.S. Stocks Rise as Unemployment Rate Unexpectedly Drops,” http://www.bloomberg.com/news/2012-10-05/u-s-stock-futures-little-changed-before-payrolls-report.html .

A truer picture of the dire employment situation is provided by the 600,000 rise over the previous month in involuntary part-time workers. According to the BLS, “These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.” Turning to the 114,000 new jobs, once again the jobs are concentrated in lowly paid domestic service jobs that cannot be offshored. Manufacturing jobs declined by 16,000. Read more >>

US jobs report points to protracted downturn

Andre Damon
The Labor Department said Friday that the US unemployment rate rose in April, but that the economy added more jobs than had previously been expected. Behind the increase in jobs, however, is a dismal and in many ways worsening employment situation, combined with a systematic attack on wages and social programs.

The unemployment rate grew to 9 percent, up from 8.8 percent in March. The number of employees reported by businesses increased to 244,000, higher than the 185,000 that economists expected. This is still barely enough to keep up with the growth in the labor market.

The Labor Department bases its estimate of the unemployment rate on a survey of households, while the payroll figure comes from a survey of businesses. Because of this, the two do not always move together.

The 244,000 jobs created in April represent only a small portion of the jobs that were destroyed during the downturn. Since February 2010, the US economy has created 1.8 million jobs. But this figure pales in comparison with the 8.7 million jobs that were lost since the start of the recession.

Some commentators were quick to dismiss the rise in the unemployment rate as a sign that discouraged workers were once again reentering the labor force, but there is little in the report to suggest that this is the case.

The labor force participation rate held steady last month at 64.2 percent for the fourth consecutive month, down from 66 percent in 2006. The number of people out of work likewise stayed the same at 13.7 million. The U-6 unemployment rate, which includes "discouraged workers" and people working part-time for economic reasons, grew to 15.9 percent, from 15.7 percent the month before.

For some sections of the population, unemployment is rampant. One in four teenagers looking for work cannot find it, along with 16.1 percent of African-Americans and 11.8 percent of Hispanics.

The report follows a string of dismal economic news. The Commerce Department said late last month that the US economy grew by 1.8 percent in the first quarter of 2011, significantly less than the 3.4 percent growth in the fourth quarter of last year and 4.5 percent in the third quarter of last year.

Weekly initial jobless claims likewise continued to edge up. After dipping as low as 375,000 in late February, the figure shot up to 474,000 last week. This was the fourth consecutive week in which initial claims were over 400,000, generally considered a indicator of net job losses.

The housing market, meanwhile, has continued to worsen. The S&P/Case-Shiller index of home prices in 20 major cities fell by 1.1 percent in February, the latest month for which information is available, according to figures released April 26. Nationwide, home values are down by 3.3 percent over the past year. Since the beginning of the housing market downturn in 2006, over $9 trillion has been wiped out from home values. More...

17.9 Percent Real Unemployment

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17.9 Percent Real Unemployment - How Solid is the Recovery?
Simon Maierhofer
The unemployment picture painted by today’s jobs report headlines is much rosier than reality. Still, they were enough to provide a serious pop for stocks. What are the real numbers and will reality seriously ding the market?

How do fish get caught? They open their mouth. How do investors get ensnared or misled? They believe in non-existent phenomenon like a “jobless recovery.”

Surprising as it is, for nearly a year, investors have shrugged off mounting jobless claims and rising unemployment as an ingredient that is not really required for an economic recovery.

In reality, real unemployment is at 17.9%, 0.1% short of last month’s all-time high. Yes, 17.9%! This is the official number reported by the Bureau of Labor Statistics (BLS).

The BLS publishes different sets of data on a regular basis. The main focus tends to be on the U-3 unemployment rate (currently 9.7%, seasonally adjusted).

U-3 is the “official” unemployment rate and illustrates total unemployed persons as a percentage of the civilian labor force. Another category – U-4 – includes unemployed workers plus discouraged workers. A discouraged worker is someone who’s available to work but has stopped actively seeking for work.

U-5 unemployment includes the number of unemployed workers, plus discouraged workers, plus marginally attached workers. A marginally attached worker is someone who is able and willing to work but is not actively seeking work.

U-6 is as close to the real unemployment figure as government reporting gets. This number includes unemployed workers, plus discouraged workers, plus marginally attached workers, plus workers that are forced to work part-time because they are not able to find a full-time job.

According to the Bureau of Labor Statistics, the number of U-6 unemployed workers is 17.9% (not seasonally adjusted – 16.8%, an all-time high). More...

“Real” unemployment rate in US is 22%

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layofflist.org
The media and government officials often tout the unemployment rate using the official, or U3 rate, which stands at 10.2% for October. While 10.2% unemployment is certainly bad enough – it’s the highest rate nationally excluding 1983s 10.8% - it pales when compared to the U6 unemployment rate. First let’s discuss the differences between U3 and U6 measures.

According to the Bureau of Labor Statistics (BLS) the U3 measure is described as “total unemployed, as a percent of the civilian labor force (official unemployment rate).” Now let’s take a look at the BLS U6 measure: Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

When including marginally attached workers and those forced to work part-time instead of full-time we have a national unemployment rate of 17.5%, which is nearly 70% higher than the U3 rate of 10.2%. That’s a dramatic increase from the normally quoted U3 unemployment rate, but even U6 fails to provide the actual percentage of people who are, or may be considered unemployed.

John Williams discusses alternative unemployment data sets at his Shadow Government Statistics site. Their service, in part, “exposes and analyzes flaws in current U.S. government economic data and reporting.” Once those flaws are included in the unemployment calculation – called the SGS Alternate - the unemployment rate reaches 22%. Shadow Government Statistics gives the following reason for SGS Alternate measure: “The SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated “discouraged workers” defined away during the Clinton Administration added to the existing BLS estimates of level U-6 unemployment.”

To clarify why the discrepancy between U6 and the SGS Alternate rate of 22%, I contacted the BLS and received the following answer to my question about the change in discouraged worker designation during the Clinton Administration:

“(P)rior to 1994 persons were not asked whether they had searched for work recently. If they gave one of the five “discouraged worker” reasons for not looking for work in the past 4 weeks, they were assumed to have “given up” the search for work, although they weren’t asked when they had last looked. As a result of the greater specificity introduced in 1994, the number of discouraged workers was cut approximately in half, from about 1.1 million in 1993 to 500,000 in 1994.”

About 600,000 people were removed from the unemployment calculations in 1994, so if you merely add those 600,000 to the current U6 number, the rate of unemployment would be much higher than 17.5% and would more accurately be reflected in the SGS Alternate unemployment rate of 22%.

The BLS now offers the U6 measure of unemployment for states. An example is New York’s U6 rate averages 13.4% for the period fourth quarter of 2008 through third quarter of 2009 at: Alternative measures of labor underutilization by state. So making the simple assumption that the SGS Alternate data is, on a national level, about 4.5% higher than U6, the unemployment rate in New York is closer to 17.9%, and that’s being conservative since the current unemployment rate is higher than the average presented at the BLS.

When nearly 1 in 5 eligible New York workers are either unemployed or underemployed, we are made aware of the brutal state of employment. Maybe it’s time to spend more money on job creation, instead of pumping billions of dollars into the coffers of banking bonus babies and corrupt banks and institutions that were made too big to fail by two presidential administrations more concerned about campaign money than taxpayer needs.

A sliver of good news, according to John Williams, is that during the Great Depression the SGS Alternate measure of unemployment would likely be near 34%. Let’s hope our elected “representatives” don’t aim for those lofty unemployment levels.

If you would like to follow my Examiner.com posts, they are located at Rochester Unemployment Examiner’s Articles.

“When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.” – Frederic Bastiat (1801-1850)

Real Unemployment 17.5%

New York Times
With the release of the jobs report on Friday, the broadest measure of unemployment and underemployment tracked by the Labor Department has reached its highest level in decades. If statistics went back so far, the measure would almost certainly be at its highest level since the Great Depression.

In all, more than one out of every six workers — 17.5 percent — were unemployed or underemployed in October. The previous recorded high was 17.1 percent, in December 1982.

This includes the officially unemployed, who have looked for work in the last four weeks. It also includes discouraged workers, who have looked in the past year, as well as millions of part-time workers who want to be working full time.

The official jobless rate — 10.2 percent in October, up from 9.8 percent in September — remains lower than the early 1980s peak of 10.8 percent.

The rate is highest today, sometimes 20 percent, in states that had big housing bubbles, like California and Arizona, or that have large manufacturing sectors, like Michigan, Ohio, Oregon, Rhode Island and South Carolina.

The new benchmark is a sign of just how much damage financial crises tend to inflict. A recent book by Carmen M. Reinhart and Kenneth S. Rogoff, two economists, found that over the last century the typical crisis had caused the jobless rate in the country where it occurred to rise for almost five years. By that standard, the jobless rate here would continue rising for two more years, through the end of 2011. More...