The real unemployment rate is higher than you think it is

[Dissent]

» The Real Unemployment Numbers Are Worse Than You Are Being Told Alex Jones' Infowars: There's a war on for your mind!

Bout what I figured...actually its lower than I expected it to be..I was thinking at least 15%

 

[Rozman]

Well you just got to know the Dems will do whatever it takes to get that number down
below 8% just before the election.
If it takes a master chef to cook the books to do it they will do whatever it takes.

Mario Batali come on down

 

[Londoner]

Easily 15%.

Son. You need to understand the larger context for where jobs went.

America was manufacturer to the world during the postwar years. American business had to employ American workers. The result was the wealthiest, most upwardly mobile middle class in history.

But there was a problem. American workers come with "first world" labor costs. This meant that investors made less of a return than if their goods were made in freedom-hating sweatshop nations with oppressed labor markets that got paid pennies a day and lived in unfree hell beneath dictators.

So what did American business do? They started pouring money into Washington so they could have access to 3rd world labor (which comes with much higher returns for investors). So they began to ship manufacturing jobs to places like communist China, who is Walmart's biggest manufacturer. But it's not just China, American goods are now made all over the freedom-hating world, from Grenada to Pakistan.

The reason there are no jobs is because "John Galt" (the private sector) cut the American middle class out of the loop. American capitalism makes trillions in extra profits by getting in bed with freedom hating nations run by dictators.

Of course, Americans were not totally cut out of the loop. The capitalist needed to sell the things he made in communist China. So he erected shopping malls and big box stores to sell his wares. Then he paid Americans 3rd world wages to sell his things in shopping malls. What did he do with all the extra profits? He put the money in banks who loaned Americans money in the form of credit cards. [FYI: they needed those credit cards because they lost their high paying jobs to freedom hating sweatshop nations. The capitalist basically loaned the worker the money he used to make in wages and benefits.]

As a result of this expansion of credit, starting in 1980, American households started using debt to consume - debt as a way of life; debt to survive. This is why we all started receiving 3 credit card offers a week starting in the 80s.

Reagan sent jobs to China and handed out credit cards so American consumers could buy the Chinese goods (made with American capital). Irony or ironies: John Gault got in bed with communists and waged war against the American worker.

We did this for 30 years. We borrowed and borrowed and borrowed. It got so bad that we borrowed against the last piece of value we had left: our homes.

Of course, you can only borrow so much until the system blows up from so much consumer debt.

The good news is that the Government bailed out the wealthy with TARP, and then they foreclosed on the poor, so they could sell their stuff to the next round of suckers.

Son, the jobs are gone, and they've been gone for a long time. Turn off talk radio and reclaim your brain.

 

[Avatar4321]

Like people care about the unemployment numbers. If people cared about unemployment, Obama would even be close to winning any polls.

 

[pinqy]

» The Real Unemployment Numbers Are Worse Than You Are Being Told Alex Jones' Infowars: There's a war on for your mind!

Bout what I figured...actually its lower than I expected it to be..I was thinking at least 15%

Let's examine:

For example, if the labor force participation rate was the same today as it was back when Barack Obama first took office, the unemployment rate in the United States would be a whopping 11.2 percent.

True. But what does it mean? Let's define the terms used in the Current Population Survey (monthly survey by Census for BLS):
Population = Everyone in the US 16 years and older who is not in the military, prison, or an institution (mental institute, old age home, etc).
Employed = Worked at least 1 hour for pay or 15 hours unpaid in family business/farm during the reference week of the survey (those on vacation, sick leave, etc are still Employed).
Unemployed = Did not work, but actively looked for work in the 4 weeks ending in the reference week (unless on temp layoff expecting to return).
Labor Force = Employed + Unemployed...(basically everyone working or trying to work. Everyone else in the Population is "Not in the Labor Force")

Labor Force Participation = Labor Force as a percent of the population.
Employment-Population Ratio = Employed as a percent of the population.
Unemployment Rate = Unemployed as a percent of the Labor Force.

So, when Obama took office, the population was 234,739,000, with 142,187,000 Employed and 12,049,000 for a Labor Force of 142,187,000+12,049,000 = 154,236,000 so the LF Participation was 154,236,000/234,739,000 = 65.7% and the UE rate was 12,049,000/154,236,000 = 7.8%

For August 2012, the population was 243,566,000, Employed was 142,101,000, Unemployed was 12,544,000 giving a Labor Force of 154,645,000. LF participation = 154,645,000/243,566,000 = 63.5% and UE rate is 12,544,000/154,645,000 = 8.1%

What Infowars is saying is that IF the LF participation rate was still 65.7%, that would be a Labor Force of 160,036,000 and assuming ALL of the extra 5,391,000 were Unemployed, THEN the UE level would be 17,935,000 and the rate would be 11.2%

Basically it's a tautology...IF more people were Unemployed AND the same number of people were Employed, THEN the UE rate would be higher. Duh.

But the fact is that there are only 12.5 million, not 17.9 million looking for work.

Personally, I much prefer the employment-population ratio. It is a measure of the percentage of working age Americans that actually have jobs.

The problem is that there are many non-labor market reasons for that to go lower. A baby boom, with a large number of full time student 16 year olds joining the population would cause the Population, but not Employment, to go up, causing a decline. A large number of retirees and/or people deciding to be stay-home spouses, or returning to school will cause Employment to go down and not change the Population, also causing a decline. The current Employment-Population ratio is higher than anytime before 1978, but we're obviously not better off than anytime before 1978.

In August 2010, 58.5 percent of working age Americans had jobs.

In August 2012, 58.3 percent of working age Americans had jobs.

What he fails to mention is that in August, 2010, 32.5% of Americans didn't want to work, while in August 2012 that percent is 33.4% Kind of an important point.

Here's an interesting thing....let's go through the "real rate" again ...
Jan 2009 had an LF participation rate of 65.7%. Aug 2012 has a Population of 243,566,000 so the Labor Force "should be" 160,036,000. Employment in Aug 2012 is 142,101,000 so Unemployment "would be" 160,036,000-142,101,000 = 17,935,000 and the UE rate "would be" 17,935,000/160,036,000 = 11.2%

But let's do the same thing with different years. Let's use December 1954 as our "real rate" which was 58.1%. And we'll apply that to April 2000. April 2000 had a Population of 212,108,000 so the Labor Force "should be" 123,272,000. Employment in Apr 2000 was 137,270,000 so Unemployment "would be" 123,272,000-137,270,000 = -13,998,000 and the UE rate "would be" -13,998,000/123,272,000 = -11.4%

Clearly that's nonsense. And if an equation can give nonsensical results...if the Labor Force participation can only be "too low" and not "too high" then the process is nonsense.