The Real Unemployment Rate

Discussion in 'Economy' started by hvactec, May 28, 2012.

  1. hvactec
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    hvactec VIP Member

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    Monday, 28 May 2012 10:31
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    Mark Twain once noted three varieties of lies in public life: “Lies, damn lies, and statistics.” In the area of macroeconomics and government, Twain could not have been more right. The statistics kept by the U.S. Bureau of Labor Statistics include “unemployment,” and this number counts those Americans who are actively seeking employment. As many commentators have noted, when times are really tough, those Americans who have simply stopped looking for a job drop off the statistics, making it artificially appear that the unemployment rate has dropped.

    The nominal unemployment rate is still high, but the real jaw-dropping fact is the number of working-age Americans who are not working. Today that is 100,000,000 Americans out of a total population of about 310,000,000. Demographically, about 80,000,000 Americans are minors and about 40,000,000 are age 65 or older. That leaves approximately 190,000,000 Americans who are adults of working age. About half of those do not have a full-time job.

    The situation, according to the very statistics of the Bureau of Labor Statistics, show an increasingly dismal picture, when the number of people who could be working but are not is counted. In April 2011, the number listed in those statistics as “unemployed” was 13.8 million. That number actually dropped in February 2012 to 12.8 million, then to 12.7 million in March and 12.5 million in April. The unemployment rate over those four months also declined: 9.0 percent in April 2011, 8.3 percent in February 2012, 8.2 percent in March 2012, and 8.1 percent in April 2012.

    When those “Not in the labor force” are adding to those “Unemployed,” then those who are not working is growing: 99.5 million in April 2011, 100.3 million in February 2012, 100.5 million in March 2012, and 100.9 million in April 2012. When counting both those “Not in the labor force” (though in the age in which most Americans work) and “Unemployed” as a single group, then those who are not working, but are in the age group in which Americans normally work, has remained steady and high: 41.6 percent in April 2011, 41.5 percent in February 2012, 41.5 percent in March 2012, and 41.6 percent in April 2012.

    read more The Real Unemployment Rate
     
  2. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    To me, one of the more important statistics that indicate where we are is the labor force participation rate. In Jan 09 it was 65.7, in April 12 it was 63.6. It means there's a whole of fewer people working today relative to the population. People are going on disability if they can find a way to do it, and our UE payments are through the roof. And the UE rate for young people under 25 is outragious, particularly for minorities.

    You can say that Obama inherited a bad situation, and you'd be right IMHO. But the job he and the Dems have done since then has not been very good, we should've rebounded a lot sooner and a lot higher than we have IMHO. Even now all they talk about is fairness rather than effectiveness. News flash: higher taxes, bigger gov't, and more income redistribution may lead to more fairness, but it doesn't lead to more economic growth and more jobs.
     
  3. brudder
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    brudder Member

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    Lies, all lies, Joe Biden told us we were in the summer of recovery in 2009, and he wouldn't lie to us!!!

    :lol:
     
  4. Middleoftheroad
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    Middleoftheroad Active Member

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    I like how you quote Mark Twain about lies, then go on to lie yourself, particularly about statistics. Counting those that choose not to work and don't need to as unemployed is blatantly false. Your 41.6% number includes, all college students who don't need to work, all mothers who choose not to work, all rich people who don't need to work and choose not too, everyone that retired early, and everyone who is really disabled.

    But hey, ya know, we need to tell all those mothers out there that they can't stay home and take care of their kids. Its their civic duty to get off their lazy asses and get a job. That's what your saying right?
     
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  5. Flopper
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    Flopper Gold Member

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    It's not important which unemployment rate you quote because they track each other. What is important is consistency. When the country was recovering from 2001 recession, Republicans would quote U3, the primary measure of unemployment because it indicates lower unemployment than the other measures. After 2007 recession they quote U6, which includes hardcore unemployment and hidden unemployment, because it's always higher. It's one of the oldest tricks in book.
     
  6. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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  7. Rozman
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    Rozman Gold Member Supporting Member

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    Maybe one day the Obama administration will
    start to tell the truth about how things really are
    with the economy.Maybe tell us the real number
    of people out of work.

    Nah....there is an election coming up.
     
  8. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    Maybe pigs will fly too. That's the day when I come to Jesus.
     
  9. pinqy
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    pinqy Gold Member

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    Ok, let's break things down. First, for labor force statistics, we're talking about the Adult Civilian Non-Institutional Population. That means we first exclude those groups that have barriers to entry/exit and work....those under 16, those in prison, those in institutions (mental institutes, nursing homes, etc) and the military.

    That gives us an Adult Civilian Non-Institutional Population of 242,784,000 for April, 2012.

    Of those, 141,865,000 worked the week of April 8-14 (employed), 12,500,000 did not work but could have accepted a job April 6-14 and did something to get a job March 18-Apr 14.

    That leaves 88,419,000 who did not work, and either did not look for work or could not have accepted a job. Source: Table A-3

    Let's look further at the Not in the Labor Force. (Table A-38)
    82,551,000 said they did NOT want a job, 6,328,000 said they did, BUT....3,285,000 hadn't tried to find work in over a year.

    3,042,000 had looked in the last year but not last 4 weeks, though 679,000 said they could not take a job if offered.

    That leaves 2,363,000 "Marginally Attached," people who aren't currently trying to get a job, but likely will sometime. 968,000 "gave up" saying they think they wouldn't be hired...reasons include belief in discrimination, lack of skills/training. The rest are for personal reasons that have nothing to do with the Labor Market.

    So who exactly of those should be considered objectively unemployed?
     
  10. pinqy
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    pinqy Gold Member

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    We can actually test some things here. Mr. Williams claims that he is taking the U-6 measurement and adding in people who would be classified as Discouraged except that they haven't looked for work in over a year and adding them, and only them, in raises the UE rate to 22.3% for April. He doesn't do his own collection and relies entirely on BLS data.

    So...our terms:
    Unemployed: wants to work, available to work, actively looked for work previous 4 weeks.
    Labor Force: Employed + Unemployed
    Marginally Attached (includes Discouraged): wants to work, available to work, actively looked in previous 12 months but not previous 4 weeks. Discouraged stop looking due to the specific reason of believing they'd be unsuccessful.
    Part Time for Economic Reasons: wants to and can work 35+ hours but worked < 35 hours due to slack business or couldn't find full time work.

    Unemployed (U) = 12,500,000
    Labor Force (L) = 154,365,000
    Marginally Attached (M) = 2,363,000 (968,000 Discouraged)
    Part Time for Economic Reasons (P) = 7,853,000
    All data can be found at www.bls.gov/new.release/empsit.toc.htm and I'm using seasonally adjusted except for Marginally Attached.

    So the U-6 is (U+M+P)/(L+M) = (12,500,000+2,363,000+7,853,000)/(154,365,000+2363,000) = 22,716,000/156,728,000 = 14.5%

    Now we add in X, Mr Williams' claimed Discouraged over 1 year:
    (22,716,000+X)/(156,728,000+X) = 0.223
    Solve for X and we get 15,746,000 as the number of people he's adding in. He's claiming there are 15,746,000 people who want to work, are available to work, but quit looking over a year ago because they don't believe they'll find work.

    hmmmm one problem. Looking at Tabke A-1 we see that there are only 6,366,000 people not already counted as Unemployed who say they want to work. Subtracting the Marginally Attached from that category, we have him adding 11,743,000 people more than those who say they want to work. How does that work? 11.7 million people who say they don't want to work but really do and quit searching due to discouragement? Seriously?

    You'll note of course that Williams doesn't say where he gets his data from except from BLS, and he doesn't really explain his methodoloy. His math doesn't work.
     

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